MANILA, Philippines — A shutdown of malls early in the year and continuing mandated delays in rental payments when the economy reopened pulled down SM Prime Holdings Inc.’s net income as of September.
In a disclosure to the stock exchange on Monday, the property unit of the SM Group reported a consolidated net income of P14.4 billion in the first 9 months, down 48% year-on-year.
The financial performance was greatly hurt by operations of SM Supermalls, whose revenues sank 57% annually to P18.3 billion from January to September. That drop more than offset a resilient residential property business that increased revenues 7% to P34.2 billion.
Shares at SM Prime closed down 0.87% to P34.2 apiece on Monday.
“SM Prime’s core businesses, primarily its malls, showed slight recovery as the government started to re-open more industries to help the economy going in to the second half of the year,” Lim said, without citing data to show improving numbers.
“We have also implemented tighter controls on our expenses achieving a major reduction in operating expenses quarter on quarter,” he added.
SM Prime operates over 90 SM Supermalls nationwide, the largest mall chain in the country, and therefore the most that suffered when shopping centers were forced for close most shops during lockdowns from March to June. Together with the shutdown, government also ordered rental payments deferred to ease the financial burden on small firms renting space in these malls.
That rent reprieve continues for the next 60 days from last month under Republic Act 11494 or the Bayanihan to Recover As One Act. As a result, 9-month rental income of SM Prime plummeted to P16.8 billion, down 52% year-on-year.
The property segment partly tempered the financial damage from a slump in mall revenues. SM Development Corp., the company’s real estate arm, recorded an operating income of P14.1 billion as of September, up 13% from year-ago levels.
Earnings were propelled by rising reservation sales that reached P66.7 billion, slightly higher than the P66.4 billion posted a year ago. “With the resumption of construction in new and expanding SMDC projects, the company is expecting to add more units in its inventory…,” the Sy-led firm said.
Commercial spaces, meanwhile, collected P3.7 billion in revenues in the first 3 quarters, while operating income reached P3.3 billion. SM Prime did not provide comparative figures for the data.
Revenues from hotels and conference centers for rent, meanwhile, reached P1.3 billion amid a tepid tourism environment and restrictions on large gathering imposed by the pandemic.
“As we work together to bounce back from these challenges, SM Prime will stay committed to finding solutions to serve the ever-changing needs and aspirations of its customers, while providing growth to all our stakeholders and maintaining a safe and healthy environment for everyone,” Lim said.
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Article and Photo originally posted by Philippine Star last October 26, 2020 5:25pm and written by Ian Nicolas Cigaral.
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