SM Group bullish on non-core business portfolio

MANILA  -The Sy family’s SM Investments Corp is counting on its non-core businesses, such as those in the energy and logistics sectors, to drive faster growth and significantly boost its earnings.

SM Investments, led by the heirs of the late taipan Henry Sy Sr., recently forayed outside its core banking, property and retail businesses by making strategic investments in renewable energy firm Philippine Geothermal Production Co., and in logistics firms 2GO Group Inc. and Airspeed.

READ: SM Investments boosts renewable energy portfolio

The portfolio companies currently contribute 10 percent of total earnings but Timothy Daniels, SM Investments consultant for investor relations and sustainability, said the goal was to raise their share of the total pie in the coming years.

“We think we can get this to the mid-teens in percentage contribution over the medium term,” Daniels said during a recent business forum.

READ: SM Investments gains controlling stake in another logistics firm

“Our optimism lies in the potential contributions of logistics and geothermal ventures to drive faster growth,” he added.

The group’s portfolio investment strategy was also meant to be complementary to SM Investments, a P1- trillion conglomerate that owns the country’s biggest bank, BDO Unibank Inc.,  and property giant SM Prime Holdings Inc.

“We are picking the businesses that add to the ecosystem of SM Investments. It’s about creating value and growth,” Daniels said.

For example, SM Group said PGPC “fits with SM’s objectives when it comes to its sustainability agenda”.

“With PGPC, the SM Group will be able to provide steam to power plants that will, in turn, go to the communities that need them,” it noted.

During the first six months of the year, SM Investment booked profits of P36.5 billion, up 32 percent, while total revenues climbed by 18 percent to over P286 billion.