SM Prime profit up 9% in third quarter despite typhoon damage

MANILA, Philippines - Shopping mall giant SM Prime Holdings Inc. reported a nine percent rise in its third quarter net income this year despite the damage caused by recent typhoons.

In a financial report filed with securities regulators, SM Prime said net earnings rose to P1.7 billion during the period July to September this year on the back of 14 percent growth in revenues to P5 billion.

This brings SM Prime’s net income for the nine months ending September this year to P5.1 billion, up eight percent from the previous level. Revenues went up 14 percent to P14.6 billion. Income from operations improved by 11 percent to P7.7 billion.

The results include the operations of SM’s three malls in China located in the cities of Xiamen and Jinjiang in Southern China, and Chengdu in Central China. In terms of share, the SM malls in China contribute five percent to total revenues and two percent to net income.

Hans Sy, president of SM Prime, credited the resiliency of OFW remittances to the steady growth of the company. “The resiliency of OFW remittances augurs well for the company as we move into the Christmas season. Our positive third quarter results are a validation of the company’s sound operating principles and deep understanding of its markets,” he said.

“SM Prime performed up to par and realized its objectives for the period, notwithstanding earlier fears arising from the impact of the global recession. Although there is some disruption in the operations of SM City Rosales and the basement of SM City Sta. Mesa brought about by the recent typhoons, these have minimal impact on the company, as the physical damage and business disruption are covered by insurance,” Sy noted.

Sy said the company is working double time to ensure that SM Sta. Mesa and SM Rosales could resume full operations by Nov. 26.

“We’re speeding up the reopening of the affected malls so that employees who depend on these malls for their livelihood may go back to work immediately,” he said.

From January to September this year, rental fees grew 15 percent to P12.7 billion, accounting for the largest share of SM Prime’s consolidated revenues. The increase came from both same store rental growth, which rose five percent and from additional floor space created by a new mall and several expansion projects completed in the first nine months of 2009.

Among the new malls that opened this year were SM City Naga and SM Center Las Piñas while those expanded were SM City Rosales in Pangasinan, SM City Fairview, and SM City North EDSA through its Sky Garden.

Combined, the new mall and the expansion projects added approximately 141,000 square meters to SM Prime’s total gross floor area (GFA).

Cinema ticket sales amounted to P1.3 billion, eight percent higher than the previous level.

Meanwhile, operating expenses reached P6.9 billion or an increase of 18 percent from P5.8 billion a year earlier, due mainly and expectedly to the opening of new malls.

SM Prime is slated to the launch within the fourth quarter SM City Rosario in Cavite, bringing the group’s total number of malls operating nationwide to 36.