SM Prime upbeat on third quarter earnings

MANILA, Philippines — SM Prime Holdings Inc. (SMPH) said its third quarter net income remains strong despite spiraling inflation and rising interest rates.

“It’s still okay. We have not yet seen the impact of the inflation numbers,” SMPH president Jeffrey Lim said when asked about the company’s third quarter performance.

He said preliminary data shows that the numbers are still within target.

For the fourth quarter, Lim said consumer spending would likely remain strong due to holiday spending.

Inflation grew 6.7 percent in September, a nine-month high amid surging oil prices, a trade war between US and China, and various supply-related issues in the local market.

Interest rates, likewise, have gone up with the Bangko Sentral ng Pilipinas (BSP) raising rates by 50 basis points in its latest meeting last month.

Lim said higher interest rates – which would push borrowing costs higher – might not necessarily affect SM Prime’s property business, or at least not yet, as the Chinese market continues to push demand for residential projects.

SM Prime develops malls, hotels and other commercial projects as well as residential developments.

In the first half, the company reported a 16 percent jump in net income to P16.62 billion. Revenues rose 15 percent to P49.77 billion, while operating income increased by 16 percent to P23.36 billion.

Lim said the company’s expansion in various provincial areas supported growth.

SM Prime plans to put up more integrated developments in the coming years anchored by lifestyle malls, luxurious yet affordable residences, and other complementary amenities across the country.

Accounting for 58 percent of SM Prime’s consolidated revenues, malls contributed P28.71 billion in revenues.

Mall operating income increased by 12 percent to P15.9 billion.

At present, SM Prime has 77 malls, of which 70 are in the Philippines and seven are in China.

SM Development Corp., the primary residential unit of SM Prime, meanwhile, recorded a 25 percent increase in reservation sales to P34.45 billion in the first semester.