Ayala Corporation facing tight budget constraints this year

The Ayala Group is implementing another round of capital expenditure reductions for the second consecutive year, with its flagship property and telecommunications segments leading the cuts to optimize existing assets.

For 2024, the Ayala Group plans to slash its capex guidance by approximately 10 percent from the previous year’s P264 billion. This reduction reflects the decisions of Ayala Land Inc. (ALI) and Globe Telecom Inc. to decrease their spending.

ALI, the real estate developer, will operate on a lower budget compared to the previous year’s P85 billion. While it will continue to expand its portfolio, the pace will be slower due to uncertainties in the property market, including the timing of potential interest rate cuts by the Bangko Sentral ng Pilipinas (BSP) to stimulate borrowing.

Globe Telecom will also reduce its capex spending to a five-year low of P55 billion as part of its strategy to achieve cost efficiency and return to positive cash flow by 2025. This reduction aligns with the company’s goal of maintaining pre-pandemic capex levels.

In contrast, AC Energy Corp. (ACEN), the energy arm of the Ayala Group, plans to increase its capex for the year. ACEN aims to expand its renewable energy capacity to 20 gigawatts by 2030, requiring elevated spending over the next few years. This includes investing in clean energy projects in the Philippines, with an estimated cost of up to $7 billion.

Overall, the Ayala Group’s capital expenditure adjustments reflect its strategic response to current market conditions and its focus on optimizing resources for sustainable growth across its various business segments.

Business News: Ayala Corporation facing tight budget constraints this year