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AYALA
Land Inc.’s (ALI) profit growth slowed in the second
quarter as the fastest inflation in 14 years crimped
sales of the country’s biggest developer.
Net
income rose 29 percent to P1.08 billion. Sales rose 22
percent to P7.15 billion.
Inflation accelerated to 11.4 percent in June on record
high oil prices and rising food costs, leaving Filipinos
with less money to spend at Ayala’s shopping malls and
damping demand for new apartments. Inflation quickened
to 12.2 percent in July, the fastest pace in 16 years.
“There
are a lot of headwinds: rising oil prices, higher
interest rates,’’ said April Lee Tan, head of research
at Citiseconline.com. “There may be a slowdown, but not
a reversal. A US economic slowdown may result in fewer
remittances” from Filipinos working overseas.
First-half profit rose to P2.91 billion, Ayala Land
said, from P2.13 billion a year earlier. Sales grew to
P15.4 billion from P11.6 billion. First-quarter profit
reached P1.83 billion on sales of P8.23 billion,
according to the company.
Higher
equity earnings from Ayala Land’s corporate investment
vehicles in Bonifacio Global City, Cebu Holdings Inc.
and Alabang Commercial Corp., contributed to net income
growth. In addition, the company earned higher interest
and other income with increased cash balances and the
sale of shares in three subsidiaries (namely, Piedmont
Property Ventures Inc., Stonehaven Land Inc. and
Streamwood Property Inc.) in March that generated P762
million in pretax capital gains.
Shopping
center and property management margins dropped due to
the continued closure of high-margin Glorietta 2, the
startup operations at Greenbelt 5 and lower carpark
volume with the ongoing Ayala Center redevelopment.
Meanwhile, overhead costs were kept at bay as general
and administrative expenses increased by only 11 percent
to P1.31 billion.
The
company also continued to drive the growth in land
values of its landbank areas. In Makati, construction of
the Raffles/Fairmont luxury hotel complex, in
partnership with Kingdom Hotel Investments has
commenced. Glorietta 5, which has both office and retail
components, is also set for completion by the
end-2008.
In
Bonifacio Global City, the 29-story BGC E-Services
Building is already under construction and will be
completed by 2010. Planning of the headquarter office
building that will house the Philippine Stock Exchange (PSE)
in the West Superblock area is well underway.
Forthcoming developments include the headquarter-office
building of a major local company, the six-star
Shangri-La Hotel to be built beside the PSE building in
the West Superblock area, as well as a Mind Museum.
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