SM Prime net income grew by 13% to PHP18.4bn in 2014

(23 February 2015, Pasay City, Philippines) SM Prime Holdings, Inc. (SM Prime), one of the leading integrated property companies in Southeast Asia, reported a full year consolidated net income growth of 13% to PHP18.4 billion in 2014 on the back of a revenue growth of 11% to PHP66.2 billion.
“The encouraging financial performance in 2014 reiterates that the transformation of SM Prime into a property conglomerate is bearing fruits and trending above management expectations. We expect this performance to be surpassed this year as the company pursues its 2015 expansion plans with the opening of four new malls, the completion of FiveE-comCenter and the launch of five new housing projects. This is to complement the expansion of existing malls and on-going construction of high-rise residential development projects.” SM Prime President Hans T. Sy said.
SM Prime’s rental revenues from retail and commercial spaces grew by 13% to PHP36.5 billion in 2014 from PHP32.2 billion in 2013. Rental revenues accounted for 55% of SM Prime’s consolidated revenues. Management attributed the increase in rental revenue mostly to the new malls that opened and the expansion of existing malls in 2013 and 2014, namely, SM Aura Premier in Taguig, SM City BF Parañaque, Mega Fashion Hall in SM Megamall in Mandaluyong, SM City Cauayan in Isabela province and SM Center Angono in Rizal province, which have a combined total gross floor area of 564,000 square meters. Growth was also partly due to TwoE-comCenter at the Mall of Asia Complex which opened in 2012 and is now fully occupied. Meanwhile, same-store rental grew by 7%, sustaining the growth posted in 2013.
SM Prime’s housing group, which accounted for 33% of consolidated revenues, continued to show improvements. The group recorded a 7% increase to PHP22.2 billion in real estate sales in 2014 mainly driven by the increase in the pace of construction of sold units in Grace Residences in Taguig, Shell Residences in Pasay, Breeze Residences in Pasay, Green Residences in Manila, Grass Residences Phase 2 in Quezon City and Trees Residences in Quezon City. Meanwhile, reservation sales hit PHP35.9 billion in 2014 from only PHP26.3 billion in 2013. Most of the reservation sales were from Shore Residences and Air Residences projects in Pasay and Makati respectively.
The mall’s cinemas generated ticket sales of PHP4.3 billion, an increase of 14% during the period under review. The increase was driven by the opening of additional digital cinemas in the new malls and expanded malls and by the launch of international and local blockbuster movies. Excluding the new malls and expansions, same-store cinema ticket sales grew by 10%. Meanwhile, amusement and other revenues increased by 8% to PHP3.3 billion in 2014. The increase was mainly due to the strong patronage of amusement rides and additional recreational facilities provided by management in various malls. Cinemas and amusements accounted for 12% of SM Prime consolidated revenues in 2014.
SM Prime’s consolidated costs and expenses increased by 8% to PHP38.6 billion in 2014 compared with last year’s PHP35.7 billion. The bulk of the increase came from depreciation expenses attributed to new malls added in the past 12 months. Film rentals were also higher as it corresponded to the growth in cinema ticket sales in 2014.
Consolidated costs of real estate was PHP12.3 billion in 2014, up by 3% from last year. The slower increase in expenses was attributed to improving cost efficiencies as well as rationalization of expenses. This resulted to improvement in gross margin to 45% in 2014 from 43% the previous year. Meanwhile, net income margin was sustained at 21%.
SM Prime’s overall interest expense increased by 11% to PHP4.1 billion in the 2014 compared with PHP3.7 billion the previous year. The increase was due to new bank loans and the PHP20 billion retail bond availed in third quarter of 2014.
SM Prime is an integrated property development company that acts as a catalyst for economic growth, committed to deliver innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people.
For further information, please contact:
Alex Pomento
Vice President, Investor Relations
SM Prime Holdings, Inc.
E-mail: alex.pomento@smprime.com
Tel. no.: +632 862 7940
Monday, February 23, 2015