Vol. XXII, No. 15 [ BusinessWorld Online ]
Friday, August 15, 2008 | MANILA, PHILIPPINES
SY-LED HOLDING company SM Investments Corp. (SMIC) posted a more than 10% increase in net profits in the second quarter, mainly driven by its four main businesses. The company expects to beat that in the second half.
"We [expect] the second half to be better since all [major units] are growing. The economic environment for the second half will also be better globally and domestically," said Jose T. Sio, SMIC executive vice-president and chief finance officer, told reporters yesterday.
He noted that given the improving global and local situation, market confidence should be back soon.
The conglomerate hiked its net income by 14% to P2.73 billion for April to June. First-half results also went up by more than a tenth to P6.5 billion.
Unit SM Development Corp. (SMDC) is projecting a P6-billion increase in sales this year from P3.5 billion last year, Mr. Sio said.
An analyst said the company can hit the target, although it might be a different story for the group’s banking business.
"We should not expect much from the company’s banking sector," said the analyst, who did not want to be identified.
The SM group’s shopping malls contributed about a third to total net profits, while its retail merchandising business contributed another third. About a quarter came from banking, while the share of its property business stood at 7%.
For the first half, retail merchandising profits went up by a tenth to P1.6 billion, while sales were up by a fifth to P52.6 billion.
As of this month, SM’s retail group already has 89 stores composed of 31 department stores; 32 supermarkets, nine of which are SaveMore branches; 11 hypermarts; and 15 Makro outlets. This year, the company will inaugurate two more department stores, two supermarkets, two hypermarts and three SaveMore branches.
"We feel the growth is still there. There will be more stores and malls next year," Mr. Sio said.
Meanwhile, SM Prime Holdings, Inc., the country’s leading shopping mall developer and operator, posted a 10% increase in net income to P3.2 billion for January to June. Revenues hit P8.4 billion, 8% higher than a year earlier.
The company said SM Prime’s results included the three SM Malls in Xiamen, Jinjiang and Chengdu, all in China. It acquired the malls last year.
This year, the group will open new malls in Marikina; Rosales, Pangasinan; Nagtahan; and Baliuag, Bulacan, as well as expand SM Megamall, SM North EDSA and SM Fairview. By yearend, SM malls will have a total gross floor area of 4.4 million square meters.
Net income of the company’s banks — Banco de Oro Unibank, Inc. (BDO) and China Banking Corp. — declined in the first half.
BDO went down by a quarter to P2.4 billion as trading gains were clipped by the "turbulent investment period," while China Bank posted a net income of P1.5 billion, a tenth lower than a year earlier.
But real estate revenues for the first half went up by 14% to P3.4 billion. Profits from the business also more than doubled to P700 million.
SM traced the growth to condominium projects of SMDC, leasing activities of the commercial property group and resort projects of Costa de Hamilo.
For the first half, SMDC more than doubled realized revenues from real estate operations to P1.8 billion, while its net income was up by 250% to P400 million on the back of its strong pre-selling activities.
SMDC has five ongoing housing projects — the Mezza, Berkeley, Grass Residences, Chateau Elysee and Lindenwood Residences — and plans to launch two more condominium projects this year — the Sea Residences and Field Residences.
"All other property and real estate projects of SM are in full swing, such as the Mall of Asia Complex in Pasay City, the Sofitel Cebu Hotel and the expansion of the Taal Vista Hotel in Tagaytay City," the company said. — Kristine Jane R. Liu
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