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SM Prime profit growth slows even with more malls, expansion

Friday, February 20, 2009 [ manilatimes.net ]

By Likha C. Cuevas-Miel, Reporter

THE Philippines’ biggest mall operator announced on Thursday that its full-year profit grew on the back of its mall expansion despite a slowing economy.

In a statement, SM Prime Holdings Inc. said its consolidated net income in 2008 rose by almost 7 percent to P6.4 billion from the previous year as revenues climbed by 12 percent to P17.8 billion.

Profit growth last year however was slower than the 10 percent seen in 2007.

Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 9 percent to P12.3 billion, for an EBITDA margin of 69 percent. These results include the company’s three SM malls in Xiamen and Jinjiang in Southern China, and Chengdu in Central China, which the Philippine company acquired in the latter part of 2007.

“Notwithstanding the global financial situation, SM Prime achieved its goals and sustained its expansion in 2008. The company performed fairly well and was able to deliver on its targets and objectives due mainly to the unwavering support of its loyal customers, tenants, suppliers, shareholders, and employees,” Hans Sy, SM Prime president, said.

Rental fees continued to account for the largest share of the firm’s consolidated revenues, growing 15 percent to P15.4 billion year on year. The bulk of the increase came from the additional space in new malls and mall expansion during the year.

Last year, SM Prime opened SM City Marikina, SM City Rosales and SM City Baliwag even as it expanded SM City North Edsa and SM Megamall. These added 9 percent, or 353,000 square meters of gross floor area, bringing the total to 4.3 million square meters.

The average occupancy rate of the new malls currently stands at 93 percent.

Ticket sales were flat due to a dearth of movie blockbusters.

Operating expenses for the full year increased 15 percent to P8.2 billion, largely because of the additional malls and growth in leasable space. Income from operations grew 9 percent to P9.6 billion year-on-year.

For this year, SM Prime is slated to open SM City Naga in Camarines Sur, SM City Rosario in Cavite, SM City Pamplona in Las Piñas, and the Sky Garden at SM City North Edsa. The company will also expand SM City Rosales in Pangasinan.

By year-end, SM Prime will have 36 malls nationwide and 3 malls in China and an estimated gross floor area of 4.9 million square meters.

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