Aug. 12--AYALA Corp. announced Monday that its first-half profit plunged by nearly half owing to pressures from costlier oil and commodities, as well as tightening credit globally.

In a statement, Ayala said its consolidated net income fell by 45 percent to P6.3 billion in the six-month period ending June this year from P11.5 billion in the same period a year ago due to significantly lower capital gains and lower equity earnings from its key operating units.

In the second quarter alone, the conglomerate's profit reached P3.7 billion, or 38 percent lower than a year ago.

"The pressures of rising oil and commodity prices and tightening credit globally have created a much more challenging operating environment," Fernando Zobel de Ayala, the company's president and chief operating officer said.

The conglomerate booked P2.7 billion in capital gains from the sale of 3.8 million common shares in Globe Telecom Inc. This was lower than the P7-billion gain booked in the first half of last year.

Equity earnings from operating units declined 23 percent as net income of certain operating units softened amid a more challenging economic environment, the conglomerate said.

"But while earnings have been under some pressure this year, we continue to see strong underlying demand in each of our key businesses, particularly in real estate, consumer and corporate loans, telecom services, auto sales, and electronics," the company's president said.

Jaime Augusto Zobel de Ayala, its chairman and chief executive, said the company expects operating conditions to remain challenging until early next year as it continues to feel the pressure from higher inflation and interest rates.

"We believe the fundamentals of each of our businesses remains solid and we are optimistic that as global markets adjust and normalize, we are well-positioned, given the group's scale and financial and market strengths, to achieve our growth targets and value creation objectives," he said.

Last week, Ayala Land Inc. (ALI) reported a 37-percent growth in net income with revenues up 25 percent year-on-year on sustained growth of its residential and construction businesses.

"Its strategic land bank management, corporate business, and operations in Visayas and Mindanao also contributed to revenue improvement," the parent company said.

ALI's residential development revenues grew 12 percent with unit takeup during the period up by 13 percent over last year. Its shopping center revenues remained stable while corporate business revenues registered an 8-percent growth.

It spent P7.9 billion in capital expenditure in the first semester, 14 percent higher than in the same period last year. The company expects to catch up with its capital expenditure program in the second half of the year.

Bank of the Philippine Islands' net income in the second quarter reached P2.3 billion, pushing the first-half figure to P3.8 billion, 33 percent lower than the P5.7 billion recorded in the same six-month period last year.

"Margins and securities trading income were tighter amidst a rising interest rate environment which resulted in a 6-percent drop in net interest income and a 22-percent decline in non-interest income," the parent company's president said.

Lower operating expenses, however, partly cushioned the revenue shortfall.

Globe also reported a 3-percent decline in revenues during the period on lower wireless service revenues. The company said the changing pattern in consumer spending tempered revenue growth particularly for voice and value-added services, indicating the shift in consumers' preference for lower-cost alternatives such as text messaging.

Equity earnings from companies under AC Capital were lower this year due to a decline in earnings of Ayala Automotive Holdings Corp., international arm AG Holdings, and one-time loss provisions at Integrated Microelectronics Inc. Double-digit earnings growth for Manila Water Co. Inc., however, partly cushioned the earnings shortfall.

Manila Water reported a 21-percent jump in net income at end-June to P1.4 billion from P1.1 billion the previous year.

"Its continued focus on its capital investment plan has allowed it to consistently improve operating effi-ciencies," the parent company said.

Ayala's business process out-sourcing (BPO) companies continued to generate positive performance despite tougher economic conditions, as listed customer care company eTelecare will be announcing its second-quarter earnings results on August 13 (5 p.m. US Eastern time). When it released its first-quarter results in May, it provided guidance of second-quarter revenues of $72 million to $74 million, or up 18 percent, and net income of $1.5 million to $2.1 million.

Its unlisted BPO unit, Integreon, completed its acquisition of New York-based eDiscovery company, Datum, Inc., pushing revenues up 44-percent post-acquisition, and 38 percent on a stand-alone basis. Both operating and gross margins improved significantly on the back of favorable foreign exchange rates and Datum's strong performance, Ayala said. In the meantime, graphics and creative design outsourcer Affinity Express made major customer acquisition wins last quarter, which are ramping up to full volumes, the parent company said.

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