SM Prime tops 2011 income target

MANILA, Philippines - SM Prime Holdings Inc., the country’s largest retail landlord, said it topped its income guidance for 2011 as net earnings grew 15 percent to P9.1 billion on new store openings as well as higher contributions from its China operations.

In a disclosure to the Philippine Stock Exchange yesterday, SM Prime said total revenues climbed 13 percent to P26.9 billion while EBITDA (earnings before interest, taxes, depreciation and amortization) rose 16 percent to P18.5 billion for an EBITDA margin of 69 percent.

These results include the operations of the four SM malls in China, located in the cities of Xiamen and Jinjiang in Southern China, Chengdu in Central China, and Suzhou in Eastern China.

SM Prime attributed its better-than-expected performance to an expanded capacity from its new malls here as well as a healthy same-store rental growth of seven percent.

The group’s four malls in China sustained their positive trajectory with net earnings doubling to P889 million from only P428 million in 2010. A tighter grip on operating expenses through the use of innovative energy conservation methods likewise contributed to the company’s rise in profits, SM Prime said.

“SM Prime’s noteworthy performance in 2011, which was achieved in spite of tempered economic progress, clearly shows that the business formula the company has adopted is resilient and built for sustainable growth,” SM Prime president Hans T. Sy said.

Sy said the company would continue to pursue its growth and expansion plans to further enhance shareholder value.

Lease operations accounted for 85 percent of total revenues, growing 14 percent to P22.8 billion. This was mainly driven by new rental space from SM City Tarlac, SM City San Pablo, SM City Calamba, SM City Novaliches and SM City Masinag. Combined, the new malls added 380,000 square meters (sqm) to the company’s total gross floor area (GFA) and currently have an average occupancy rate of 97 percent.

Cinema ticket sales likewise went up 10 percent.

Just last week, SM Prime inaugurated SM City Olongapo, its first mall in the province of Zambales. For the rest of 2012, SM Prime is slated to open four more across the country and one in China. These are SM City Lanang in Davao City, SM City Gen. Santos in Southern Mindanao, SM City Consolacion in Cebu, SM City San Fernando in Pampanga, and SM Chongqing in China.

SM Prime aims to open three to four malls every year. In China, the company will continue to open one mall per year, with increased momentum by 2014, when it is scheduled to open its 540,000-sqm mall in Tianjin.

The group is expected to end the year with a total of 46 malls nationwide and five in China with an estimated combined GFA of 6.3 million sqm.