(7 August 2008. Philippines)  SM Prime Holdings, Inc. (“SM Prime”), the Philippines’ dominant shopping mall developer and operator, attained a 12% increase in consolidated net income during the second quarter of 2008, to Php1.6 billion from Php1.4 billion in the same quarter last year. Revenues, on the other hand, reached Php4.4 billion, for an 8% increase, compared to Php4.1 billion during the second quarter of 2008. EBITDA for the period increased by 10% to Php3.0 billion for an EBITDA margin of 69%.

For the first half of 2008, SM Prime attained a 10% increase in consolidated net income to Php3.2 billion from Php2.9 billion in the same period last year. Revenues, on the other hand, reached Php8.4 billion, for an 8% increase, compared to Php7.7 billion during the first six months of 2007. EBITDA for the period increased by 9% to Php5.9 billion for an EBITDA margin of 70%.

SM Prime’s results for the first half of 2008 consolidated the financials of the three SM malls in China following their acquisition late last year. The SM China malls are located in the cities of Xiamen, Jinjiang in Southern China, and Chengdu in Central China.

For the first half of 2008, SM Prime’s consolidated rental revenues still contributed the biggest share, growing by 11% and amounting to Php7.2 billion, as compared to Php6.4 billion during the same period last year. Growth came from a mix of growth in retail sales which yielded a 5% increase in same mall sales, and from expansion in mall space with three SM malls opened in 2007, namely, SM City Bacolod, SM City Taytay, and SM Supercenter Muntinlupa. In addition, three existing malls, namely SM City Pampanga, SM City Cebu, and Mall of Asia, were expanded last year.  Following its expansion, SM City Cebu became one of the largest malls in the world, joining three other SM malls that are already listed among the world’s largest such as SM Mall of Asia, SM North EDSA, and SM Megamall.  The three SM malls that were opened last year now enjoy an average occupancy rate of 94%. 

Operating expenses during the first six months of 2008 increased by only 6%, to Php3.8 billion from Php3.6 billion, due largely to effective cost saving initiatives implemented in all SM malls. Consequently, income from operations rose to Php4.6 billion, up 10% from Php4.2 billion. 

Cinema ticket sales, however, decreased by 9% to Php0.9 billion from Php1.0 billion. The decline was attributed to the lack of blockbuster movies shown during the first half of 2008, in contrast to the same period last year.

In terms of gross revenues, the three malls in China contributed P0.37 billion for the six months ended June 30, 2008 and P0.29 billion in the same period 2007, or 4% of total consolidated operating revenues.  The SM China malls’ major tenants include U.S. retail giant Walmart, SM Laiya Department Store, Giordano, Watson’s and international quick service restaurants McDonald’s and KFC, among others. The SM malls in China, which are very similar to those in the Philippines, allow SM Prime to gain a vital foothold in China’s vibrant and expanding economy and serve as a platform for the company’s long-term growth.

Without the China malls, SM Prime’s net income in the first half grew by 8% to Php3.1 billion on revenues of Php8.0 billion.  

SM Prime President Mr. Hans T. Sy said, “We are satisfied with the company’s first-half results. In spite of a much tougher operating environment brought about by global challenges, we still managed to grow and move forward.”  
For the rest of 2008, SM Prime is scheduled to open new malls in Marikina, Rosales, and Baliuag. Expansion of existing malls are likewise ongoing, namely, SM Megamall, SM City North EDSA, and SM City Fairview. By end 2008, total GFA for all SM Prime malls in the Philippines is estimated to reach 4.2 million sqm.