SMIC profit up 16% in H1

MANILA, Philippines - SM Investments Corp. (SMIC), the investment holding firm of the country’s richest man Henry Sy Sr., accelerated its earnings growth in the first half, driven by its banking business.

The mall and banking conglomerate recorded a 16-percent jump in net income to P12.6 billion in the first half. In the same period last year, SMIC’s profits picked up 13 percent to P10.9 billion.

The strong performance in the first semester allowed the company to stay ahead of its 12-15 percent annual income growth target, its top executive said.

“Our first half financial results is ahead of our full-year target as BDO delivered a stellar performance from trading gains,” said SMIC president Harley T. Sy.

Revenues climbed 16 percent to P122.1 billion in the first six months from P105.1 billion the previous year.

“The growth was driven by the increase in the profits of the banking and mall businesses,” SMIC said in a statement.

SMIC derived 49.7 percent of its income from banking (BDO Unibank), 20 percent from retail operations (SM Retail Inc.), 18.4 percent from commercial centers (SM Prime Holdings Inc.) and 11.9 percent from real estate (SM Development Corp. and SM Land Inc.).

“We expect the second half to normalize but still at the back of the strong growth expectations of all our core businesses,” Sy said.

“The Philippines is in a unique position to support a vibrant domestic consumer sector. This gives us reason to pursue our growth and expansion plans over the medium term,” he added.

Among SMIC’s operating units, its banking business led the growth.

BDO, the country’s largest bank in terms of assets, doubled its net income to P14.1 billion in the first half from P5.8 billion as net interest income rose 14 percent to P20 billion and non-interest income surged 81 percent to P20.3 billion.

The mall operations, through SM Prime, posted a 15-percent growth in net income to P5.6 billion from P4.9 billion in the same period last year.

Revenues of the country’s largest mall operator and developer increased 14 percent to P16.6 billion from P14.6 billion on the back of strong consumer spending and new shopping malls.

By yearend, SM Prime will have 48 malls in the Philippines and five in China with an estimated combined gross floor area of seven million square meters.

Late in May, SMIC consolidated all its property assets into SM Prime in a P279-billion transaction that created Southeast Asia’s largest integrated property firm.

For retail operations, SM Retail said it recorded a net income of P3.1 billion, up 9.9 percent from a year ago, supported by a 13.3-percent growth in sales to P83.6 billion.

As of end-June, SM Retail had a total of 209 stores consisting of 48 SM Department Stores, 38 SM Supermarkets, 37 SM Hypermarkets and 86 SaveMore stores.

SMIC allotted a record P65 billion for its capital expenditures this year, up from P56 billion in 2012, to support an annual profit growth goal of 12-15 percent for 2013-2015.

In another development, for the property holding firm of the land-rich Ortigas clan, SMIC is looking to “sit down and also see how we can professionally run the company for the interest of all,” said SMIC chief finance officer Jose Sio.

The battle for control over OLCP Holdings saw the Ayala and Sy families backing a different Ortigas group.

“At 42 percent, we are happy already provided the company is run properly and the income growth is well,” Sio said.

“One of the option we are looking is possibly bringing the company into initial public offering,” Sio said, adding that this will allow shareholders to see the real value of the company.