SM Investments Corp. (SMIC) posted an 8-percent increase in consolidated net income to P45.9 billion in the first half from P42.6 billion a year earlier, supported by sustained consumer demand and growth across its diversified businesses.
Consolidated revenues rose 6 percent to P339.2 billion from P319.2 billion in the same period last year, SMIC said on Wednesday.
Banking remained the group’s biggest earnings contributor, accounting for 47 percent of net income, followed by property at 27 percent, retail at 15 percent and portfolio investments at 11 percent.
Franklin Gomez, SMIC executive vice president, said the group’s diversified portfolio helped cushion weaker performance in some businesses during the first half.
“If there’s anything that’s been highlighted by our performance, it’s the strength of the portfolio of businesses that we have,” he said during the company’s first-half results briefing.
Gomez said some businesses could face a more challenging environment while others, such as mining and retail, could provide stronger earnings.
“In some cases, residential or whatever is in a more challenging environment, or even commercial for that matter. We have mining again that’s injecting a big boost to our earnings and retail continues to be very steady.”
SM Retail’s net income increased 5 percent to P8.9 billion while operating income grew 12 percent to P14 billion as the business managed expenses amid higher inflation.
The segment saw steady sales growth in its supermarket and minimart formats, while specialty retail benefited from higher sales in the Home, Other Fashion and Kids categories.
SM’s mall business also continued to benefit from consumer activity, with revenues rising eight percent to P41.8 billion on higher occupancy, stronger tenant sales and improved operating efficiency.
SM President and CEO Frederic DyBuncio said that consumer spending remained resilient during the first half despite economic challenges.
“Consumer spending is holding up,” he said, noting that the main factors dampening economic growth were the pullback in investments and government spending.
The group’s banking businesses posted mid-teens loan growth, remaining its largest earnings contributor.
Portfolio investments also improved, driven partly by the turnaround of Atlas Consolidated Mining and Development Corp. amid higher copper prices.
DyBuncio said SM Investments still planned to transfer its mining assets, including its stake in Atlas, to another listed entity within the group.
“The intention for SMIC is to completely move out from the mining sector,” he said.
SM Investments holds about a 34-percent stake in Atlas. DyBuncio said the transfer of that stake to another entity would likely take place next year along with the accompanying restructuring for the receiving entity.
2GO Group Inc., meanwhile, posted revenue growth across its businesses, supported by higher passenger volumes in its travel segment and increased logistics volumes from online purchases.
Philippine Geothermal Production Co. Inc. also recorded higher revenues following adjustments in energy prices.
Looking ahead, DyBuncio said the group remained optimistic about the second half, citing easing inflation and resilient household consumption.
“So far, the macro is showing pretty good signs,” he said.
SM ended the first half with total assets of P1.82 trillion and a capital structure of 31-percent net debt and 69-percent equity.
DyBuncio said the group would continue to invest while maintaining a disciplined approach to its finances.
“Our diversified portfolio, prudent balance sheet and disciplined approach to capital allocation position us well to continue investing in the Philippines and creating long-term value for our customers, communities and shareholders,” he said.
SMIC shares surged P16.00, or 2.66 percent, to close at P618.00 each on Wednesday amid a 0.63-percent rise for the benchmark Philippine Stock Exchange index.
