Our Vision and Commitment
Sustainability is at the heart of our vision – to build an ecosystem of sustainable businesses that are catalysts for responsible development in the communities we serve.
We are committed to partner with our host communities to provide a consistently high standard of service to our customers, look after the welfare of our employees and deliver sustainable returns to our shareholders, at all times upholding the highest standards of corporate governance and environmental stewardship in all our businesses.
Our Values
What We Stand For
Drive and Enthusiasm, Entrepreneurship, Leadership, Integrity, and Teamwork are the values that guide us every day.
When we work together as one SM team, we provide the best possible experiences for our customers.
Drive and Enthusiasm
We show up, we get things done and we make it happen.
Leadership
We always consider the wider good – we’re here to make things better.
Integrity
We do the right thing even if no one is looking.
Teamwork
We work as a team guided by family values.
Entrepreneurship
We find the places there’s a problem to be solved – and seize the opportunity.
Our Board's Vision
To Our Shareholders,
At the heart of how we do business at SM is our understanding of the important role we play in
serving and building communities across the Philippines. We are a leading player in a growing, rapidly developing country with many communities to serve. Our businesses are catalysts for their growth.
As we grow too, we are aware of the many thousands of business partners and individuals who depend upon us from their livelihood, and the millions of Filipino customers who trust and rely on SM for access to modern retailing, banking, property and our other services. We have a responsibility to these, our stakeholders, and to the unique natural environment in which we operate.
In 2022, with the pandemic largely behind us, we were able to return to serving Filipinos and helping lead responsible development across the regions of the country.
In doing so, our businesses delivered record financial results last year. This came from a rapid return to normal economic activity, employment and spending by Filipino consumers. We also benefited from the deliberate actions we took during the difficult times to strengthen our businesses, support our stakeholders and acquire new assets in high growth sectors. These priorities have begun to pay off. SM is a stronger, more dynamic and more responsible ecosystem today.
We would like to thank our leadership and people for their dedicated efforts, our private and public sector partners for their continued support, and our customers for their ongoing loyalty. We would also like to thank our Board members for their service and our shareholders for their confidence in us.
Despite the continuation of global uncertainties the Philippines remains a bright spot, and SM remains a strong player with a growth mindset and many opportunities ahead. We look forward to serving more Filipinos in the future.
Our President’s Report
To our Stakeholders,
I am very pleased to report that 2022 was an exceptional year for the SM group. It was year
of remarkable growth, benefits to our communities, impact towards our key advocacies, and record results.
Behind this was the resurgence of economic activity that come following the removal of Covid era restrictions and which enabled us to open up and perform for our stakeholders.
Philippine GDP grew by 7.6%, remittances by overseas Filipino workers grew by 3.6% and unemployment fell to 4.3%. This created an environment of economic activity, active growth and consumer confidence.
All of our businesses participated in this. We were conscious of inflationary risks and adapted our business operations and customer offerings accordingly. As a result, all our businesses delivered good growth.
Our banks started the year from a position of strength, having already recovered from the pandemic in 2021. In 2022 they showed revenue growth across their core activities, with lower NPLs than provided for and strong balance sheets in place. Rising interest rates helped improve margins and positive business sentiment helped deliver profit growth.
Normalized movement and social activity resumed from the second quarter onwards and resulted in strong growth in our retailing businesses, particularly in nonfood formats. Our wide portfolio of brands experienced both pent up ‘revenge spending’ as consumers resumed shopping and going out, and also sustained spending as they returned to higher earnings
and daily social activity.
The optimism of consumers in turn enabled our malls to return to full rental arrangements with their tenants by the mid-year. With high tenant occupancy and foot traffic frequently above pre-pandemic levels, our property arm, SM Prime, also delivered strong growth.
Additionally, we were able to improve operating margins across our businesses due to the rigorous review of efficiencies and cost saving actions taken over the last two years.
Overall SM grew consolidated revenues by 28% to PHP554 billion and earnings by 53% to PHP62 billion in 2022. This exceeded pre-pandemic performance.
Business Expansion
At the same time, we returned to our pre-pandemic strategy of expanding our footprint nationwide, opening new stores, malls, residences and bank branches, allowing us to reach and serve more Filipinos. As economic growth strengthens in the provinces, we opened 348 retail stores, added 300,000 sqm of mall floor area and 111 new bank branches outside Metro
Manila in 2022.
Heading into 2023, we remain optimistic as a group.
Opportunities for growth in the Philippines remain high.
Our businesses are well positioned and have clear strategies to participate in this.
New Businesses
As a strategy to participate in emerging high growth sectors we have invested in several related businesses in recent years, identifying where we can add value to our partners from synergies within the SM ecosystem. In 2022 we increased our involvement in the logistics sectors, increasing our stake in 2GO to 52.9%, and in the geothermal steam for renewable energy generation, acquiring 100% of Philippine Geothermal Production Company (PGPC). We are particularly optimistic about these opportunities.
