SY family-led conglomerate SM Investments Corp. (SMIC) said on Thursday they would seek clarification from the government on what jobs are considered covered by the prohibition on “contractualization.”

Jose Sio, SMIC executive vice president and chief finance officer, said that although they are willing to follow labor laws–the strict enforcement of which is deemed to put an end to “endo”–there are some legal matters that still need to be clarified.

“Endo” is a colloquial for “end of contract,” which many contractual workers experience at the end of each six-month work stint.





“In essence, we always follow the law and regulations. It is part of our corporate governance. Even our tenants and consignees, we always remind them to follow the law, not just the labor law, but also taxation law and other laws,” Sio said on the sidelines of the conglomerate’s first-half media and analysts briefing on Thursday.

Last week, the Department of Labor and Employment (DOLE) issued a memorandum that would prohibit the “endo” practice in some labor-intensive sectors as well as the outsourcing of employees in malls, food chains and hotels.

Any company found to have violated this regulation can no longer renew its license to operate, Labor Secretary Silvestre Bello III has said.

Exempted from the memorandum are fixed-term contracts which are project-based or seasonal in nature.

“But the PCCI [Philippine Chamber of Commerce and Industry], ECOP [Employers Confederation of the Philippines], and Philexport [Philippine Exporters Confederation] are asking for some clarifications on some rules, and what it really is,” he added.

He said SMIC will raise their concerns through the PCCI. “We want to clarify the type of employments that are not supposed to be covered by the prohibition, such as seasonal and project-based employees, because it has not been sufficiently defined.”

“They [PCCI] would be talking on behalf of all the member companies. We are a member. We have given our inputs and we would do it as one organization since it is more difficult if we do it individually,” he said.

H1 net income grows to P15B

At the same event, SMIC reported that its consolidated net income for the first of the year grew by 11 percent to P15 billion from the P13.5 billion realized in the same period last year.

“We are on track for the first half and we are confident of posting a double-digit growth for the rest of the year,” Sio said.

Stripping off one-time gains, recurring income in the first half grew 8 percent year-on-year.

Consolidated revenues increased 8.5 percent to P151.1 billion from P139.2 billion booked in the same period last year.

Its property business, SM Prime Holdings, contributed the most to consolidated net income with 41 percent, followed by its banking units with 38 percent and retail with 21 percent.

“Our strong first-half performance reflects continued economic growth, boosted in part by election spending. We continue to focus on cost efficiencies and operating margin improvements. With the merger of our retail businesses we now cater to a much wider range of consumer needs and we look forward to benefiting from increasing consumer spending,” SM president Harley Sy said.

SM Retail reported 9 percent growth in total sales to P105.1 billion, while net income rose 14 percent to P3.5 billion. Net margin expanded to 3.4 percent from 3.2 percent 12 months ago.

SM Prime Holdings reported core net income of P12.6 billion, 12 percent higher than the P11.25 billion realized from a year ago.

Consolidated revenues reached P39.2 billion, an increase of 9 percent from P35.9 billion in the same period last year.

Rental revenues from retail and commercial spaces accounted for 56 percent of consolidated revenues and grew 13 percent during the period to P22 billion.

The housing group, led by SM Development Corporation (SMDC), recorded a 6 percent increase in real estate sales to P13 billion.

As a result, net income stood at P3.2 billion, up 7 percent. Reservation sales rose 18 percent to 8,091 units, translating to a 20 percent increment in sales value worth P22.6 billion, from P18.8 billion previously.

In its banking units, BDO Unibank, Inc. (BDO) grew its net income by 13 percent to P13.2 billion on broad-based improvement across the bank’s businesses and a one-time gain from the consolidation of BDO Life.

China Banking Corp. grew its net income by 30 percent to P3.3 billion for the first half, driven by strong growth in its core and fee-based businesses.

As of end-June 2016, SM’s total assets grew 7 percent to P770.2 billion. SM maintains a healthy balance sheet with a conservative gearing ratio of 39 percent net debt to 61 percent equity.