WILCON Depot Inc. said its net income grew to almost 16 percent last year to P2.12 billion from the previous P1.83 billion, despite the changes in accounting standards on rents.
“Coming off a high base, we had a respectable topline growth and the margin improvement we gained from our product mix strategy cushioned the spike in our operating expenses as we had planned. These results certainly will encourage us more to continue in our strategic direction and give us assurance that we can deliver consistent growth in the coming years,” Lorraine Belo-Cincochan, the company’s president and CEO, said.
This year, the company has allocated some P2.9 billion in capital expenditures to fund the construction of new stores, more renovations and extensions as it upgrades some old branches to put them on a par with new stores and others, she said.
“We are targeting to maintain a mid-teen topline and net income growth for 2020 as well as a steady 5[-percent] to 6-percent comparable sales growth,” she said.
Net sales for 2019 grew 16 percent to P24.47 billion for 2019 from the previous year’s P21.04 billion on the back of a steady ramp-up of the new stores which contributed P2.33 billion, or 68 percent of the total increase, and comparable sales growth of 5 percent for the full year.
It said six new depots were opened last year, increasing the branch tally to 57 at the close of 2019.
The depots comprised 96 percent of net sales totaling P23.469 billion generated from 50 branches, or a sales growth of 16 percent.
Sales from its smaller format, Home Essentials, accounted for 2.7 percent or P658 million, a growth of 6 percent.
There are no immediate plans to expand the smaller format, it said.
Project sales, meanwhile, accounted for the remaining 1.4 percent or P349 million, growing 28 percent.
New accounting standard
The company adopted the new accounting standard for leases, Philippine Financial Reporting Standard 16 (PFRS 16) starting January 1, 2019, which involved the recognition of the company’s qualified operating leases as right-of-use assets with the corresponding lease liabilities in the balance sheet.
As a result, qualified lease-related expenses previously classified as rent expense are reflected in the income statement as depreciation/amortization of the right-of-use assets and interest expense on the lease liabilities.
Total actual rental payments in 2019 amounted to P1.18 billion including rent of transport and other equipment, and leases exempted from the adoption of PFRS 16.
“Our capital expenditure for 2019 reached P2.65 billion comprised mainly of construction of new stores, warehouses and extensions to or renovation of existing stores and investment in computer software, among others. We are on track to finish 2020 with at least 65 stores as we are set to open between eight to nine depots this year,” Belo-Cincochan said.