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SM malls hike profit by a tenth despite downturn, calamities

Posted on 10:09 PM, February 18, 2010 [ BusinessWorld Online ]


PROFITS OF SM Prime Holdings, Inc., the country’s largest mall operator, rose by a tenth last year to P7 billion from P6.4 billion, hitting the higher end of the listed firm’s projections.


Growth was attributed to continued expansion and higher sales in existing malls, the firm said.

Revenues grew by 15% to P20.5 billion in 2009, while EBITDA (earnings before interest, taxes, depreciation and amortization) grew by 14% to P14 billion, for a margin of 68%, SM Prime said yesterday in a statement.

Rental fees, which accounted for 86% of total revenues, increased by 15% to P17.7 billion.

“Due to the continued support and patronage of our customers, SM Prime again met its targets for 2009 despite the challenges brought about by the global recession and a series of natural calamities that affected most of Luzon in the latter part of the year,” SM Prime President Hans T. Sy said.

Storm Ondoy forced the company to temporarily close six Savemore branches and the supermarket at SM City Sta. Mesa late last year.

Storm Pepeng, which battered Northern Luzon, later flooded SM City Rosales in Pangasinan.

Early this month, the Henry Sy-led firm said profits last year were expected to have risen by 8%-10%.

Last year, SM Prime opened SM City Naga in Camarines Sur, SM Center Las Piñas in Metro Manila, and SM City Rosario in Cavite. It also expanded SM City Rosales in Pangasinan, SM City Fairview, and SM North EDSA with the “Sky Garden,” which made it the largest mall in the Philippines.

New malls and expansion projects added 226,000 square meters to the company’s total gross floor area, bringing it to 4.5 million square meters, or a 5% increase.

Meanwhile, operating expenses rose by 19% to P9.7 billion, largely due to expenses related to mall expansion.

This year, SM Prime has allotted P12 billion -- P8 billion for the Philippines and P4 billion in China -- for capital expenditures, and is looking to put up real estate investment trusts and secure about $300 million to help finance the expansion.

This year, SM malls will rise in Calamba and San Pablo in Laguna, Tarlac City, Novaliches in Quezon City, Masinag in Antipolo, and Suzhou in China.

By the end of 2010, SM Prime will have 41 malls in the Philippines, of which 16 are in Metro Manila.

Shares in SM Prime went down to P9.50 apiece yesterday from P9.60 on Wednesday. -- Neil Jerome C. Morales

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