SM Consolidated Net Income Rises 8% in First Nine Months

SM Investments Corporation (SM) reported consolidated net income rose 8% to Php23.8 billion for the first nine months of the year. Recurring net income, net of one-time items, climbed 13%. Consolidated revenues likewise grew 8% to Php272.2 billion for the period from Php252.7 billion in the same period last year.

“Our solid third quarter results benefited from vibrant growth in our property and retail businesses. Property earnings were driven by nationwide mall expansion and the strong performance of residential developments. Retail also gained from footprint expansion and robust consumer sentiment, particularly in specialty retailing. We remain confident that our growth plans are on track,” SM President Frederic DyBuncio said.

For the first nine months, property accounted for 40% of consolidated earnings, banks at 38% and retail 22%.

Retail

Retail operations under SM Retail Inc. reported growth in total sales of 6% to PHP197.9 billion while net income rose 10% to Php7.7 billion. Revenues from Specialty Retail grew 9%.

THE SM STORE opened two stores in Cagayan de Oro and in Puerto Princesa during the nine-month period. Total gross selling areas of all 59 department stores stood at over 750,000 square meters.

The Food Retail Group continued its aggressive expansion adding 21 mid-sized format Savemore stores, three SM Supermarkets and two WalterMart stores for a total of 26 new stores year to date. Most of these new stores were located in communities outside Metro Manila. Meanwhile, Alfamart increased its number of stores to 320 as of end-September from 210 at the start of the year.
Specialty Retail added 68 new stores during the nine-month period.

Property

SM Prime Holdings, Inc. (SM Prime) reported net income expanded by 15% in the first nine months of the year to Php20.0 billion driven by additional rental revenues from mall expansions, consistent growth in same-mall-sales and higher contribution from residential sales. Consolidated revenues likewise rose 12% to Php64.7 billion.

Mall revenues rose 10% to Php38.6 billion. Mall rentals increased 10% to Php32.8 billion due to expansions and new malls that opened in 2016 and 2017 while same-mall-sales sustained its 7% growth.

Consolidated revenues of SM Prime’s residential group, which includes SM Development Corp. (SMDC), expanded by 10% to Php20.5 billion due to increase in sales take-up of ready-for-occupancy (RFO) units and construction accomplishments of SMDC. Reservation sales surged 18% to Php42.1 billion in sales value in the first nine months.

The rest of SM Prime’s businesses which includes offices, hotels and convention centers registered revenue growth of 39% to Php5.8 billion.

Banking

BDO Unibank earned Php20.4 billion, up 5%, on sustained growth in its core lending, deposit-taking and fee-based businesses. Net interest income grew by 23% to Php59.8 billion, supported by 18% growth in customer loan portfolio to Php1.7 trillion and 15% growth in deposits to Php2.1 trillion. Fee-based income was up 30% to Php20.8 billion.

Balance Sheet

As of end-September 2017, total assets of SM grew 16% year-on-year to Php942.4 billion. SM maintains a healthy balance sheet with a conservative gearing ratio of 43% net debt to 57% equity.