Property giant SM Prime Holdings saw a 21.9-percent year-on-year drop in first quarter net profit to P6.5 billion as the prolonged pandemic and the reimposition of tough lockdown protocols weighed down the flagship shopping mall business.
The growing residential business, however, has mitigated the overall decline in earnings. This segment led by SM Development Corp. contributed P11.9 billion in revenues in the first three months, up by 5 percent year-on-year.
As an indicator of future revenue contribution, the residential segment saw a 31-percent year-on-year growth in reservation sales to P32.4 billion, mostly from newly launched residential projects in Metro Manila.
For the full year, the company aims to bring to the property market 15,000 to 20,000 residential units.
“We welcomed 2021 with high hopes as most areas in the Philippines, including Metro Manila, were placed under [general community quarantine] in the first quarter of 2021. Along with the sustained growth of our residential business, our mall affiliates together with many of our [small and medium enterprises] partners were able to reopen their shops, allowing our mall business segment to perform better,” SM Prime president Jeffrey Lim said in a disclosure to the Philippine Stock Exchange on Monday.
Quarter-on-quarter, SM Prime’s net income improved by 80 percent while consolidated revenues were flat.
The residential segment accounted for 57 percent of SM Prime’s consolidated revenues, while the share of the shopping mall segment—previously the group’s cash cow—was capped at 28 percent.
Compared to the previous quarter, however, the local shopping mall business grew revenues by 10 percent to P5.9 billion as operating mall tenants increased, boosting mall income by 14 percent to P5.6 billion.
Meanwhile, SM Prime’s China malls registered a 53-percent year-on-year growth in revenues to 199 million renminbi (P1.48 billion) in the first quarter. This positive growth of international malls signals a return to normal operations after the government-imposed lockdown in mainland China.