The country’s oldest conglomerate, which booked a record-high core income of P45 billion last year, launched a series of business streamlining moves to boost earnings or cut losses at several non-core segments, including healthcare, logistics and manufacturing.
“The stuff that was taking away from value we have either reduced the cost of that or we’ve shut it down completely,” Cezar P. Consing, Ayala president and CEO, said during a briefing following the company’s annual meeting last week.
“That means we are setting a new baseline and that new baseline will allow for growth,” he added.
In 2024, Ayala registered robust income growth across key subsidiaries led by banking, telecommunications, real estate and energy.
But several of its younger portfolio companies remained in the red, posting about P5 billion in combined losses in 2024 and weighing on its earnings target next year.
Fixing before firing up
Getting these segments into growth mode, either for a sale or a permanent role in the portfolio, will take some work.
“It’s hard to be in a loss minimization mode and a profit maximization mode at the same time,” Consing said. “You have to handle the fix first and that’s what we’ve done with our smaller businesses.”
One example is AC Logistics, whose losses last year widened to P2.2 billion from P1.8 billion in 2023. Over the past year, they shut down last-mile delivery business Entrego and streamlined operations at Air21.
These efforts paid off months later as Ayala announced an agreement to sell 40 percent of AC Logistics to A.P. Moller Capital, an investment firm founded by the group that controls Danish shipping giant Maersk.
Playing it smart with GCash
Another example, involving AC Ventures, shows how the group is being strategic with prized assets such as GCash, which is eyeing an initial public offering at a valuation of around $8 billion.
AC Ventures owns a significant stake in GCash and weaker bets like Zalora.
To unlock value, it raised its holdings in the fintech giant last year before selling 50 percent of AC Ventures to Japanese industrial giant Mitsubishi, securing a long-term partner for the business.
Analyst’s view
Ayala’s main portfolio businesses (Ayala Land, Bank of the Philippine Islands, Globe, and ACEN) will drive most of the growth in the bottom line.
With the exception of GCash, this means even profitable smaller companies will have a limited impact next year.
COL Financial Group chief equity strategist April Lynn Tan said reaching the 2026 profit goal won’t be easy.
This is because of Globe’s single-digit growth, threats facing the real estate sector (Ayala Land), and Bank of the Philippine Islands’ high profit base, according to COL’s Richard Laneda.
“If it will only be dependent on recurring profits, it will be challenging,” she said.
Momentum is picking up for other units…
Ayala’s healthcare arm, AC Health, also booked losses of P610 million last year, and expects to be back in the black this year or next year, CEO Paolo Borromeo said last week.
The realignment in this segment also included the sale of telehealth unit KonsultaMD to Manuel V. Pangilinan-led Metro Pacific Investments, a competitor in the space.
AC Mobility, led by Jaime Alfonso Zobel de Ayala, could also be profitable within two years.
“That will probably start to get back into the black on a net income basis in two years,” said Alberto M. de Larrazabal, Ayala chief finance officer.
“[T]he reason for that is we’re growing that business so aggressively, we’re building on the infrastructure, the dealer network, so what you’re seeing is the startup costs continuing in the next two years,” he added.
AC Mobility manages a multi-brand portfolio that includes BYD, Kia, Honda, Volkswagen, Isuzu, and Bosch Car Service, operating over 90 dealerships, and with 215 electric vehicle charging points installed nationwide.
While questions linger for others
Ayala owns 35 percent of the Light Rail Transit Line 1 project, whose other shareholders are Metro Pacific, Sumitomo and Macquarie.
In 2024, the conglomerate recorded a P3.2 billion accounting loss due to delayed fare hikes and lower-than-expected passenger volume, but Consing said they’re still optimistic on its long-term potential and remain committed to its extension to Cavite, which requires substantial investments.
What’s next?
Consing said Ayala’s portfolio is being realigned to ensure all business units are contributing to growth, echoing his message from the past year.
“I think the chances are there will be a year where all engines are firing on all cylinders because we’re making sure we’re set up for that,” Consing said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
