Sy-led holding firm SM Investments Corp. (SMIC) yesterday announced plans to form two new companies within this year as part of its efforts to simplify its organizational structure among its diverse business interests. An SM Hypermarket outlet at the new SM City North EDSA’s The Block.

In a statement, the conglomerate said it would form SM Retail, Inc. to handle its retail operations. SM Retail will have under its wing the companies operating the SM Department Stores, SM Supermarkets, and the SM Hypermarkets. This sector currently generates over 70% of SMIC’s total revenues.

SMIC would also create SM Land, Inc. to focus on the conglomerate’s real estate ventures. These include projects of listed firms like the SM Development Corp., which is SM’s development arm for high-rise residential, subdivision, and commercial space for sale or lease, as well as Highlands Prime, Inc., is a high- and low-rise residential developer in Tagaytay Highlands.

‘SM has become one of the country’s largest conglomerates in the Philippines. Such a condition merits greater simplicity in the organization to better achieve efficiencies in SM and provide greater clarity in our financial reports,’ SMIC President Harley T. Sy was quoted in the statement as saying.

‘We aim to substantially execute the plan by end of this year,’ he added.

Aside from retail merchandising, and real estate development and tourism, SMIC also has interests in shopping mall operations, and banking and financial services.

SM Prime Holdings, Inc. which has been listed since 1994, will continue to be the sole mall operator of the conglomerate. Mall operations accounted for more than half of SMIC’s net income last year.

BANKS

Meanwhile, SMIC said the banks, namely Banco de Oro and China Banking Corp., will continue to operate independently given their solid performance in the market and strong profitability. The banks contributed 22% to SMIC’s net income last year.

‘The primary objective of the restructuring is to realign the ownership of shares and properties within SM to follow major business lines, namely retail merchandising, mall operations, the banking and financial services, real estate, and private investments. Once completed, SM will be able to unlock its corporate value and become even more transparent to the investing public,’ the conglomerate said in a statement.

‘It will also help investment analysts forecast the company’s future earnings and place a realistic value on its assets. Funding options for future projects will likewise broaden as the specific lines of business can then tap specialized investment funds that match their specific areas of interest,’ it added.

SMIC’s shares were unchanged at P219 apiece in yesterday’s trading.