SM Investments profit up 24.4% to P2.7B in 6 months

Boosted by the continued strong gains of its mall operations, SM Investments Corp. (SMIC), the investment holding firm of the SM Group reported a 24.4 percent growth in net income for six months ending September this year to P2.7 billion, from P2.2 billion in the same period a year ago.

Based on a financial report filed with the Philippine Stock Exchange, SMIC registered consolidated revenues of P25.2 billion, an increase of 10.6 percent, with retail sales remaining as the main driver of growth.

Accounting for 72 percent of the company’s total revenues, retail sales rose 7.9 percent in the period April to September this year to P18.2 billion, mostly due to the contribution of new SM Department Stores in Batangas and Dasmariñas and the reopening of the SM Department Store in Delgado, Iloilo.

The company’s retail business now operates a total of 24 department stores nationwide, including SM San Lazaro, which opened last July.

Rental revenues from the SM malls increased 12.9 percent to P4.23 billion, accounting for 17 percent of total revenues.

Aside from SM San Lazaro, the other mall which opened this year include the SM Supercenter Valenzuela. Its 22nd mall, SM Supercenter Molino is slated for opening on Nov. 18 along with SM Sucat Annex, which will house an SM Department store.

Meanwhile, equity in net earnings of associates Banco de Oro and China Bank jumped 58.9 percent to P1.2 billion from the previous year’s P771 million. The significant increase was largely due to the substantial improvement in the performance of BDO and Chinabank.

BDO, in which SMIC holds a 46.6 percent stake, posted P1.17 billion in net profit or an improvement of 41 percent. China Bank, where SMIC owns 21 percent, reported a 19 percent growth in income to P1.61 billion.

SMIC’s total cost and expenses, on the other hand, went up by only 8.9 percent to P19.7 billion.

SMIC’s shopping mall unit SM Prime Holdings Inc. likewise sustained its gains during the first nine months of the year to P3.59 billion, up seven percent from P3.37 billion a year ago.

Contributing to the bulk of revenues, rental income from leases in the malls and food courts grew 10 percent to P6.48 billion from P5.91 billion in the same period last year.

Gross revenues likewise increased five percent to P7.8 billion. Although operating expenses went up six percent to P3.35 billion this year from P3.15 billion last year, SM Prime managed to post an operating income of P4.45 billion as of end-September 2005, up four percent from P4.29 billion last year.

SM Prime expects consumer spending for the Christmas holidays to boost growth in the last quarter of the year as holiday spending is expected to pick up with the increased inflow of overseas Filipino workers’ (OFWs) remittances.

SMIC declared a cash dividend of P3.50 per share in June and as of end-September, paid a total of P1.86 billion. In October, it signed a P5-billion notes facility agreement with a consortium of banks. The issuance was oversubscribed, indicating market confidence in the company.

The company’s subsidiaries, meanwhile, continue to create opportunities for growth.

SM Prime is expanding to the provinces with the construction of new malls in Sta. Rosa, Laguna and Pampanga.