SM Prime profit flat in Q1, eyes cut in capex

MANILA, Philippines — SM Prime Holdings Inc., the integrated property developer of the SM Group, is looking at a more measured growth in 2026 following a flat first quarter performance, with the company mulling a cut in capital spending for the year.

“We know that 2026 will be difficult. Many of the pressures we are facing are simply beyond our control, but our business is structurally sound and specifically built to withstand volatility. Our diversified portfolio provides a better and stable foundation and our people have been through enough cycles to know what to do,” SM Prime president Jeffrey Lim said during the company’s annual stockholders’ meeting yesterday.

SM Prime chairman Henry Sy Jr. said the company is taking the risk effect of the US-Iran conflict seriously.

“We recognize the situation is volatile and could become even more difficult in the coming months. But we believe SM Prime is in a very solid position to march through this period,” he said.

“We are also managing costs and prioritizing capital spending to protect cash flow and balance sheet strength,” he added.

Lim said SM Prime may defer some of the non-critical capex or expansions planned previously.

“We are now reviewing capex for the year and then probably defer some of those given the current conditions,” he said

SM Prime earlier announced that it is allocating around P100 billion in capital expenditures to fund the group’s continuing expansion for 2026.

SM Prime’s first quarter net income reached P11.66 billion, flat compared to P11.65 billion during the same period last year, as costs and expenses outpaced revenue growth.

Total revenues improved by two percent year-on-year to P33.3 billion from P32.8 billion on higher rental income and other revenues, which helped cushion weaker revenue from real estate sales.

Lim said recurring income will remain central to SM Prime’s performance in 2026.

“We are prioritizing occupancy, customer experience and cost discipline to navigate the challenging operating environment,” he said.

Rental income for the quarter jumped by eight percent to P21.6 billion from P20 billion on higher mall and office occupancy, while other revenues accelerated by 11 percent to P3.9 billion from P3.5 billion, driven by higher ticket sales, stronger food and beverage revenue and increased uptake of experiential offerings.

Real estate sales fell by 16 percent to P7.8 billion from P9.2 billion as revenue recognition from prior-year sales moderated and cancellations impacted booked results.

Costs and expenses increased by three percent to P16.6 billion from P16.1 billion mainly due to higher depreciation and amortization charges and fixed overhead costs.

SM Prime said malls remained the largest topline contributor, accounting for 61 percent of total revenues. The segment delivered P20.4 billion, up by eight percent year-on-year due to high occupancy and sustained interest in experiential offerings.

The residential segment contributed P8.3 billion, representing 25 percent of total revenues for the quarter and down by 14 percent from P9.7 billion a year earlier. Higher leisure residential sales partially offset weaker core residential performance.

Hotels and convention centers generated P2.2 billion, equivalent to seven percent of total revenues and eight percent higher year-on-year. Improved room occupancy, higher average daily rates and increased convention center bookings accounted for the growth.

The office segment contributed P2.5 billion, accounting for seven percent of total revenues, up 10 percent year-on-year on improved occupancy.