SMIC ‘cautiously optimistic’ this year

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SM INVESTMENTS Corp. (SMIC) said it is “cautiously optimistic” on the economy this year, while expecting its businesses to sustain its growth.

“We’re still watching the economy, we’re cautiously optimistic of the economy. So for us, it’s business as usual,” SMIC President and Chief Executive Officer Frederic C. DyBuncio told reporters during the company’s media event last Dec. 6 in Makati.

Asked what factors could impact the listed conglomerate’s businesses, Mr. DyBuncio cited ongoing trade war between the United States and China, higher inflation, rising interest rates and peso-dollar rate fluctuations.

“All of those obviously will have some impact here. The degree of that impact we don’t know, we’ll have to wait and see,” Mr. DyBuncio explained.

SMIC’s core businesses include property, banking, and retail, which are primarily consumer-driven. Rising inflation could affect consumers’ spending habits as they adjust to the higher cost of living. This translates to lower profits for businesses, alongside slimmer margins.

Inflation climbed to a nine-year high of 6.7% in September and October, before cooling down to six percent in November. Analysts generally expect inflation to ease this year.

SMIC Vice Chairperson Teresita Sy-Coson, however, noted that sales within the SM Group continued to grow despite elevated inflation last year. She expects the company’s revenues to continue growing this year.

“I think the economy in spite of the inflation, the sales are still growing strong, revenues are going on. So we don’t expect a downtrend,” Ms. Sy-Coson told reporters, noting that the mid-term elections will be a good thing for the consumer sector.

For the property business, Mr. DyBuncio said SM Development Corp. (SMDC) is “very well-positioned” to take advantage of the strong demand.

SMDC, which handles the group’s residential business, booked a 23% increase in revenues to P25.26 billion in the first nine months of 2018, driven by the higher demand for projects from international buyers, overseas Filipino workers, and the emerging middle class.

“All the businesses we have are consumer-focused, and as the economy’s doing well, consumption is doing well, disposable income is increasing, so that’s all very positive for the businesses we’re involved with,” Mr. DyBuncio said.

The company continues to expand its mall business, as it looks to end 2019 with 10.5 million square meters of gross floor area from its shopping malls in the country.

SMIC’s net income attributable to the parent grew by 10% to P26.17 billion in the first nine months of 2018, compared to P23.79 billion it made in the same period a year ago. This came after a 12% year-on-year uptick in gross revenues to P307.42 billion.

Shares in SMIC gained 4.64% or P42.50 to close at P958 each at the stock exchange on Thursday. — Arra B. Francia