SM Investments 2014 profit up 3.6% to P28.4B

Sy family-led conglomerate SM Investments Corp. (SMIC) grew its net profit last year by 3.6 percent to P28.4 billion, driven by a double-digit expansion in recurring earnings.

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

SMIC said underlying earnings growth was mainly boosted 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 the 2014 consolidated net income. 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. posted a net income of P18.4 billion in 2014, up by 13 percent on the back of an 11-percent revenue growth 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 rose by 9 percent to P197.1 billion.

BDO posted a record-high net profit of P22.8 billion in 2014, up from P22.6 billion in the previous year, while China Bank’s net income was flat at P5.11 billion.

SMIC’s comparative net income of P27.4 billion in 2013 included exceptional items such as trading gains from the group’s banking businesses.

In 2014, consolidated revenue grew by 9 percent to P275.7 billion, which was attributed to good retail sales environment that also boosted SMIC’s property business’ rental revenues.

For SM Prime, rental revenue 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, as well as a 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.

In the previous year, SM Prime opened its 50th mall in Angono, Rizal, bringing its total gross floor area to 6.5 million square meters. SM Megamall became the country’s largest mall, with floor area of 484,373 square meters, after opening its 101,005-sqm Mega Fashion Hall.

SM Prime continued its foray into China, planning to open one new mall per year going forward. Its sixth mall in China will be located in Zibo, Shandong Province and its largest mall, spanning 540,000 sqms, will open in the Tianjin Binhai New Area.

SM Prime operates five malls in China with total gross floor area of about 800,000 sqm.

In the meantime, 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.