Founded by an entrepreneur, SM is inherently agile in spotting opportunities for growth while strictly adhering to the wisdom of its late founder, Henry Sy Sr., to always maintain a strong balance sheet and focus on industries that ensure continuous cash flow.
This guidance continues with the management of the SM Group, which has now adopted a new slogan: “Growth With Purpose.”
Indeed, in 2024, the group maintained a robust and conservative balance sheet with a 31 percent net debt to 69 percent equity ratio.
“I think from the very inception of the SM Group, the founder, Henry Sy Sr., established a policy that we would always have a very, very conservative balance sheet. And that has served us well,” said Frederic DyBuncio, President and CEO of SM Investments Corp. (SM Investments), the holding company of SM Group, during a press conference at the Annual Stockholders Meeting on April 30, 2025.
This policy has enabled the company to grow even during challenging times. During the Asian and Lehman crises, the SM Group grew with a “very, very manageable” debt position.
While they have significant financial flexibility to access various markets, DyBuncio stated that they are “always looking at our own internal conservative position of maintaining a 50-50 debt-equity ratio.”
The SM growth story is also bolstered by a focused approach on three strong core businesses: retail, banking, and property. These sectors provide substantial cash flows to fund expansion and new investments.
SM Investments Chairman Amando M. Tetangco Jr. explained that the Philippine macroeconomic structure is 70 percent driven by consumption, while exports account for 15-16 percent and manufacturing for 20 percent.
So far, he noted that the country’s macroeconomic fundamentals are sound, with inflation declining to 1.8 percent in March of this year and 2.2 percent for the first quarter, providing the economy with some protection from external effects, such as the 17 percent Trump tariffs.
However, he advised remaining watchful and being resilient and flexible during these shifting conditions.
In the case of SM, he pointed out that its core businesses are closely tied to the country’s economy and the everyday needs of Filipinos. These sectors provide stability. “We continue to position ourselves to meet the demand,” he said. Thus, the company’s focus is on remaining agile, ensuring financial visibility, and staying well positioned for sustainable growth.
In 2024, SM expanded its retail footprint by opening 618 new retail stores, 73 bank branches, and two malls. Notably, its minimart, Alfamart, opened its 2,092nd store last year.
Over 85 percent of these developments were outside Metro Manila, reflecting its geographic expansion strategy to tap into high-growth provincial markets and provide new growth opportunities as they serve more Filipinos.
Overall, SM operates 4,470 retail outlets, 87 malls, 2,441 bank branches, and 22 integrated property developers across the country.
Its focus on consumer growth mirrors the fact that over 70 percent of the country’s GDP is driven by consumer spending.
SM’s earnings soared to PhP 82.6 billion in 2024, up from PhP 77 billion in 2023. Its total revenue reached PhP 654.8 billion, reflecting a 15 percent CAGR over the past three years. Among its core businesses, SM Retail contributed the largest revenue with PhP 434.5 billion, followed by BDO with PhP 186.6 billion, SM Prime with PhP 140.4 billion, and Chinabank with PhP 63.5 billion. Total SM assets rose to PhP 1.699 trillion from PhP 1.586 trillion in 2023.
SM Investments also declared a total of PhP 15.886 billion in cash dividends, including a first special dividend reflecting PhP 13 per share, payable on May 29, 2025, to its stockholders on record as of May 16, 2024. Believing their stocks have been undervalued, SM decided to buy back shares worth PhP 60 billion, the largest in Philippine corporate history. The aim is to generate returns for its shareholders and highlight the value opportunity in its current share price. “We support our shareholders and believe our stock is significantly undervalued,” DyBuncio stated. SM’s share price in 2024 was at PhP 899 per piece.
To support its growth strategy, SM Investments launched the Philippines’ first joint Euro-medium term loan program together with SM Prime, allowing the issuance of up to US$ 3 billion between the two companies. In July of last year, the group successfully priced a $500 million bond issuance under the program.
This marks the largest bond issuance since 2014, providing them with greater flexibility in the face of market volatility and underscoring global investor confidence in SM’s financial strength.
Scale
SM has a growing portfolio of businesses that are strategically aligned to add synergies and support its ecosystem.
In 2024, earnings from its portfolio investments grew by 7 percent, but the group is aiming for mid-teens growth in the future.
Given its strong balance sheet, SM Investments is always on the lookout for growth opportunities. DyBuncio noted that they focus on industries where they know they can scale up. When an opportunity arises, they ensure that the cash flow is “very predictable” and that the returns are sufficient for them to borrow money if needed.
However, DyBuncio stressed that if an investment risks breaching their internal guidelines, “We will have to think very, very seriously about whether it’s worth pursuing.”
One major undertaking for SM is the massive 360-hectare reclamation project at Manila Bay. “That is a testament to the group’s financial strength,” said DyBuncio.
As of 2024, 60 percent of the land development for the 360-hectare integrated property development project in Pasay City, Manila Bay, has been completed. Full completion is expected in the near term, allowing horizontal development to begin in 2027.
Logistics
DyBuncio stated that the company is shifting its focus more towards logistics to support growth in provinces, which are experiencing higher growth rates than Metro Manila.
“You need logistics to deliver the goods and services that local communities in those provinces require,” he explained.
The SM Group has two logistics companies: 2Go and Airspeed. 2Go is the most comprehensive logistics company in the country, providing services from shipping to special containers, warehouses, express delivery, freight forwarding, and retail. Interestingly, 2Go is also the only shipping company in the country that carries passengers.
The shipping business constitutes the largest segment of 2Go, contributing roughly 45 percent of the overall operations as it transports a significant volume of goods from Manila to the southern regions, primarily to Visayas and Mindanao.
Another fast-growing area for 2Go is its project logistics business, where their vessels transport heavy equipment such as solar panels, wind turbines, generators, large trucks for the mining industry, and reefer vans for cold chain projects.
2Go has launched two new ships, the MV Masiglan and the MV Masikap, enabling them to connect to more localities and bring more goods and people nationwide.
On the express delivery front, they transport nearly 100,000 packages a day across the country.
Airspeed, while significantly smaller than 2Go, initially operated as a cross-border logistics company, focusing on bringing in goods from overseas. Airspeed is also a service provider for FedEx, with 2Go providing additional retail services for the company.
Another growth area is its renewable energy business, which supports the government’s goal of achieving 50 percent clean energy by 2040.
Purpose
Given the scale of the SM Group, DyBuncio stated that financial returns have become secondary. “What we really want to do is uplift the lives of the Filipino people. We believe that by enhancing their lives, we can sustain the continued growth of SM as a unified group. We aim to ensure that all our stakeholders are properly cared for, including our shareholders, partners, and over 100,000 MSMEs we engage with,” he said.
The late founder, Henry Sy Sr., also believed that business growth and social progress are intrinsically linked. Guided by this principle, in 2024, SM supported over 100,000 MSMEs among tenants and suppliers, fostered workplace inclusivity for more than 114,000 employees, and contributed to the nation’s social and economic development.
“That’s what we mean when we say we grow with purpose. It’s not just about financial returns; for me, that’s secondary,” he stated.
By fulfilling their responsibilities towards Filipinos, who are their primary customers and stakeholders, DyBuncio affirmed, “profits will come.”
“As we approach 2025, we remain committed to driving purposeful growth, confident that moderation in inflation and a robust economy will allow new opportunities for our country’s consumer driven economy. Together, we will build on what we have accomplished in 2024 and continue to grow with purpose in 2025 and beyond,” he said.
