Ayala Corp., the country’s biggest conglomerate, yesterday reported a 33 percent surge in net income for 2007.

It will also double its capital spending this year to P56 billion, the highest in a decade, to shield it from slower economic growth.

The Ayala group is the country’s third most valuable firm with a market cap of $4.5 billion. Its businesses range from outsourcing, property, telecoms, banking and a water utility.

The spending spree, according to Ayala chairman and chief executive Jaime Augusto Zobel de Ayala, is part of its program of "developing platforms for new businesses."

Ayala Corp.’s annual net profit of P16.2 billion was boosted by one-off gains from share sales as well as lower financing expenses and strong growth in its main businesses, which have benefited from a booming outsourcing sector and rising personal consumption.

The company booked capital gains of P7.3 billion in 2007, up 55 percent from P4.7 billion in 2006. Its net income would have risen by about 19 percent if these gains were excluded.

The company had a net income of P2.6 billion in the fourth quarter, flat from the same period of 2006, according to Reuters Estimates.

The group — controlled by the country’s richest clan, the Spanish-Filipino Zobel de Ayalas — owns the Philippines’ largest property firm Ayala Land, the second largest telecom firm Globe Telecom, and the most valuable lender Bank of the Philippine Islands.

The group prepaid debt of P14 billion last year, which lowered its average funding cost and resulted in a net debt of P13.5 billion as of year-end 2007.

Shares of Ayala Corp gained nearly 15 percent in 2007, under performing the main stock index, which climbed 21 percent. -

ALI, BPI and Globe reported double-digit net income growth.

ALI posted a 13 percent growth in net income to P4.4 billion. Consolidated revenues increased marginally by 1 percent to P25.7 billion due to accelerated residential revenue bookings in 2006.

Residential bookings were up by 25 percent, shopping center revenues up 5 percent.

BPI reported an 11 percent net income increase to P10 billion as revenues went up 9 percent driven due to the 28 percent increase in non-interest income. Net interest income was relatively flat.

Lending activity was up 11 percent with corporate loans up 9 percent as appetite for term loans from top corporate clients improved while loans to SMEs expanded by 20 percent.

Globe reported a core net income of P13.7 billion, 27 percent higher year-on-year, with consolidated revenues up 11 percent to a record P63.2 billion, driven by strong growth in wireless business as mobile customer base reached 30 higher than last year at 20.3 million SIMs as of year-end.

Globe is allotting about $400 to $450 million in capital expenditures this year mainly for investments in core mobile services, wired and wireless broadband technologies as well as international submarine cable facilities.

Companies under AC Capital combined contributed P1.4 billion in equity earnings, 42 percent lower than the prior year’s contribution. Although Manila Water, Integrated Microelectronics, Inc. (IMI), and Ayala Automotive continued to contribute solid profits, equity earnings were lower due to losses related to the start up costs and capacity investments made in support of growth programs of the newer BPO and shared services companies.

Manila Water reported net income at P2.4 billion, slightly higher than 2006 level despite the expiration of its income tax holiday last year. Operating efficiencies continued to improve with non-revenue water (NRW) down to 24 percent from 30.3 percent the prior year and 63 percent when it took over the concession in 1997. This has pushed billed water volume to over 1 billion liters per day servicing 986,000 households.

IMI’s net income rose 3 percent to $36 million and dollar revenues were up by 8 percent to $422 million. Revenues from Philippine operations increased by 14% and accounted for over half of total revenues while revenues from China and Singapore operations on the other hand grew by 1 percent.

"The impact of a stronger peso on direct labor and overhead expenses as well as expenses related to technology integration pushed operating income lower. IMI is moving towards a more balanced customer, industry, and geographic portfolio as well as higher margin industries," Ayala Corp. said.