SM Investments (SM) Q2 2024 earnings summary

Executive summary

• Net income attributable to owners rose 10% year-over-year to PHP40.2bn on consolidated revenues of PHP301.4bn, reflecting double-digit earnings growth and a positive economic environment.

• Growth was driven by strong banking and property segments, with banking contributing 50% of net income and retail showing steady performance despite margin pressure.

• Food retailing continued to expand, with a recovery in non-food retailing in Q2 due to improved consumer spending.

• EBITDA increased by 6.6% to PHP83.3bn, with an operating margin of 23.4% and net margin of 18.3%.

• Successful USD500mn bond issuance under the USD3bn EMTN programme, oversubscribed by 3.2x.

Financial highlights

• Consolidated revenues reached PHP301.4bn, up 5% year-over-year; net income at PHP40.2bn, up 10%.

• Retail revenues grew 4% to PHP196.9bn; retail net income declined 9% to PHP7.6bn.

• Banking net income: BDO up 12% to PHP39.4bn; China Bank up 6% to PHP11.4bn.

• Property revenues increased 8% to PHP64.7bn; property net income up 13% to PHP22.1bn.

• Portfolio investments contributed 9% of total earnings, with Atlas Mining net income up 154% to PHP2.1bn and NEO Group net income up 8% to PHP1.1bn.

Outlook and guidance

• Group remains cautiously optimistic for 2024, with continued expansion including new malls in Cebu and Laoag and 157 additional Alfamart stores, supported by underlying economic strength and improved consumer spending.

• Investments in new ventures will be pursued as opportunities arise, funded by operations and capital raising.