SMIC earnings up 15% to P8.5 billion in first half

MANILA, Philippines - SM Investments Corp. (SMIC) said its net earnings rose 15 percent in the first half of the year, largely driven by solid growth across all its business units led by retailing, property development and banking, prompting the Sy-owned holding firm to raise its full-year income growth target from 12 percent to 14 percent.

Consolidated net income reached P8.5 billion during the period under review compared with only P7.4 billion the previous year. Revenues likewise grew 15 percent to P85 billion while EBITDA amounted to P18.4 billion for an EBITDA margin of 22 percent.

For the rest of the year, SMIC is spending P21.9 billion for the continued expansion of its core businesses.

“SMIC exceeded its growth targets, as all our core businesses rode on the strength of the Philippine economy. With a brighter forecast for the rest of the year, we are more confident of attaining our full year objectives,” company president Harley T. Sy, said.

With the second half a traditionally strong period for corporations, along with the positive outlook for the remaining six months of the year, SMIC chief finance officer Jose T. Sio said the company is most likely to post a 14 percent hike in net income this year.

Retailing contributed the most to the year’s net income with a 35 percent share. This was followed by banking and shopping malls, which accounted for 28 percent and 24 percent, respectively. The emerging property group chalked in 13 percent.

The retail group posted a first half net profit of P2.8 billion, up 25 percent from P2.2 billion, due to gains in its food business and greater operational efficiency. Total retail sales went up 12 percent to P63.4 billion.

The group opened nine new retail stores since the start of the year, boosting the total branch network to 125. For the rest of 2010, the group will launch three more department stores, three supermarkets, six SaveMore branches and four hypermarkets.

SMIC’s mall unit, SM Prime Holdings, reported a 10 percent rise in consolidated net income to P3.8 billion on revenues of P11.3 billion. The results include the operation of the company’s three malls in mainland China located in the provinces of Jin-Jiang, Xiamen and Chengdu.

Banking arm Banco de Oro Unibank Inc.’s net profit surged 94 percent to P4.1 billion and is likely to hit P8.1 billion by yearend. Another bank unit, China Banking Corp., reported net earnings of P2.1 billion or an increase of eight percent.

SMIC’s real estate operations, meanwhile, yielded a 39 percent growth in net income to P1.7 billion, mostly coming from residential arm SM Development Corp. and the leasing activities of the commercial properties group as well as the resort projects of Costa Del Hamilo. Revenues from real estate operations jumped 59 percent to P5.2 billion.

By the end of 2011, SM Hotels will have a total of 810 rooms in its portfolio from only 260 rooms. The group will open in September Radisson Blu, located in Cebu, which houses a total of 400 units.

SMIC is currently the largest player in the convention business with 27,278 square meters of total leasable space.   Revenues from the convention business went up ninepercent to P121 million.