Wilcon Depot (WLCON) Q2 2024 earnings summary

Executive summary

• Net sales for 1H 2024 totaled Php 17.2B, a 0.2% increase year-over-year, driven by new store openings but offset by a 4.6% decline in comparable sales.

• Net income after tax for 1H 2024 was Php 1,510M, down 16.9% year-over-year, with net margin at 8.8% versus 10.6% last year, mainly due to higher operating expenses amid flat sales growth.

• Gross profit margin improved to 39.8% for 1H 2024, supported by a higher mix of exclusive and in-house brands.

• Five new stores were opened in 1H 2024, bringing the total to 95 as of June 2024, with new depots contributing 4.1% to sales.

• Insurance claims from the Baliwag, Bulacan fire are expected to be received later in the year, offsetting most of the P92 million initial write-off.

Financial highlights

• 2Q 2024 comparable sales declined 2.0% year-over-year; 1H 2024 comparable sales declined 4.6%.

• 1H 2024 EBITDA was P2,640 million (15.4% margin), down 13.0% year-over-year; EBIT was P1,994 million (11.6% margin), down 17.2%.

• Operating expenses increased 8.6% in 1H 2024 year-over-year, mainly from expansion-related costs.

• Interest expense rose 8.1% to P335 million due to new capital leases.

• 1H 2024 CAPEX reached Php 1.398B, mainly for new stores and warehouses.

Outlook and guidance

• Focus on expanding store network, developing in-house and exclusive brands, and enhancing both physical and online store experience.

• Continued store expansion and investments in new locations are planned, supported by strong internal funding and access to debt markets.