Despite renewed lockdowns, Wilcon Depot posts higher earnings in Q3

MANILA, Philippines — Wilcon Depot Inc. recorded higher earnings in the third quarter despite strict quarantine restrictions, thanks to tax savings that cushioned a slump in sales and an increase in operating expenses.

In a disclosure to the Philippine Stock Exchange on Wednesday, the home and construction supply retailer reported that its net income rose 16.7% year-on-year in the July-September period to P622 million.

That brought the company’s nine-month net profits to P1.87 billion, up 111.1% compared to the same period last year when movement restrictions hampered construction activities and hurt the company’s sales.

But Wilcon still reeled from the effects of on-off lockdowns. Financial results showed a brief return to strict curbs last August to arrest the spread of Delta variant weighed on the company’s third quarter net sales, which dipped 1.9% to P6.6 billion. Nevertheless, the drop last quarter was milder compared with 9.3% sales contraction posted in the same period last year, when restrictions were at their tightest.

Adding pressure to the company’s third quarter earnings were higher operating expenses, which grew 10.1% year-on-year to P1.7 billion after the company opened two new depots during the period as part of its store expansion plans.

But at the same time, Wilcon’s tax expense dropped 10.7% on-year to P204.7 million in the third quarter because of a new law that cuts corporate income tax to help businesses recover from the coronavirus onslaught.

“Hopefully, with the easing of restrictions as Covid-19 cases decline, our customers will be able to finish or start their home improvement projects in time for the Christmas holidays,” Lorraine Belo-Cincochan, company president and CEO, said.

“We’re looking forward to a better fourth quarter."

Unlike last year when Wilcon had to shut down its stores because of stringent community quarantine, the company said its operations were “generally uninterrupted” this year after the government implemented policy changes to minimize economic losses from lockdowns. As a result, net sales in the first nine months grew 27% year-on-year to P20 billion.

Nine-month operating expenses, meanwhile, jumped 16.7% on-year to 5.2 billion. During the period, Wilcon opened a total of six depots, with three more set to open this year. Belo-Cincochan said the company spent a total of P1.8 billion in capital expenditure so far.

As of 12:22 p.m., shares in Wilcon were trading up 5.70%, bucking losses in the main index.