Ayala Corp. (AC), the country’s oldest conglomerate, is reviewing its capital spending plans this year and may scale back investments as macroeconomic uncertainty and rising interest rates prompt a more cautious stance.

Speaking during the company’s annual stockholders meeting on Friday, AC president and CEO Cezar Consing said the firm is reassessing its earlier guidance of P220 billion to P230 billion in capital expenditures (capex), which had been set before recent global developments, including oil market volatility.

Calibrate down capex

“Last year, we spent P180 billion in capex across the group. When we were entering this year, we said P220 to P230 billion,” Consing said. “At that point, this was before the oil crisis, so we’re really thinking of ramping up. Now, we’re reviewing that number again because we might have to calibrate that down. I suspect the number will probably look more like last year’s number, more or less.”

Although spending will remain substantial, the potential recalibration is also expected to influence AC’s funding strategy.

Challenging macroeconomic backdrop

AC’s more cautious stance comes amid a challenging macroeconomic backdrop marked by elevated inflation, higher interest rates, and reduced fiscal space compared to the pandemic period.

While its businesses remain fundamentally strong, some sectors, particularly real estate, may face headwinds due to tighter financial conditions. The group is also placing greater emphasis on cash flow, earnings, and balance sheet growth.

Refocus once global energy conditions stabilize

Consing noted that while the company is taking a more measured approach for now, it intends to refocus on expansion once global energy conditions stabilize.

For this year, the company is targeting a core net income of P65 billion.

In a separate address, Ayala Corp. chairman Jaime Augusto Zobel de Ayala still expressed confidence in the country’s long-term outlook.

“Ayala has prospered for almost 200 years because it has always sought to be relevant to our community and stakeholders and be a partner in nation-building,” Zobel de Ayala said.