All of the companies active in our equity investment portfolio are currently profitable. Indeed, they collectively contributed 11% of consolidated earnings last year and we expect this to increase over time.
Community Impact
As we grow, we work to ensure that we create and share value with our partners and our communities, helping build strong social foundations. Last year we carried on with our programs providing access to food security through farmer training, quality education with our school building and scholar programs, and healthcare with our facilities building and medical missions.
SM Supermalls was the single biggest entity to vaccinate Filipinos in the country as it administered more than 10.5 million doses of Covid-19 vaccines nationwide by the end of 2022 using its nationwide mall network as vaccination centers.
We also continue to champion inclusive societies. Within our own workplace we recently appointed our Group Diversity Officer to develop and ensure a group-wide approach in promoting diversity, equity, inclusion and belonging among our people. This mirrors the same inclusivity we offer to our customers and other stakeholders.
Climate Advocacy
We partnered with WWF to host a conference for private and public sector action towards climate change last year and to launch a private sector climate alliance. The Philippines’ unique exposure as one of the most at risk countries to climate change calls for concerted efforts, both towards reducing emissions and also towards critical adaptation efforts, where SM remains a leading advocate. We took actions on both fronts.
SM Investments published its Climate Position this year (see pxx) and the group made a number of moves towards using, funding and driving renewable energy growth in the Philippines. SM Prime notably achieved over 50% of energy use in its malls coming from renewable sources last year. BDO meanwhile laid out its plans towards lower support for coal as an energy source, in line with national objectives.
Recognitions
It was gratifying to be recognized by leading awards bodies for our efforts in a number of these areas. I am particularly proud that SM Investments was Top Rated
by Sustainalytics ESG rating agency in two categories last year – top among diversified financial companies globally, and top among all companies in Asia Pacific. Additionally, Forbes Magazine included SM among its World’s Best Employers. Meanwhile 6 companies within the group were highly recognized by the ASE AN Corporate Governance Scorecard awards.
On behalf of the SM group, I’d like to thank our customers, our people, our partners in both business and in the public sector, and our many stakeholders across the country for continuing to trust in us and support us in our ambitions to grow and help serve our communities nationwide. We are inspired by the people we work with and motivated to do more.
Heading into 2023, we remain optimistic as a group. Opportunities for growth in the Philippines remain high. Our businesses are well positioned and have clear strategies to participate in this. We are focused on expansion around the country and on ensuring that our ecosystem of businesses work together to create shared value for all our stakeholders.
Thank you.
Frederic C. DyBuncio
President and CEO
Our Business Footprint
SM Retail
We’ve Got It All for Every Filipino
77.3%
Effective Interest
PHP378.1bn
Revenues
72
THE SM STORE
215
Savemore
1,611
Brand Affiliates
1,412
Alfamart
65
SM Hypermarket
54
SM Hypermarket
82
Waltermart
1
MindPro
BDO Unibank, Inc.
We go where we are needed
45.3%
Effective Interest
Php149.2bn
Net Interest Income
Php57.1bn
Net Income
1,650
Branches in the Philippines
4,655
ATMs
2
Foreign Branches
China Banking Corporation
Sustaining high performance and excellent governance standards
22.5%
Effective Interest
PHP45.6bn
Net Interest Income
PHP19.1bn
Net Income
640
Branches
1,044
ATMS
SM Prime Holdings
Creating Meaningful Communities
22.5%
Effective Interest
PHP45.6bn
Net Interest Income
PHP19.1bn
Net Income
640
Branches
1,044
ATMS
PORTFOLIO INVESTMENTS
Capturing high growth opportunities in the emerging Philippine economy
26.6%
Belle Corp.
52.9%
2GO Group
34.1%
Atlas Mining
71.3%
PULS
95%
NEO Subsidiaries
34%
NEO Associates
34%
CityMall
74.1%
Goldilocks
51%
Airspeed
Awards
How We Create Value
Learn MoreOur Valued Resources
Following our value creation framework, we mobilize our capitals-our most valued resources-to work together to achieve sustainable business objectives and deliver long-term value for all our stakehoders.
We keep an eye on the future
Identifying Risks And Opportunities
· Trends that Shape Changing Demographics
· Climate Related and Geopolitical Risks
· Limitation in Resources
· Shift in Human Capital Skills
· Underlying Technological Innovation
Why we’re here
· Ecosystem that serve as growth drivers in provinces
· Real Impact for Communities
· Stewardship of the Environment
· Empowered Teams that Deliver
For us good governance means
· Sustainable Business Vision from Principals and Board
· Capable and Innovative Management Teams Ensuring Delivery
· Clear, Communicated and Measurable Objectives
· Customer-Focus, Service-Driven Culture
What’s Important
We identified what are critical for us in order to create consistent value that can be shared by our stakeholders aligned to what matters to them.
What We Delivered
We work on critical issues at all levels of leadership from our strategy to day-to-day delivery of our products and services – clearly exhibited the values that the SM brand represent.
Our Impact
We strive for transparency and accountability across all areas of our business, and are focused on becoming a global leader in sustainable business practices.
