SM Prime profit slides 5 percent as weak real estate sales offset mall growth

MANILA — SM Prime Holdings reported a 5 percent drop in nine-month net income to P35.4 billion on Monday, as a slump in residential sales dragged down performance despite growth in its shopping mall division.

Consolidated net income fell from P37.2 billion a year earlier, while total revenues for the January-to-September period were broadly unchanged at P103.1 billion.

The slowdown was driven by a 23 percent fall in real estate sales to P24 billion. Segment revenues for residential property dropped 21 percent to P25.6 billion amid slower revenue recognition and buyer backouts.

“Higher borrowing costs, elevated inflation and cautious consumer spending continued to weigh on residential demand,” said SM Prime President Jeffrey Lim, adding that commercial growth and cost discipline helped ease pressure on earnings.

Shopping malls remained the company’s primary revenue driver, accounting for 62 percent of total earnings. Mall revenues grew 10 percent to P63.7 billion, buoyed by additional leasable space, higher tenant occupancy, and strong demand for dining and experiential offerings.

Revenues from offices and warehouses gained 10 percent to P7.8 billion, while the hospitality and MICE segment rose 7 percent to P6.4 billion.

For the third quarter alone, net income slipped 15 percent year-on-year to P10.9 billion as revenues contracted 11 percent to P31.4 billion.

Capital expenditure for the nine-month period dropped 25 percent to P44.4 billion, with the bulk spent on ongoing mall and residential developments.