Mall sales push SM Investments profit up 22%

Mall sales push SM Investments profit up 22%
By Zinnia B. Dela Peña
The Philippine Star 03/15/2006

SM Investments Corp. (SMIC), the investment holding company of retail tycoon Henry Sy, posted a net profit of P7.1 billion in 2005, up 22 percent from P5.8 billion a year earlier, mainly driven by robust retail sales.

In a statement, SMIC said its revenues rose 7.6 percent to P54 billion from P50.2 billion, with retail sales accounting for 72 percent or P39.1 billion of total.

Retail sales increased by eight percent primarily due to the opening of new SM department stores in Dasmariñas in Cavite, Batangas, San Lazaro in Manila and Sucat.

Rental revenues likewise grew nine percent to P8.3 billion from P7.6 billion due to the opening of new SM Supermalls.

SMIC’s main financial services unit Banco De Oro Universal Bank posted a net income of P2.5 billion, an increase of 26 percent from a year earlier while China Banking Corp. reported a 12 percent growth in net profit to P3 billion.

Interest income, meanwhile, jumped 23 percent to P2.6 billion from P2.1 billion the previous year.

At the same time, interest expense declined by 22 percent to P2.5 billion as a result of certain prepayments of certain bank debts from the proceeds of SMIC’s initial public offering in March last year.

SMIC said its balance sheet remained strong with consolidated assets growing 9.1 percent to P168.3 billion from P154.4 billion in 2004.

Consolidated liabilities, on the other hand, amounted to P68.2 billion, almost the same level as in the previous year.

SMIC is engaged in four core businesses through its subsidiaries, namely: Shopping mall development and management (SM Prime Holdings Inc.), retail merchandising (SM Department Stores); financial services (Banco de Oro Universal Bank and China Banking Corp.) and real estate development and tourism (SM Development Corp. and Highlands Prime Inc.).

SMIC expects to perform better this year with its subsidiaries well on track to completing its expansion programs. "SMIC and its subsidiaries are prepared for the increasing challenges ahead and are well positioned to seize the opportunities brought about by the improving over-all economic outlook," the company said.

After opening its 23rd mall in Sta. Rosa, Laguna, SM Prime intends to continue beefing up its branch network which is expected to increase its total gross floor area to 3.5 million square meters by the end of the year.

Other malls scheduled to open this year are the Mall of Asia, SM City Clark, SM City Lipa, SM Supercenter Frontera Verde, and SM City North Edsa Annex-3.

Meanwhile, Banco De Oro is presently converting into BDO branches the 66 branches of United Overseas Bank (UOB) Philippines which it acquired last year. This will bring the total number of BDO branches to 251.

Its branch strategy is to focus on the Philippines’ major industrial and commercial regions in Metro Manila, Northern and Southern Luzon, Metro Cebu, Iloilo-Bacolod and Mindanao. Within these regions, BDO has strategically positioned its branches in key business and commercial centers, including SM Group malls, in order to increase access and exposure to high-quality clients.

China Bank, on the other hand, continues to offer innovative ways to improve services to clients. Its Internet and mobile banking platform, China Bank Online, allows customers to do their bank transactions anytime, anywhere. As of end-2005, China Bank has a network of 141 branches across the country.

Property units SM Development Corp. (SMDC) and Highlands Prime Inc.(HPI) continue to develop substantial tracts of real estate holdings into residences and tourist destinations.

SMDC recently launched its Mezza Residences across SM City Sta. Mesa. Mezza Residences has four, 38-story residential towers, offering one-bedroom, two-bedroom, three-bedroom, and suite units.

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