SM Prime Holdings, Inc., the Philippines’ largest mall owner and operator, said second-quarter net income went up from last year on the back of higher mall space rentals, boosted by China-based malls it has acquired last year.

In a statement, SM Prime Holdings, Inc. (SMPH) said its profits rose 14 percent in April to June to Php1.6 billion from Php1.4 billion a year ago as gross revenues reached Php4.4 billion, for an 8% increase, compared to Php4.1 billion in the same period last year.

For the first six months of the year, SMPH posted  a 10% increase to Php3.2 billion year-on-year while gross revenues reached Php8.4 billion from Php7.7 billion in the same period a year ago. EBITDA for the period increased by 9% to Php5.9 billion for an EBITDA margin of 70%.

“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,” Mr. Hans T. Sy, SM Prime President, said.  

The company’s financial report already included the SM malls in China located in the cities of Xiamen, Jinjiang, and Chengdu that it has folded in late last year. The three malss contributed P0.37 billion in the same period last year, or 4 percent of total consolidated operating revenues.

Excluding revenues from these malls, SMPH’s net income for the period grew by 8 percent to P3.1 billion on revenues of P8 billion.

At end-June consolidated rental revenues still contributed the biggest share, growing by 11% and amounting to Php7.2 billion from Php6.4 billion during the same period last year. The company said growth came from retail sales which yielded a 5% increase in same mall sales. Mall space expansion also contributed growth the opening of three SM Malls last year, namely, SM City Bacolod, SM City Taytay, and SM Supercenter Muntinlupa,” the company said.

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 malls as, 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.

For the rest of 2008, SM Prime is scheduled to open new malls in Marikina, Rosales, and Baliuag. Expansion SM Megamall, SM City North EDSA, and SM City Fairview are likewise ongoing.