Expansion to drive SMIC’s continued profit growth

August 17, 2024 | 12:00am

MANILA, Philippines — Sustained expansion is expected to drive profitability of the Sy family’s investment holding company SM Investments Corp. (SMIC) in the coming years as the group continues to see enormous potential for business growth.

“We are quite optimistic with our potential for growth because there’s huge room for us to grow our footprint,” SMIC executive vice president for finance Franklin Gomez said in an interview with Bloomberg TV.

“So I think that from an earnings point of view, for as long as we continue on this path of expansion, we should see improvement in our profitability over time. We are very patient in investing. We’re very patient in building our portfolio. And this formula has done very well for the group for the last 60 years and we’re sticking to the same formula,” he said.

Gomez said that SMIC is broadening its sources of funding so that expansion plans “will go unabated.”

Last month, SMIC raised $500 million from the first tranche of its $3 billion multi-issuer euro medium term note program, marking its largest offshore bond issuance since 2014.

“The $500 million is but a part of the $3 billion European medium term note program. So we do expect to tap on this when market conditions are favorable. But suffice to say, at the moment, this is really going to partly refinancing and capital expenditures,” Gomez said.

Gomez said SMIC is currently focused on growing core businesses in retail, banking and property, as well as its investments in fast growing portfolio companies, specifically logistics and renewable energy.

He said the company also continues to look at opportunities that may come up in terms of acquisitions as long as they will have some adjacencies to its core business and will add to the ecosystem of the whole group.

“As you can see, the potential for growth of all our businesses, be it in retail, banking or in property, they are enormous. In retail, there’s only about a third of the retailing market in the Philippines that are in modern trade. For property, the periphery, the regions are growing significantly faster now than Metro Manila so that is big room for expansion for us. In our banks, we continue to expand our network as only about a third of Filipinos still have bank accounts,” Gomez said.

“We also look into investing in some of our portfolio companies be it in logistics, considering that the Philippines is comprised of 7,600 islands and we do have an extensive network to connect them with each other. We are also investing in our sustainability agenda and we have made an investment in a geothermal company, which actually will add to the renewable sources for the government,” he said.

For the first half, SMIC saw its net income expand by 10 percent to P40.2 billion from P36.5 billion in the same period in 2023.

Revenues for the period grew by five percent to P301.4 billion from last year’s P286.7 billion.