Wilcon expects recovery in second half after lower Q1 profit

LISTED home improvement and construction finishing supply retailer Wilcon Depot, Inc. expects to recover in the second half of the year following a decline in first-quarter (Q1) net profit.

“Despite the drop in net earnings, which was mainly driven by lower sales in the first two months of the year, we are expecting a turnaround especially in the second half given the encouraging average daily sales right before and right after the long Easter holidays in April,” Wilcon President Lorraine Belo-Cincochan said in a regulatory filing on Monday.

“Should this sales trend continue and especially if it improves further, we expect to reverse the decline in net earnings in this quarter later in the year,” she added.

Wilcon posted a 27.5% decline in its first-quarter net income to P536 million from P740 million a year earlier.

Gross profit fell by 1.7% to P3.26 billion due to a lower margin rate across non-exclusive, exclusive, and in-house brand categories.

Operating expenses, including lease-related interest expense, rose by 7.8% to P2.66 billion, primarily due to depreciation from new store buildings and lease-related interest expenses for new branches.

Net sales increased by 1.2% to P8.41 billion from P8.31 billion in the same period last year, driven by contributions from new stores.

Wilcon now operates 102 branches after opening two new stores in the first quarter — one depot in North Luzon and one smaller-format Do-It-Wilcon (DIW) store in Metro Manila.

“We are also encouraged by the performance of our below-one-year-old stores, which generated positive earnings as a whole, after quarterly negative results all of last year and despite a very soft market during the first two months of the year,” Ms. Belo-Cincochan said.

“We are hoping that this indicates a growing sales trend that will be sustained from here on,” she added.

Net sales from depot branches rose by 1.8% to P8.12 billion, accounting for 96.5% of total sales.

DIW branches posted an 11.1% increase in net sales to P258 million, equivalent to 3.1% of total sales.

Project sales, which made up the remaining 0.4% of total sales, declined by 67.2% as the company did not serve any new major projects.

“Should project sales’ contribution stay below 1%, we shall be integrating project sales with our depot sales subsequently,” Wilcon said.

On Monday, Wilcon shares fell by 4.35% or 30 centavos to close at P6.59 apiece. — Revin Mikhael D. Ochave