SMIC posts record P28.4B net profit

SY family-led conglomerate SM Investments Corp. grew its net profit last year by 3.65 percent to a record high P28.4 billion driven by robust banking, property and retailing businesses.

Excluding extraordinary items, SMIC’s recurring net income for the year grew by 14.4 percent, the conglomerate reported to the Philippine Stock Exchange on Wednesday.

SMIC said underlying earnings growth was mainly driven by banking arm BDO Unibank, Inc., which posted a core income growth of 18 percent. Together with China Banking Corp., the banking businesses accounted for 41 percent of consolidated net income in 2014. The property and retail segments contributed 38 percent and 21 percent, respectively.

“The group’s strong underlying earnings growth of 14.4 percent in 2014 was the result of solid performance and ongoing expansion in all our three core businesses. During the year we raised additional capital and entered into several strong partnerships, accelerating our investments for growth and ensuring we expand in line with our continuing optimism about the economic prospects of the Philippines,” SMIC president Harley Sy said.

Consolidated property businesses under SM Prime Holdings Inc. chalked up a net income of P18.4 billion in 2014, up by 13 percent on the back of a revenue growth of 11 percent to P66.2 billion.
 
On the high-volume low-margin retailing segment, SM Retail Inc. grew its 2014 net income by 3.3 percent to P5.9 billion while total sales expanded by 9 percent to P197.1 billion.

It was earlier reported that BDO had posted a record-high net profit of P22.8 billion in 2014, slightly rising from P22.6 billion in the previous year. China Bank posted a full year consolidated net income of P5.11 billion, flat from the previous year’s level.

Overall, SMIC’s comparative net income level of P27.4 billion in 2013 included exceptional items such as trading gains from the group’s banking businesses.
 
For 2014, consolidated revenues grew by 9 percent to P275.7 billion, which the conglomerate attributed to good retail sales environment which also boosted rental revenues in SMIC’s property business.

For SM Prime, rental revenues rose by 13 percent to P36.5 billion, mainly from the opening of new malls and the expansion of mature malls in 2013 and 2014 alongside sustained same-store rental growth of 7 percent.

SM Prime’s housing group recorded a 7 percent increase in real estate sales in 2014 to P22.2 billion, with reservation sales expanding by 36.5 percent to P35.9 billion. Mall cinemas generated ticket sales of P4.3 billion, up by 14 percent.

Meanwhile, SMIC’s food retail business continued to expand in both urban and rural communities, adding 28 new stores in various parts of Luzon, Visayas and Mindanao. SM Retail entered into partnerships with local and foreign players to accelerate its expansion program, growing its community mall supermarket presence through relationships with CityMalls and WalterMart and developing small format mini-marts in partnership with Indonesian convenience store chain Alfamart.

At of end-2014, SM Retail had a total of 269 stores, comprising 50 SM Stores, 40 SM Supermarkets, 42 SM Hypermarkets, 113 Savemore stores and 24 WalterMart stores.

 In the department store business, SM Store added new locations in Cauayan, Isabela and Cabanatuan, Nueva Ecija and introduced new brands to its merchandise mix. In the last few years, SM has introduced fashion brands such as Forever 21, Uniqlo, Sfera, Suite Blanco, Josef and other lifestyle brands such as Uno de 50 and Crate and Barrel.
 
As of yearend, SMIC’s total assets grew by 12 percent to P711.9 billion.//30