MANILA, Philippines - Shopping mall giant SM Prime Holdings Inc. said its net earnings rose 14 percent in the first half of the year, mainly due to new store openings and the improved performance of its malls in China.
In a financial report submitted to securities regulators, SM Prime said its net profit amounted to P4.27 billion from P3.76 billion a year earlier while revenues climbed 12 percent to P12.71 billion.
The three malls in China contributed P980 million or eight percent of consolidated revenues. In terms of net income, these malls chipped in P210 million, accounting for five percent of consolidated net earnings.
The China malls are enjoying healthy increases in rental rates and much higher occupancy levels, particularly in SM Xiamen’s Lifestyle Center and SM Chengdu. Rental revenues jumped 57 percent to P950 million.
The average occupancy rate for the three malls in China is now at 91 percent, SM Prime said.
SM Prime also attributed the strong performance to lower borrowing costs resulting from a low interest rate environment and successful debt-management initiative, which included the prepayment of higher interest-bearing loans through refinancing.
The prepayment lengthened the maturity of the company’s loans.
“For the first half of this year, SM Prime exceeded expectations by continuing to implement its proven business model which focuses on building long-term tenant relationships and effective innovation. This is further supported by a capable organization that is firmly committed to satisfy the various requirements of our millions of loyal customers,” said Hans T Sy, president of SM Prime.
Lease revenues went up 15 percent to P10.92 billion, brought about by healthy consumer spending which resulted in a seven percent rise in same-store sales and additional rental space from the opening of SM City Tarlac, SM City San Pablo, SM City Calamba and SM City Novaliches.
Cinema ticket sales, however, declined to P1.3 billion from P1.37 billion due to a low turnout of blockbuster movies during the period.
Operating expenses stood at P5.92 billion, up 11 percent owing to higher administrative expenses.
Income from operations increased 13 percent to P6.79 billion.
In the second quarter, SM Prime posted a consolidated net profit of P2.15 billion or an increase of 15 percent. Consolidated revenues expanded 12 percent to P6.64 billion while EBITDA earnings before interest, taxes, deprecation and amortization improved 13 percent to P4.48 billion for an EBITDA margin of 68 percent.
The company opened SM City Masinag last May with 90,261 square meters of space. Later this year, SM Prime is set to open an expanded SM City San Fernando in Pampanga, SM City Olongapo in Zambales and SM City Suzhou in China to bring its total branch network to 43 by yearend.
SM Prime is also set to expand two of its existing malls namely SM City Davao in Southern Mindanao and SM City Dasmariñas in Cavite.
It expects to end the year with a total gross floor area of 5.2 million sqm in the Philippines and 0.6 million sqm in China.