SMIC net profit up 22% in 1st quarter

Tycoon Henry Sy-led conglomerate SM Investments Corp. grew its first-quarter net profit by 22 percent year-on-year to P7.4 billion, led by the group’s banking business and sustained growth in mall and property units.

For the full year, SMIC expects a net profit growth of 15-17 percent, SMIC chief finance officer Jose Sio said in a press briefing after the conglomerate’s annual stockholders’ meeting. During the meeting, SMIC affirmed a group-wide capital spending of P65 billion.

“We are encouraged by our first-quarter results. With the continuing rise in remittances from overseas Filipinos, the expansion of the country’s BPO (business process outsourcing) sector and the recent credit upgrade of the Philippines to investment grade, we are confident of achieving even better results in the second quarter and beyond,” SMIC president Harley Sy said in a statement.

For the first quarter, banks (through BDO Unibank and China Banking Corp.) accounted for the lion’s share of consolidated net income, contributing 59.9 percent of total. Mall development (through SM Prime Holdings) contributed 15.8 percent, followed by retail (SM Retail) and property (including SM Development Corp. and SM Land) with 14.1 percent and 10.4 percent, respectively.

Group-wide revenues increased to P56.8 billion from P49.6 billion in the previous year while cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) rose 36 percent year-on-year to P16.9 billion, or an Ebitda margin of 29.7 percent. Return on equity stood at 13.6 percent.

For the first quarter, SM Retail grew its net profit by 4 percent year-on-year to P1.2 billion for a net margin of 3.4 percent. Sales rose by 5.8 percent to P36.4 billion. For the full year, the retail business is expected to grow by at least 8 percent.

For this year, SM Retail plans to open two SM Supermarkets, 16 SaveMore stores and seven SM Hypermarkets. As of end-March, SM Retail had 201 stores consisting of 46 department stores, 37 supermarkets, 37 hypermarkets and 81 Savemore stores.

George Mendiola, president of SM Department Stores, said the non-food retail group grew its topline by only 4 percent in the first quarter as there were some days lost to national holidays. “However, for the month of April, growth is already at 9 percent,” he said.

For the food group, SM Hypermarkets president Robert Kwee said the first quarter was “below expectations” because of the number of days without operations due to national holidays (such as during some days of Lent). But like the non-food group, he said the same pick-up in growth was seen starting April.