Bulletin 9/15/2008
Los Angeles, CA - Although the US market would remain its bread and butter in its overall international sales, Ayala Land Inc. (ALI), the Philippines' biggest property developer, is now putting more focus on emerging markets in Asia and Europe for its marketing strategy following the US economic slowdown.
Rose de Ocampo, president of Marketing Strategists Inc. handling the Ayala International Sales told Business Bulletin during the American International Real Estate Expo & Conference (AIREEC) that more focused marketing efforts are directed to Europe and Asian countries like Dubai and other countries in the Middle East.
"Our overall sales are not affected by the economic slowdown in the US because there are other booming markets like Korea," De Ocampo said.
De Ocampo, however, said a more focused marketing strategy in the other parts of the world is necessary just in case the US economic slowdown may trigger a slowdown in its US sales.
The US sales is the bread and butter of the company's total international sales accounting for as much as 40 percent.
The company's international sales, however, is limited to 40 percent only because of the Constitutional restriction on foreign land ownership.
While ALI has no problem in selling its vertical property developments, it's horizontal residential projects are subject to the Constitutional provision limiting foreign land ownership in the country to 40 percent.
ALI ended the first half of 2008 with a net income of P2.91 billion, posting a significant 37 percent growth from the P2.13 billion recorded last year. This robust financial performance was driven by strong growth in operating revenues, improved equity earnings from affiliates, higher interest and other income, and effective cost control.
The company recorded consolidated revenues of P15.38 billion in the first half of 2008,32 percent more than the P11.63 billion recorded in the same period last year. Operating revenues increased by 26 percent to P13.71 billion buoyed largely by growth in the Residential and Construction businesses. Strategic Landbank Management, Corporate Business and Visayas-Mindanao operations also contributed to consolidated revenue growth.
Higher equity earnings from Ayala Land's corporate investment vehicles in Bonifacio Global City, Cebu Holdings, Inc. (CHI) and Alabang Commercial Corporation (ACC), 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 pre-tax capital gains.
Consolidated net operating income (NOI) reached P4.29 billion in 1H08, growing by 16 percent from the same period last year. Margin improvements were achieved by the Residential, Corporate and Strategic Land-bank businesses. However, overall NOI margin declined by three percentage points to 31% as shopping center and property management margins dropped due to the continued closure of high-margin Glorietta 2, the start-up operations at Greenbelt 5 and lower carpark volume with the ongoing Ayala Center redevelopment. Construction margins also dropped significantly due to highly competitive bids on large external contracts as well as the rising costs of construction materials.
Meanwhile, overhead costs were kept at bay as general and administrative expenses increased by only 11 percent to PI.31 billion. The residential development accounted for the bulk of revenues at 45 percent of total or P7.0 billion.