SM Prime’s 2014 net profit up 13% to P18.4B

SY FAMILY-led property giant SM Prime Holdings Inc. grew net profit last year by 13 percent to P18.4 billion as the opening of new shopping malls and expansion of some old malls boosted rental income by a double-digit pace, complementing stable growth from mature retail hubs.

Consolidated revenues rose by 11 percent to P66.2 billion, SMPH told the Philippine Stock Exchange on Monday.

“The encouraging financial performance in 2014 reiterates that the transformation of SM Prime into a property conglomerate is bearing fruits and trending above management expectations. We expect this performance to be surpassed this year as the company pursues its 2015 expansion plans with the opening of four new malls, the completion of FiveE-comCenter and the launch of five new housing projects. This is to complement the expansion of existing malls and on-going construction of high-rise residential development projects.” SM Prime president Hans Sy said in a press statement.

SM Prime’s rental revenues from retail and commercial spaces grew by 13 percent to P36.5 billion in 2014, accounting for 55 percent of consolidated revenues.

The increase in rental revenue was attributed mostly to the new malls that opened and the expansion of existing malls in 2013 and 2014, namely: SM Aura Premier in Taguig, SM City BF Parañaque, Mega Fashion Hall in SM Megamall in Mandaluyong, SM City Cauayan in Isabela province and SM Center Angono in Rizal province, which opened up additional gross floor area of 564,000 square meters.

Growth was also partly attributed to TwoE- comCenter at the Mall of Asia Complex which opened in 2012 and is now fully occupied.

Meanwhile, SMPH’s same-store rental grew by 7 percent, sustaining the growth posted in 2013.

SMPH said its housing group, which accounted for 33 percent of consolidated revenues, continued to show improvements. The group recorded a 7 percent increase in real estate sales to P22.2 billion in real estate sales in 2014 mainly driven by the increase in the pace of construction of sold units in Grace Residences in Taguig, Shell Residences in Pasay, Breeze Residences in Pasay, Green Residences in Manila, Grass Residences Phase 2 in Quezon City and Trees Residences in Quezon City.

Meanwhile, reservation sales hit P35.9 billion in 2014 from only P26.3 billion in the previous year, mostly from Shore Residences and Air Residences projects in Pasay and Makati respectively.

The mall’s cinemas generated ticket sales of P4.3 billion, an increase of 14 percent during the year. The increase was driven by the opening of additional digital cinemas in the new malls and expanded malls and by the launch of international and local blockbuster movies.

Excluding the new malls and expansions, same-store cinema ticket sales grew by 10 percent.

Meanwhile, amusement and other revenues increased by 8 percent to P3.3 billion in 2014. The increase was mainly due to the strong patronage of amusement rides and additional recreational facilities provided by management in various malls. Cinemas and amusement facilities accounted for 12 percent of SMPH’s consolidated revenues in 2014.

On the expenditure side, SM Prime’s consolidated costs and expenses increased by 8 percent to P38.6 billion in 2014 on depreciation expenses attributed to new malls added in the past 12 months. Film rentals were also higher as it corresponded to the growth in cinema ticket sales in 2014.

Consolidated costs of real estate was P12.3 billion in 2014, up by 3 percent from last year. The slower increase in expenses was attributed to improving cost efficiencies as well as rationalization of expenses, resulting in an improvement in gross margin to 45 percent in 2014 from 43 percent in the previous year. Meanwhile, net income margin was sustained at 21 percent.