Ayala Land cuts expenditure budget

Property developer Ayala Land Inc. said it is allocating some P80 billion in capital expenditures (capex) this year, lower than the P90 billion it announced earlier, as the company will defer some of its land acquisitions, according to a report by BusinessMirror.

Augusto Cesar D. Bengzon, the company’s CFO, said the decline in capex will not affect the construction of its projects.

“There are certain conditions, procedures that have to be fulfilled by the owner. Because I’m an arranger, we’re trying to negotiate harder…we don’t need to rush it,” he said. “And we think probably next year we’ll be able to come to terms. So that takes P10 billion out of the P90 billion (capex).”

“What you’ll see is you see an acceleration of spending towards the third and fourth quarters which is typically is our spending pattern.”

In January to June, the company has so far spent P30.2 billion, more than half of which went to residential projects and 15 percent each to estate development and land acquisition.

The company reported an attributable net income of P8.08 billion for the first half, up 34 percent from the previous year’s P6.04 billion.

Revenues for the period grew at a slower pace of 9 percent to P53.33 billion, from last year’s P48.95 billion.

For the second quarter alone, its income came in at P4.9 billion, 51 percent higher than the previous year and revenues at P28.7 billion, 18 percent.

The company said property development revenues was flat at P34.14 billion from the previous year’s P34.1 billion. Its residential development revenues fell 9 percent to P27.35 billion from last year’s P30.05 billion due to stretched payment terms arising from the challenges of the pandemic and an increase in cancellations.

Bernard Vincent O. Dy, the company’s president and CEO, said the downturn is not like what the market has seen during the Asian financial crisis in the 1990s and the global financial crisis in 2008, when the property market collapsed.

Dy said the market will start to improve from this year.

“Some people think that this is a linear business. It is not. Anywhere in the world this is happening…you do get some bit of cycles. The good part here is that the reduction has been generally been manageable. So it is not alarming.”