Wilcon Depot Inc., the Philippines’ leading home improvement and finishing construction supplies retailer, posted a 16.9 percent year-on-year drop in net income to P1.51 billion in the first half of 2024 as operating expenses grew faster than net sales.

In a disclosure to the Philippine Stock Exchange (PSE), the firm said its second-quarter net sales growth improved to P8.87 billion, a year-on-year increase of 2.9 percent. This brought the first half of 2024 net sales to P17.18 billion and approximately equaled the first half of 2023 level of P17.15 billion. 

Gross profit margin rate expanded to 39.8 percent for the first half from 39.5 percent in the same period in 2023, bringing the gross profit level to P6.84 billion by the end of the period. 

“Our second quarter performance improved over that of the first quarter’s to generate a net income of P770 million. While this was down 10 percent, there are one-off charges recognized this quarter of P98 million for inventory allowances and loss due to fire,” said Wilcon President and CEO Lorraine Belo-Cincochan.

She added that “the improved second quarter performance was partly due to the timing of the long holidays, but we also rolled out programs focused on contractors and professionals and best deals promotions to increase turnover.”

“We are looking forward to a better second half as we continue to push for higher sales while re-aligning resources deployed with the current market demand. We are continuing with our store network expansion program, opening five new stores for the first half and on track to reach our 100-store target by the end of the year,” Belo-Cincochan noted.

Net sales for the first half 2024 was driven mainly by sales from new stores offset by the decline in comparable sales of 4.6 percent. Five new stores were opened during the first-half, bringing to 95 the total number of branches by the end of the period.

On a per format basis, net sales from the depot-format stores, which comprised 95.8 percent of total net sales, were lower by one percent year-on-year to total P16.47 billion. 

Sales from new depots increased the first half 2024 balance by 4.1 percent but comparable sales were 5.1 percent lower. 

The smaller Do-It-Wilcon (DIW) format, recorded net sales of P488 million, a 39.1 percent increase year-on-year, contributed mainly by new DIW stores. Same store sales for this smaller store format declined by 3.1 percent. 

The remaining 1.3 percent of total net sales was accounted for by project sales or sales to major institutional accounts, which amounted to P227 million, with a 41.5 percent year-on-year increase.

Gross profit margin rate expanded by 30 basis points to 39.8 percent, due mainly to product mix, resulting in gross profit of P6.84 billion, up one percent year-on-year.

Operating expenses including lease-related interest expense increased by 8.6 percent to P5.08 billion while operating other income totaled P244 million, lower by 22.1 percent year-on-year. 

Non-operating net other income (charges) amounted to P2 million with the loss due to fire of P12 million recognized in the second quarter partly offsetting the P14 million interest income.