SM Investments Corp. (SMIC), the holding firm of the Sy family, on Wednesday said it is spending between P75 billion and P90 billion this year, higher than the previous year’s P73 billion in spending.
The company said a chunk of its capital expenditure (capex) for the year will be spent on the property arm and shopping-mall operator SM Prime Holdings Inc., while P5 billion each will be spent on banking and retail business.
“We will continue to capitalize on our strengths and take advantage of the robust economy to create growth,” said Frederic C. DyBuncio, SMIC president and CEO. “Our core businesses face positive market conditions and expansive opportunities for new market development across the country, while our new investments offer additional long-term growth,” he added.
DyBuncio said the company may not enter the fray as the country’s third telecommunications company, since it doesn’t have the expertise and may not complement its current businesses, which spans shopping malls to banking. It also has equity investments in other sectors, such as mining and gambling.
Its equity investments in 2Go Group Inc., meanwhile, is meant to support its retail business, since it has shopping malls nationwide. The company is contemplating to launch its own e-commerce platform.
Franklin C. Gomez, SMIC senior vice president for finance, said most of the capex will be internally funded.
SM Prime, however, may issue its own P10 billion in bonds, still under shelf registration with the Securities and Exchange Commission.
SMIC said its net income grew 6 percent to P32.9 billion in 2017, from P31.2 billion in 2016, while consolidated revenues rose 9 percent to P396.1 billion, from P363.4 billion last year.
Property accounted for 40 percent of total earnings, with banks comprising 38 percent and retail at 22 percent.
Operations under SM Retail Inc., which consist of nonfood, such as the department stores and specialty stores, and food stores, reported total revenue growth of 7 percent to P297.4 billion, while net income stood at P10.4 billion.
“The underlying performance of our retail operations remained good, led by strong growth in our higher margin—specialty retailing—and with the addition of the successful Miniso variety-store chain during the year,” DyBuncio said.
The food group, which includes supermarket, hypermarket, Savemore and WalterMart, continued to expand mostly in provincial areas in 2017. The group added 42 new stores, most of which are stand-alone Savemore stores. SM’s food group continues to expand in various regions of the country with a multiformat growth strategy to address the lack of organized retail.
At end-December 2017, SM Retail had a total of 2,032 outlets, comprising 59 department stores, 1,299 specialty retail outlets, 52 supermarkets, 47 hypermarkets, 181 Savemore, 46 WalterMart and 348 Alfamart stores. A total of 341 outlets were added in 2017 across the retail-business portfolio.