Our Financial Management Strategy for Growth

At SM, we have diverse businesses that each require their own financial strategy.  The Property and Banking Groups need capital as they pursue their growth agenda.  The Retail Group on the other hand employs a capital light model to keep costs variable and enable them to navigate through a competitive and low margin environment.

We look at each of our businesses on a stand-alone financial basis. We use sector-specific metrics to measure performance and validate that their financing plans are appropriate to capex needs and financial capacity. In this way, they remain competitive and relevant in the markets they operate in. At the same time, we encourage our group businesses to work together, using cross-sector opportunities to further engage our customers, and deliver higher growth and lower costs.  

The Philippines remains underserved in our core business sectors, providing enormous opportunities for us to develop modern retailing, property and banking markets in underpenetrated regions. Economic and demographic growth remains high, especially outside Metro Manila, and we believe this will be sustained over the long-term.  

We implement an integrated financial strategy across our businesses – a strategy that is aimed at growth that is flexible in the face of market developments and that benefits from the inter-relatedness of our core businesses. By adopting a long-term approach, we are able to meet our financial requirements, fulfill our stakeholder objectives and deliver our business goals.

Franklin C. Gomez
SVP for Finance
SM Investments Corporation

The Philippines remains underserved in our core business sectors, providing enormous opportunities for us to develop modern retailing, property and banking markets in underpenetrated regions.

As we pursue growth, all businesses are guided to maintain a strong balance sheet that provides financial flexibility.  At the end of 2019, the Group’s Net Debt to Total Equity ratio stood at 36:64.  The Group’s debt profile is skewed towards longer term fixed rates to reduce volatility amidst uncertainty.  This allows us to invest in new businesses apart from the core while paying regular dividends to our shareholders. This is outlined in our Economic Value Table below.

Overall, we implement an integrated financial strategy across our businesses – a strategy that is aimed at growth that is flexible in the face of market developments and that benefits from the inter-relatedness of our core businesses. By adopting a long-term approach, we are able to meet our financial requirements, fulfill our stakeholder objectives and deliver our business goals. Our financial strategy helps us to remain strong, sustainable, responsible and a leading player in all our markets for the long-term.

2016-2019 Economic Performance

(Figures in PHP Millions)

SM Investments Corporation and Subsidiaries2016201720182019
Economic Value Generated367,205400,345453,900506,011
Economic Value Distributed333,789366,098412,832453,706
Operating Costs269,510290,795328,108355,292
Employee Wages and Benefits18,83820,39324,91131,070
Payments and Providers of Capital26,17031,42034,24940,705
Payments to Government18,85723,02624,89925,933
Community Investments414464665706
Economic Value Retained33,41634,24741,06852,305