SM Investments continues to thrive despite the economic slowdown, reporting yesterday that its retail profits jumped 37 percent in the period January to September.
The holding company of mall and banking tycoon Henry Sy Sr. said the profit from its nationwide retail ventures, which contributed 81 percent of total sales, grew 37 percent in the first nine months to P3.1 billion.
SM Investments said its combined profits for the same period rose 14 percent to P10.8 billion, while sales increased 14 percent to P110.9 billion.
Net income for 2009 might reach P15.5 billion while sales might rise to P150 billion, compared with a P14-billion profit in 2008 on P132.5 billion of revenue, chief financial officer Jose Sio said.
“SM thrives and emerges stronger in times of crisis,” Sio said.
“Our units were able to increase their market share even with the slowdown because of strong balance sheet and goodwill with customers.”
The group’s shopping malls and banks contributed 12 percent each to the net income. The real estate arm contributed another 12 percent from only 5 percent in the same period last year.
“We expect the property group to increase its contribution further as it continues to register high double-digit growth from its residential condominium business,” Sio said.
The rosy forecast contrasts with the government’s projection of economic growth of between 0.8 percent and 1.8 percent this year, slower than the 4.6-percent expansion in 2008 as the global recession cuts export demand.
“More than half of what a typical consumer spends is potentially captured by SM’s malls and retail shops,” said Gilbert Lopez, analyst at Credit Suisse Group AG. He has an “outperform” rating on the stock. “Its share of Filipinos’ wallets can grow further as it expands its property ventures.”
The holding company plans a capital expenditure of P211.32 billion from 2010 through 2014, according to Sio. Sales and profit were projected to double over that period, he said.
The company will spend P40.6 billion for expansion in 2010 compared with P25 billion this year, Sio said.
Shopping mall unit SM Prime Holdings Inc. will spend P12.1 billion to build five malls next year-in Calamba in Laguna, Novaliches in Quezon City, Tarlac, Masinag in Antipolo, and San Pablo in Laguna plus a shopping center in China, said SM Prime chief financial officer Jeffrey Lim.
SM Prime is scheduled to open its 36th mall this Friday in Rosario, Cavite, while SM Investments plans to add eight more outlets before the end of the year to its network of 111 department stores, supermarkets, convenience stores and hypermarkets.
SM Investments is budgeting P17.4 billion to build more homes and residential towers next year, Sio said. The company’s real estate ventures will contribute about 20 percent of profit by 2014, compared with 12 percent in the nine months to end-September 2009, he said.
SM Prime will build one mall a year in China until 2012 before accelerating the pace of expansion. China, where SM Prime owns three malls now, will contribute 5 percent to 7 percent of the company’s profit by end 2012, Lim said. With Bloomberg
