SM Prime income surged in first quarter to P12.6B

Property giant SM Prime Holdings Inc. posted a 176-percent growth in first quarter net profit to P12.6 billion as extraordinary gains added to the double-digit rise in revenues from core businesses.

The three-month net profit of the Sy-led company—now one of the largest integrated property developers in Southeast Asia—included P7.4 billion in extraordinary gains from the sale of marketable securities.

Excluding the one-time gain, core net income grew by 14 percent to P5.2 billion in the first quarter. The growth was higher than the 11- percent growth posted in the same period last year. Consolidated revenues also increased by 9 percent to P16.7 billion year-on-year.

SMPH president Hans Sy said in a statement: “2015 promises to be a strong year and the first quarter numbers seem to reflect that. There are a lot of reasons to be optimistic with consumer spending getting a boost from lower oil prices and improved consumer confidence. The strong economy provides much motivation for us to expand and grow our business more aggressively to take advantage of new opportunities, particularly in the provincial areas. We can grow all areas of business, malls, residences, commercial and tourism-related developments together to achieve synergies.”

Rental revenues from retail and commercial space, which accounted for 57 percent of the consolidated revenues, grew by 10 percent year-on-year to P9.4 billion in the first quarter. The growth was led by the significant increase in rental revenues from the new malls that opened and the expansion of existing malls in the last two years. These were SM Aura Premier in Taguig, SM City BF in Parañaque, Mega Fashion Hall in SM Megamall in Mandaluyong, SM City Cauayan in Isabela and SM Center Angono in Rizal. Combined, these new and expanded malls have a total gross floor area of 564,000 square meters.

Growth was also partly driven by the company’s increasing office space. Aside from TwoE-comCenter in Pasay, SM Prime recently launched SM Cyberwest in Quezon City, which is now fully occupied. Meanwhile, same-store rental grew by 7 percent, sustaining the growth posted in 2014.

On the other hand, the malls’ cinemas generated ticket sales of P1 billion, slightly down from P1.1 billion in the same period last year with a slight decrease in blockbuster movies shown in the first quarter of 2015.

Meanwhile, amusement and other revenues increased by 32 percent to P900 million in the first quarter of 2015. The increase was mainly due to the strong patronage of amusement rides, especially the Sky Ranch Pampanga.

Cinemas and amusements accounted for 11 percent of SM Prime’s consolidated revenues during the period.

SMPH’s housing group, which contributed 32 percent to consolidated revenues, recorded a 7-percent gain to P5.4 billion in real estate sales in the first quarter year-on-year. This allowed the group to post a 37-percent increase in net income to P1.3 billion in the period under review.

The growth was mainly driven by the increase in the sales take-up and higher construction accomplishment of projects launched in 2010 to 2013, namely Shore Residences in Pasay, Green Residences in Manila, Wind Residences in Tagaytay, Grace Residences in Taguig and Shell Residences in Pasay.

As an indicator of future growth, reservation sales grew by 47 percent year-on-year to 3,721 units in the first quarter of 2015, translating to a 34-percent increase in value terms to P9.5 billion in the first three months of this year.