SM mall, real estate units register profit despite slowing economy

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Aug 07, 2009 (The Manila Times - McClatchy-Tribune Information Services via COMTEX) -- SPHXY | Quote | Chart | News | PowerRating -- THE country's biggest mall developer and operator announced on Thursday that its profit in the first six months climbed on the back of higher rental payments even if the economy has barely expanded at the start of the year.

In a statement, SM Prime Holdings, Inc. said that from January to June this year, the Sy-led company's net income grew by 8 percent to P3.4 billion from P3.2 billion in the same period last year.

Hans Sy, SM Prime president, said the company met its targets for the first half of the year amid the global economic crisis.

"Our results reinforce our belief in the resilience of the Philippine economy. We remain steadfast in pursuing our growth and expansion programs in order to better serve our millions of loyal customers," Sy said.

At end-June, revenues reached P9.6 billion, a 15-percent increase compared with P8.4 billion last year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) during the period rose by 13 percent to P6.6 billion, for an EBITDA margin of 69 percent.

Sy said SM Prime's market share during the period also improved due to changes in consumer spending as high spenders have now moved to its malls that offer a wider price point range for merchandises.

In the first half of the year, rental revenues continued to contribute the biggest share to total as it grew by 17 percent to P8.4 billion compared with P7.2 billion year-on-year.

In the second quarter, SM Prime also posted an 8-percent to P1.7 billion increase in net income, from P1.6 billion in the same period a year ago.

The other growth driver was the increase in leasable space with the opening of new malls last year like, SM City Marikina, SM City Rosales, and SM City Baliwag, together with SM City Naga.

Meanwhile, the middle market property unit of the SM group, SM Development Corp., (SMDC) said its profit from January to June this year grew to P1 billion from P10.3 million in the same period last year.

"While we came from a low-income base last year due to our equity positions that were affected by the financial meltdown, the dramatic increase in net income was also achieved by exerting greater effort in sustaining the growth in residential real estate operations," Roger Cabunag, SMDC president, said.

Real estate income for the period increased 104 percent to P776 million, while revenues amounted to P2.6 billion, an 85-percent increase year-on-year.

Earnings before interest, taxes, depreciation and amortization reached P921 million, for an EBITDA margin of 40 percent.

Revenues from real estate operations during the period increased 31 percent to P2.3 billion from P1.8 billion last year.

During the six-month period, SMDC pre-sold 1,1771 residential units, or 32 percent more year-on-year, worth P4.1 billion.

"We expect a robust growth for the rest of the year as we are preparing to launch more projects," Cabunag said.

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