MANILA, April 6 (Xinhua) -- Ayala Corporation, the Philippines largest conglomerate, is seeking expanded regional presence amidst a weak global economic downturn, local media reports said on Monday.
This at a time that companies worldwide are either shutting down or reducing their operations as the global economic slowdown slackens demand. But Ayala Corp. is looking at property developing opportunities in the fast growing Chinese and Indian economies and expanding its share in the lucrative Japanese electronics market.
As company executives emphasized, the best time to invest is during the economic downturn, as this will better position the company to take advantage of opportunities once the economy recovers.
"Business cycles come and go," said Ayala Corp. Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala in a recent press briefing. He noted that the company will continue "to expand its geographical footprint. We're structuring our investments based on what the global market requires."
Company officials believe that Ayala Corp is also in a position to finance new acquisitions and/or expand operations owing to its strong balance sheet. The company, noted for its prudent financial strategy, has cash reserves of 25 billion pesos (about 520 million U.S. dollars), a planned capital expenditure of 49 billion pesos (about one billion U.S. dollars) for 2009 and a debt-to-equity ratio of 0.09 to 1.
The 175-year old conglomerate has successfully captured a big share of the domestic market, thanks to its strong brands that are equated with quality and affordability. Its main businesses - Ayala Land Inc., Globe Telecom and Bank of the Philippine Islands
are among the market leaders in their respective sectors.
In the past few years, Ayala Corp. also steadily increasing its presence in the international market for the past few years. The company has heavily invested in business process outsourcing, electronics manufacturing and property development and will continue to do so to maintain and increase its presence overseas.
The Ayala Corp is looking at its electronic manufacturing subsidiary, the Integrated Microelectronics Inc. (IMI). Company executives believe despite the current slowdown in global demand, the long term prospects for electronics remain strong.
"IMI posted a 5 percent revenue growth in 2008 as its operations in China remained strong, offsetting the decline in our Philippine and U.S. operations," said Fernando Zobel de Ayala, president and chief operating officer of Ayala Corp.
IMI's revenue in 2008 hit 441 million U.S. dollar. It operates manufacturing plants in the Philippines, China, Singapore and the U.S. and a product development center in Japan.
IMI President Arthur Tan said that Japanese trading house Mitsubishi Corp. plans to increase its current one percent stake to 10 percent in IMI. He said this move will allow the IMI to capture a bigger share of the Japanese electronics market which now accounts for 40 percent of the company's revenues. The increased equity will also bring in.
Company officials said Ayala Corp. through its international property investment vehicle AG Holdings "continue to focus on opportunities in China, India, Thailand and Vietnam," adding that the softer real estate market conditions are providing "more attractive terms of investment and improved negotiating leverage for the fund."
AG Holdings has set up an advisory company in India, committed 10 million U.S. dollars to a Vietnamese private equity fund and put up an investment arm in Thailand.