Conglomerate Ayala Corp. projects hitting its core net income back to pre-pandemic levels as the company creates the next big company that will push revenues higher.
“In 2022, they were at approximately 90 percent of pre-Covid levels. This is the year that we work to getting them back to 100 percent or better of pre-Covid levels. So that has got to be the first priority,” Cezar P. Consing, president and CEO, said.
Ayala Corp. in 2019 reported core profits of P31.1 billion. Last year, core income stood at P27.7 billion.
“The second priority is that with the improved earnings, we see the opportunity to get more dividends from our business units. And for us to turn around and pay more dividends to our own shareholders to the Ayala Corp. shareholders,” Consing said.
According to him, Ayala is developing the group’s other large businesses to serve as the new leg of growth, away from the conglomerate’s telecommunications and energy businesses which have been driving growth the past decade.
He noted that at the turn of the century, the big engine of growth for the group was Globe Telecom and that over the past few years growth had been provided by AC energy.
“So in terms of portfolio management, we want to make sure that the more nascent younger growing companies in our portfolio, that each has the potential to be the next Globe or the next ACEN,” he said.
Jaime Augusto Zobel de Ayala, company chairman, said the group remains guarded of its outlook for 2023.
“A slower growth is expected for the Philippines this year due to elevated inflation and interest rates. Declining high inflation may persist and will result in high interest rates. Likewise, for an extended period, the corporates appetite for spending may remain dampened,” he acknowledged.
“Due to this, though the strength of the US dollar may diminish if the Fed cuts interest rates sooner, the peso may only move sideways as our substantial current account deficit limits potential appreciation,” he added.
Zobel said the view is supported by indicators like slower imports and loan growth.
Domestic expansion supported by remittances and improving unemployment allow scope for continued growth this year counterbalanced only by how fast inflation slows, he said.
“Tourist arrivals continue to improve as well, reaching 67 percent of pre pandemic levels last February. So looking ahead, the pivotal question is how fast inflation will decelerate to the BSP target of between 2 and 4 percent. We may begin to see gradual rate cuts in this instance,” he said.
