SM Prime bares 10%-12% income growth

SM Prime Holdings Inc., the developer of the country’s largest shopping mall chain, yesterday reported a consistent 10-12 percent growth in its net profit in the first quarter of 2002, reaching an estimated income of over P1 billion during the period.

SM Prime senior vice president for finance Jose Sio told stockholders during their annual meeting yesterday that based on preliminary figures, "we were able to sustain double-digit growth of between 10 to 12 percent in our net income during the first quarter."

In the first three months of 2001, SM Prime earned P901 million which was an improvement of 11 percent from a year earlier. Backed by the company’s aggressive but strategic expansion program, earnings growth steadied throughout the year, ending 2001 with an 11percent increase in profit to P3.486 billion.

For the full year of 2002, Sio said their bottomline earnings would grow by about the same pace as their continued land banking and mall openings contribute to the company’s revenue growth.

SM Prime, which has developed 12 malls across the country, has a predictable rental stream and the growth forecast by the company is in line with analyst estimates.

Last quarter, he added sales had improved by 14 to 15 percent as tenants and customers continue to flock to the SM Malls, the anchor operations of retail king Henry Sy Sr.

Sio said indicative of the company’s aggressive expansion binge, a total budget of P6 billion a year, for the next three years, would be allotted mainly for the construction of new malls — highlighted by the planned opening in 2004 of the Mall of Asia on Roxas Boulevard — the biggest of its kind in the continent.

Last year, SM Prime opened its 11th and 12th malls in Sucat, Paranaque and Davao City, respectively while this year, another two malls are slated for opening: SM City in Bicutan and SM City in Cagayan de Oro.

Aside from the Mall of Asia, SM Prime has line up several other future projects for the medium term, with malls sprouting in Lucena, Quezon; Marilao, Bulacan; Baguio City; Dasmarinas, Cavite; Marikina; Sta Rosa, Laguna; Urdaneta, Pangasinan; San Lazaro, Tayuman, Manila; and Bacolod City.

"Just as it builds new malls, SM Prime is constantly expanding and renovating its existing shopping centers," SM Prime senior vice president for operations Hans Sy said.

Sy also said the company was open to buying a property in Fort Bonifacio Global City, a mixed-used project being developed by Metro Pacific Corp.

SM Prime, which recently sold control of its health and beauty chain to Hutchison Whampoa Ltd., said it was also open to the idea of entering a joint venture to bring Hutchison’s Park n’ Shop supermarkets to the country.

Hutchison recently bought 60 percent of SM’s Health and Beauty and Family Drugstore and its 61 branches.

The SM group was left with the remaining 40 percent of the venture, called Watson Personal Care Store Inc.

"It started with Watson and so it’s open-ended from there," Sio said when asked about a possible tie-up for the supermarket chain.