SM Investments : 2024 SMIC President’s Report

President's Report

A N N U A L S T O C K HO L D E R S ' M E E T I N G 2 0 2 4

Committed to

Our Customers

Economic	2023 GDP
Performance
and Financial
Performance	5.5%	3.2%
Snapshots
	Philippines	Ave. SEA
Overseas Filipino	Unemployment	Inflation
Workers Remittances
	FY 2023	DEC 2023
2.9%	3.1%	6.0%	3.9%

Let me first give a quick overview of the economic situation we faced last year.

The Philippine economy grew 5.5 percent last year, outpacing major economies in Asia.

A major driver of this growth was strong consumption spending as consumers benefited from record-low unemployment rate of 3.1 percent and steady growth in overseas Filipino workers' remittances of 2.9 percent.

Inflation averaged 6 percent for the year and slowed to 3.9 percent in December amid rising energy and food prices.

Taking this largely into consideration, we ensured our products and services continued to meet our customers' needs and wallet sizes.

Strong Financial

Performance

Retailing

Banking

Property

Portfolio Investments

Given this strong economic backdrop, SM remained a proxy for the Philippines and its consumer-focused growth in particular.

Our strong financial performance last year was driven by all three core businesses-retailing, banking and property--- as well as contributions from our portfolio investments.

Strong Financial

Performance

Php77.0bn ↑25%

Net Income

Php616.3bn ↑11%

Revenues

PORTFOLIO

INVESTMENTSRETAIL

9% 19%

Net

Income

47% Mix 25%

BANKING

PROPERTY

Our net income grew 25 percent to 77.0 billion pesos while consolidated revenues increased 11 percent to 616.3 billion pesos.

Our banks delivered the largest portion of our earnings at 47 percent as they benefited from higher margins and broad economic growth. Meanwhile our malls experienced high foot traffic and strong consumer activity, especially in F&B and entertainment which helped drive property contribution at 25 percent.

Retail pitched in 19 percent to total net earnings as discretionary spending remained vibrant.

Portfolio investments delivered 9 percent as it continues to demonstrate growth especially in logistics, renewable energy, leisure and entertainment and the bakeshop business.

Financial

Prudence

Php1.6tn ↑7%

Assets

Net Debt to Total Equity	33:67

Our long-term policy of financial prudence ensured that we were not adversely impacted by high interest rates.

Our total assets increased 7 percent to 1.6 trillion pesos. Gearing remained conservative at a ratio of 33 percent net debt to 67 percent total equity.

Our balance sheet remains strong with our banks well capitalized and our businesses able to invest in growth.

Retail

Expanding to Serve

Php415.0bn ↑10%

Revenues

Php19.9bn ↑11%

Net Income

Our retail business, which consists of groceries, department and specialty retail stores, reported revenues of 415.0 billion pesos, up 10 percent on consistent growth across key segments.

Net income increased 11 percent to 19.9 billion pesos.

Retail	Food Group
Expanding to Serve

Revenues ↑7%

Net Income ↑21%

Revenues from SM's Food Group, consisting of SM Markets, WalterMart and Alfamart, grew 7 percent, contributing almost half to total retail revenue growth.

With continuing efficiencies in operations, net income for the food segment increased 21 percent.

Retail

Expanding to Serve

The SM Store ↑16%

Revenues

Specialty Retail	↑11%
Revenues

Revenues of The SM Store increased 16 percent while specialty retail revenues grew 11 percent. These were driven by discretionary spending on fashion, footwear, children, pets and health and beauty. Backed by consistent growth, we continued to expand our retail footprint to over 3,800 outlets in 2023.

Retail

Expanding to Serve

3,800+	419
Retail Stores	New Stores
	In 2023

Out of this total, we opened 419 new stores last year, with 371 stores or 89 percent located in provincial areas.

Retail

Expanding to Serve

400+

Stores

Alfamart to accelerate store expansion in 2024

Alfamart, our minimart grocery format, intends to accelerate its expansion by at least 400 stores this year.

This reflects our strategy to tap into growth opportunities in emerging regions.