SM Reports 12% Growth in Recurring Net Income in First Nine Months

(04 November 2015. Pasay City, Philippines) SM Investments Corporation (SM) reported a 7% growth in consolidated net income to PHP19.4 billion for the first nine months of the year. Excluding extraordinary items, recurring net income grew 12%. Consolidated revenues grew 7% to PHP206.2 billion for the period.

“Our strong results year-to-date reflect our ongoing focus on delivering footprint expansion across the country and on driving cost competitiveness in all our core businesses,” SM President Harley T. Sy said.

SM’s underlying earnings expansion was driven by a 21% growth in retail earnings and a 15% growth in property recurring net income. For the first nine months, banks accounted for 40% of SM’s consolidated earnings, property 39%, and retail 21%.

Retail operations under SM Retail Inc. reported sustained growth in total sales of 6.5% to PHP145.3 billion, while net income rose 21% to PHP4.6 billion.

The SM Food Retail Group (SM Markets) continued to expand in both urban and rural communities in various parts of Luzon, Visayas, and Mindanao. The group added 20 new stores, most of which are standalone Savemore stores. From historically operating anchor stores based in malls, SM Markets today follows a multi-format growth strategy to address the lack of organized retail in many parts of the country. SM Markets also recently invested in the minimart business with Alfamart, a highly successful minimart operator in Indonesia, and forged partnerships with WalterMart and Citymalls to further facilitate its provincial growth. The acquisition of existing chains of stores is another part of its growth strategy, the latest of which was the acquisition of three stores of Cherry Foodarama.

THE SM STORE will maintain its strategy of growing as an anchor store in SM Malls which are targeting expansion in the provincial areas. THE SM STORE continues to be the leading player in the country’s department store business, enjoying a wide-reaching and loyal customer base. It competes on the basis of providing the widest assortment of products and services, complemented by well-designed stores.

In end-September 2015, SM Retail had a total of 294 stores, comprising 51 THE SM STORES, 41 SM Supermarkets, 43 SM Hypermarkets, 130 Savemore stores, and 29 WalterMart stores.

As of the first nine months, the total gross selling area of all 51 SM STOREs stood at 682,997 sqm.

BDO Unibank, Inc. (BDO) recorded net interest income growth of 12% to PHP41.8 billion in the first nine months, with net income up 5% to PHP17.6 billion.

Gross customer loans grew 19% to PHP1.2 trillion and total deposits rose by 12% to PHP1.6 trillion.

The third-quarter results reflect the completion of BDO’s acquisition of One Network Bank, the largest rural bank in Mindanao, in July, adding over PHP20 billion to BDO’s total loans and deposits.

The consolidated net income of SM Prime Holdings, Inc. (SM Prime) increased 70% to PHP22.9 billion in the first nine months of 2015. Excluding PHP7.4 billion of one-time trading gains in the first quarter of 2015, recurring net income increased by 15% to PHP15.5 billion in the nine-month period.

Consolidated revenues increased 9% to PHP52.2 billion in the period that ended September 30. Rental revenues from retail and commercial spaces increased by 11% to PHP29.4 billion in the period. The housing group’s reservation sales grew by 19% to 10,297 units, reflecting a 22% increase in value to PHP28.4 billion from PHP23.3 billion in the same period last year. 

Balance Sheet
As of end-September 2015, the total assets of SM grew 7% to PHP735.5 billion. SM maintains a healthy balance sheet with a conservative gearing ratio of 38% net debt to 62% equity.

About SM Investments Corporation
SM Investments Corporation (SM) is one of the leading conglomerates in the Philippines with highly synergistic businesses in retail, banking, and property development. SM has evolved into one of the most highly respected companies in the country owing to its progressive approach to business and its comprehensive sustainability programs for its host communities through SM Foundation and SM Cares.

SM’s retail operations enjoy a strong brand franchise consisting of THE SM STORE and its food retail chains namely SM Supermarket, SM Hypermarket, Savemore, and WalterMart stores. SM’s property arm, SM Prime Holdings, Inc., is among the largest integrated property developers in the Philippines with interests in mall, residential, commercial, and tourism development. SM’s interests in banking are in BDO Unibank, Inc. (BDO), the country’s largest, and in China Banking Corporation (China Bank), the fifth-largest private bank. Combined, these two banks have a network of over 1,000 branches nationwide.

For further information, please contact:

Ms. Corazon P. Guidote
Senior Vice President for Investor Relations
SM Investments Corporation
Tel. No. (632) 857-0117