SM Prime net profit up 15% to P2.43B in Q1

MANILA, Philippines - SM Prime Holdings Inc., the country’s larger retail landlord, said its net earnings increased by 15 percent in the first quarter of the year to P2.43 billion on the back of higher revenues arising from the addition of new malls and the strong growth of its China operations.

In a briefing following the company’s annual stockholders meeting yesterday, SM Prime president Hans T. Sy said the firm’s “better-than-expected performance is a welcome development and reinforces its confidence in the local economy. He expects the company to sustain its positive momentum for the rest of the year.

Sy said the results also show SM’s ability to thrive in competitive environments in China.

Jeffrey C. Lim, chief financial officer of SM Prime, said consolidated revenues went up by 16 percent to P7.03 billion while EBITDA rose 13 percent to P4.76 billion, resulting in an EBITDA margin of 68 percent. Same store rental growth climbed eight percent, an improvement from the seven-percent growth reported the previous year.

The results include the operations of the four SM malls in China, which are located in the cities of Xiamen and Jinjiang in Southern China, Chengdu in Central China, and Suzhou in Eastern China, Lim said.

The four China malls performed remarkably, with net income growing 44 percent to P140 million on the back of a 34.8 percent jump in gross revenues to P620 million. Lim attributed the robust growth to an increase in average occupancy rate, lease renewals and the opening of a lifestyle mall in Shanghai. 

Lim said the malls in China currently have an average occupancy rate of 96 percent.

Consolidated rental revenues contributed 86 percent to the total, increasing by 15 percent to P6.03 billion. Additional rental space came from SM City Tarlac, SM City San Pablo, SM City Calamba, SM City Novaliches, SM City Masinag and the recently opened SM City Olongapo. These malls put in 427,000 square meters (sqm) to the company’s total gross floor area and presently register an average occupancy rate of 93 percent.

Earlier this year, SM Prime opened to the public SM City Olongapo, its first mall in the province of Zambales. For the rest of 2012, the company is scheduled to open SM City Lanang in Davao City, SM City General Santos in Southern Mindanao, SM City Consolacion in Cebu, SM City San Fernando in Pampanga, and SM Chongqing in China.

By the end of the year, SM Prime’s mall network will increase to 46 malls in the Philippines and five in China with an estimated combined GFA of 6.3 million sqm. or an increase of 550,000 sqm.

For 2013, SM Prime will open two shopping centers in Metro Manila-SM Taguig and SM in BF Sucat, Parañaque. It will also be expanding existing malls in Clark and Bacolod.   When completed, the new malls will provide an additional 521,000 sqm.

SM Prime’s total GFA is expected to increase further with the opening of its malls in Tianjin (530,000 sqm) and Zibo (160,000) in 2014.