Corporate News

By Arra B. Francia

SMIC earnings hit P16.6B in 6 months

Posted on August 10, 2017

THE sustained growth of SM Investment Corp.’s (SMIC) retail, banking and property businesses drove its net income 9% higher in the first half of 2017.

Frederic C. Dybuncio
The holding firm of the country’s richest man Henry Sy, Sr. on Wednesday reported a net income of P16.6 billion for the January to June period.

This follows a 7% increase in consolidated revenues to P181.6 billion, compared to the P169.7 billion it generated in the first half of 2016.

“Even without the benefits of an election year, we saw sustained growth across all our core businesses, driven by the strong economy and resilient consumer sentiment. SM will continue to capture this momentum through nationwide expansion and by investing in high growth opportunities,” SMIC President Frederic C. DyBuncio said in a statement.

SMIC’s property arm through SM Prime Holdings, Inc. (SM Prime) contributed the largest share to consolidated income at 42%. Its banking and retail segment accounted for 36% and 22%, respectively.

SM Prime’s consolidated net income gained 14% to P14.4 billion during the six-month period as consolidated revenues edged 10% higher to P43.2 billion. The listed property firm said mall revenues rose by 10% to P21.8 billion, due to the addition of 1.1 million square meters (sq.m.) of gross floor area (GFA) since 2015.

The company opened three new shopping malls in the first semester, namely SM Cagayan de Oro Downtown Premier, SM Maison at Conrad Manila, and SM Cherry in Antipolo. This brought SM Prime’s shopping mall network to 63 in the Philippines with 7.8 million sq.m. of GFA. With the addition of the company’s seven malls in China, the company has a total 9.1 million sq.m. of GFA.

SM Prime’s residential arm SM Development Corp. recorded P13.9 billion in revenues, 5% higher than the same period in 2016, accounting for 32% of the company’s total revenues.

Earnings of BDO Unibank, Inc., SMIC’s banking unit, were flat for the period at P13.3 billion, against the P13.2 billion in the first half of 2016.

China Banking Corp. benefited from the growth in its lending business as its net income climbed 10% to P3.6 billion in the first semester.

On the other hand, SM Retail delivered a net income of P5.2 billion, up by 6% year on year. The same growth was recorded in total sales to P131.6 billion.

SM Retail currently has a total of 2,357 stores under its portfolio. Of this, 1,709 are specialty retail stores, 50 are SM Supermarkets, 44 are SM Hypermarkets, 170 are Savemore stores, 21 are Waltermart stores, 285 are Alfamart stores, while 58 are The SM Stores.

Revenues from the specialty retail stores, which include Ace Hardware, Toy Kingdom, Watsons, The Body Shop, and Forever 21, jumped 8% to P31.6 billion.

SMIC said it is ramping up its portfolio to segments that will complement its core businesses in order to capture the growth of the Philippine economy. For instance, its investment in Belle Corp. is riding along the growth of the tourism sector, after netting P1.8 billion for the semester, showing a 93% uptick.

Sought to provide an outlook for the SM Group, UPCC Securities Corp. equity trader Aristotle D. Reyes, Jr. said the retail business is currently being challenged by the shift to e-commerce.

“Right now, we’re expecting not that good outlook. Because when you go out to the malls, you can see open spaces. They’re now shifting in the digital retailing,” Mr. Reyes said in a phone interview yesterday.

Mr. Reyes also noted the shift to e-commerce prompted the SM Group to acquire a stake in integrated transport solutions provider 2GO Group, Inc. The transaction was made last April after SMIC acquired a 34.5% stake in 2GO’s parent, Negros Navigation Co.

“Let’s see how this partnership will perform. But for now, I think there’s a plateau in the business of SM because of the shift to e-commerce. They’re catching up with Lazada, which is doing very well right now...and can deliver (products) right to your door,” Mr. Reyes said.

Last year, SMIC partnered with Lazada Philippines to use its platform to sell online merchandise from toys to clothes. The SM Store currently sells products such as Parisian and Milanos shoes, SM Woman clothes and The Body Shop skin care line on Lazada’s Web site.

Shares in SMIC rose 1.22% or P10 to close at P830 each on Wednesday.