SM Investments Corp. (SMIC), the listed holding company controlled by retail king Henry Sy Sr., ended the first semester with a net income of P5.1 billion, 85-percent higher than the amount it made in the same period last year.

In a report to the Philippine Stock Exchange, SMIC said the increase is due to extraordinary gains from the sale of marketable securities during the six-month period and Global Depository Receipts in the first quarter.

Excluding extraordinary items, net recurring income expanded by 26 percent for the first half to P2.9 billion on the strength of the retail merchandising business, and mall operations.

Consolidated revenues, meanwhile, rose 11.1 percent during the period to P27.8 billion. This was boosted by the improvement in sales from merchandise, higher rental income and revenues from cinema operations.

Operating expenses, however, increased by 7.5 percent to P5.9 billion. The faster growth in expansion-related expenses such as personnel cost and depreciation was largely offset by a decline in expenses for light, water and maintenance, and marginal increases in rent and outside services. Cost savings, particularly in electricity consumption, amid sharp increases in oil prices, continues to be priority for management.

“We are encouraged by the continued growth, profitability, and stability of SM, especially now that it has evolved into one of the country’s largest conglomerates, said SMIC president Harley Sy.

SMIC houses all of the Sy group’s business interests, namely SM Prime Holdings, SM Development Corp., Highlands Prime Inc., and Banco de Oro Universal Bank.

SMIC still derives bulk of it revenues from its retail operations. In the last semester, consolidated retail sales grew 7.3 percent to P19.4 billion as department stores further expand their operations. However, overall sales growth was tempered by the increase in the value-added taxes from 10 percent to 12 percent starting February.

From its mall operations, the group saw a 9-percent increase in net profit to P2.6 billion. Gross revenues increased by 17 percent to P6.1 billion after getting a boost from the opening of new SM Supermalls, namely SM City San Lazaro, SM Supercenter Valenzuela, SM Supercenter Molino, SM City Sta. Rosa, SM City Clark and most recently, the Mall of Asia in Pasay City.

Two more malls are set to open before the end of the year, namely SM Supercenter Pasig and SM City Lipa.

By end-2006, SM Prime would have 27 malls with a gross floor area of 3.6-million square meters. Next year, the unit would open another four to five malls with a gross floor area of approximately 300,000 sqm.

Banking unit Banco de Oro booked a 6-percent hike in net profit for the first half to P1.3 billion. Net interest income grew by 15 percent to P3.8 billion, funded by a 44-percent increase in deposits to P201 billion.

Revenues from the sale of real- estate saw a dramatic increase from P48 million in the first half of 2005 to P450 million this year. This came from the successful launch of SM’s high-rise residential condominium projects in Metro Manila, and the Tagaytay Highlands project of SM Development Corp. and Highlands Prime Inc.

SMIC shares on Monday fell by 0.5 percent to P213 at the noon close of trading, before the company announced the half-year figures.