SM Investments earnings fall 69% on pandemic impact

SM INVESTMENTS CORP. (SMIC) posted a 69% profit drop in the first six months of the year as the coronavirus-related lockdown took a heavier toll on its businesses in the second quarter.

In a statement, Wednesday, SMIC said its consolidated net income shrunk to P7.1 billion from P23 billion last year. Consolidated revenues were lower by 21% to P185.5 billion, mostly due to its malls and banking businesses.

The property segment, through SM Prime Holdings, Inc., remained the biggest contributor with a net income of P10.4 billion or 61% of the pie. This is lower by 46% year on year due to the closure of SM’s mall network for most of the second quarter.

What helped spur the property business was the residential segment, which booked an 11% revenue growth to P23.7 billion.

The banking segment made up the second biggest chunk of SMIC’s net income, contributing 34% of the total.

BDO Unibank, Inc. posted profits of P4.3 billion, 79% down from last year due to some P22.4 billion in total provisions. This was offset by the 24% growth in profits from China Banking Corp., which stood at P5.2 billion at the end of June.

SMIC’s retail arm accounted for the balance of the pie, posting a net income of P522 million, lower by 91% from last year. It took most of its revenues from food stores located close to residential communities, which recorded a 15% growth in revenues.

“Our half-year financial results are within our overall expectations, given the context of the lockdown due to the COVID-19 (coronavirus disease 2019) outbreak, which had a greater impact in the second quarter,” SMIC President and CEO Frederic C. DyBuncio said in the statement.

“The current environment has been most challenging for our non-food retail and mall operations, which have adapted quickly to new customer needs and critical safety considerations. All our businesses will continue to prioritize health and safety as well as convenience for our customers and stakeholders,” he added.

As the decline in SMIC’s first-half performance is anticipated, investors simply wanted to ask, “How bad is it going to be?,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

“SM’s portfolio is exposed to the industries hit hard by the pandemic. The reported drop in net income will cause the stock price to adjust downward as investors extrapolate these results into the future,” Mr. Lisbona said. “Any recovery will really depend on how quickly a vaccine can be developed and released to the public.”

Shares in SMIC gained P5 or 0.58% to P870 each on Wednesday. —