SM Investments outpaces PH economy as first-half profit grows 8% to P46B

Insider Spotlight

• SM Investments grew first-half profit 8 percent to P45.9 billion, well ahead of the Philippine economy’s 2.6 percent expansion.
• Banking remained the biggest earnings engine at 47 percent, while property contributed another 27 percent.
• Consumer spending held up, with SM Retail profit rising 5 percent and mall revenue growing 8 percent.

SM Investments Corp. grew first-half net income by 8 percent to P45.9 billion, outpacing the Philippine economy as its banks, malls and retail businesses continued to expand despite a tougher operating environment.

The Sy family’s flagship company ended June with P1.82 trillion in assets, underscoring the scale of a business empire whose performance provides a broad read on Filipino borrowing, shopping and property spending.

Revenue rose 6 percent to P339.2 billion during the period.

The performance came as the Philippine economy grew just 2.6 percent in the first half, highlighting how SM’s earnings expanded at a much faster pace than the broader economy.

“The Filipino consumer was tested during the first half of the year but our businesses proved to be resilient. Steady demand across our consumer-led businesses plus solid contributions from our portfolio companies continue to reflect the strength of our diversified business model,” SM Investments president and CEO Frederic C. DyBuncio said in a statement on Wednesday. 

Banks remain the profit engine

SM Investments is the parent company behind businesses including BDO Unibank, China Banking Corp., property giant SM Prime Holdings and the unlisted SM Retail.

Banking generated 47 percent of group net income as loans grew at a mid-teens pace, while property contributed another 27 percent.

Retail accounted for 15 percent of earnings and other portfolio investments contributed the remaining 11 percent.

Consumers keep spending

SM Retail grew net income 5 percent to P8.9 billion, while operating income increased a faster 12 percent to P14 billion as the business kept expenses under control despite higher inflation.

Its malls showed similar resilience, with revenue rising 8 percent to P41.8 billion as occupancy and tenant sales improved.

Other bets add lift

SM’s portfolio companies also strengthened, led by a turnaround at Atlas Consolidated Mining on higher copper prices, while 2GO benefited from increased passenger and logistics volumes and Philippine Geothermal Production Co. gained from energy price adjustments.

SM ended the period with a capital structure of 31 percent net debt and 69 percent equity, while management said it remained positive on the second half but mindful of economic uncertainty.

SM Investment shares rose 1.16 percent to P609 apiece, valuing the conglomerate at over P730 billion. 

—Edited by Miguel R. Camus