SM Prime Holdings Inc., one of the largest property developers in Southeast Asia, said on Monday disclosed a 46-percent decline in consolidated net income in the first half of 2020 to PHP10.4 billion, from PHP19.3 billion during the same period last year.
The company’s rent income dropped by 44 percent to PHP13.1 billion in the first half of 2020 from last year’s PHP23.3 billion on the back of lower mall revenue of PHP14.4 billion from PHP28.1 billion.
In a statement, the company said its consolidated revenue for the first and second quarter of the year registered PHP43.7 billion, 23 percent lower from PHP57 billion in the first six months of 2019. “The first half of 2020 has been one of the most challenging periods we’ve faced as a company. With the government maintaining the implementation of quarantine protocols in most key areas in the Philippines where our businesses are, SM Prime is committed to sustaining its operations while adhering to the strict safety measures implemented by the government and continue providing convenience to our customers,” SM Prime president Jeffrey Lim said.
This is driven primarily by waived rent and rental discounts granted to tenants since the start of the quarantine measures in March, which amounted to PHP11 billion as of the end of June. The company said it has intensified its online strategy with the introduction of an e-commerce platform that allows its tenants to complement physical stores inside SM malls with an online interface for its customers, as well as providing pick-up points within the mall for online sales of its tenants.
Driven by concern for the safety of the customers, the company also promotes cashless transactions through digital payment options, provides extended dining areas around the mall with regular sanitation and disinfection, and partners with local farmers and public transportation services to supply fresh produce and transport people and goods safely and conveniently. SM Prime’s residential business, led by SM Development Corp. (SMDC), recorded PHP23.7 billion revenue in the first half of 2020, 11 percent higher from PHP21.4 billion in the same period last year. This accounts for 54 percent of the consolidated revenue of the company.
SMDC generated PHP42.4 billion reservation sales in the first six months of 2020, amidst the quarantine measures. Construction works on SM Prime’s new and latest residential projects have resumed, pursuant to the national government’s safety protocols. SM Prime cushions the effect of safety protocols on construction completion with its available inventory of 12,000 units as of June 2020. SM Prime’s commercial properties business’ revenue has grown 16 percent to PHP2.5 billion in the first half of 2020.
The office business of SM Prime has business process outsourcing (BPO) offices as primary tenants, which were allowed by the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) to continue its operations throughout the quarantine period.
The hotels and convention center’s business segment contributed PHP1 billion to the first half of 2020 consolidated revenues despite limited operations. The company’s biggest events center, the Mall of Asia Arena, was converted into a mega swabbing facility in partnership with various government agencies to help front-liners as well as returning overseas workers
SM Prime previously said it was allocating P100 million to beef up its e-commerce platforms to adjust to the changing shopping behavior of consumers. The company is listed on the Philippine Stock Exchange as $SMPH.
Related : BusinessWorld ; Inquirer
-StockBytes PH, August 4, 2020.
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