Vol. XXII, No. 79 [ BusinessWorld Online ]
Thursday, November 13, 2008 | MANILA, PHILIPPINES
SY-LED holding company SM Investments Corp. will keep its conservative expansion plans in 2009, and the next six months will be critical to its decision to possibly cut spending, top officials said yesterday.
In a briefing with analysts and reporters, SM Investments Executive Vice-President and Chief Finance Officer Jose T. Sio warned that the group might have to defer some projects if the global economic slowdown is prolonged and hits the Philippines like a tsunami.
The company declined to disclose third-quarter figures, but data showed net profits dipped by 8% to P3.1 billion.
"We are not in a crisis management mode. We are looking beyond the crisis for opportunities," Mr. Sio said.
Aside from improving profits, he said the present situation offers an opportunity to develop goodwill with customers, which will serve them well once the economy recovers.
For January to September, profits went up by more than a tenth to P9.6 billion from a year earlier, as sales rose by almost a fifth to P97.4.
Retail sales and mall rentals made up more than three-quarters of the company’s profits.
The group said it was confident of meeting its targets this year. "The second half of 2008 gives us more reason to be optimistic about meeting our targets," SM Investments President Harley T. Sy said in a statement.
He cited drastic cuts in gasoline and food prices, which combine well with a weak peso by boosting the buying power of customers dependent on dollar remittances from relatives working abroad.
"As such, we view the fourth quarter of the year with greater optimism. It’s a time when consumer spending heightens due to the holiday season," he pointed out.
The SM group, Mr. Sio said, had not decided on its 2009 spending program, but its budget for the past two years — P20 billion in 2007 and P25 billion this year — should be an indication.
"Today, cash is king. Liquidity is the name of the game not only to protect yourself but also to take advantage of opportunities that may come along," he said.
He added that the company would be sitting pretty next year since it doesn’t have to worry about debts, most of which will mature in five years.
Hans T. Sy, president of the group’s mall development arm SM Prime Holdings, said the group would continue its expansion program, with no plans to slowing down or being more aggressive.
He said SM Investments would focus on its core businesses, not taking in more than it can chew.
Meanwhile, the group is in talks with the Generali Group in connection with SM’s plan to acquire troubled US insurer AIG’s unit here, Philippine American Life Insurance Co.
Generali is an Italian insurance firm that is also interested in buying assets of the American insurer in Southeast Asia. Mr. Sio said they would finalize the decision by January. — Don Gil K. Carreon
