Wilcon Depot Inc.’s net income grew by a modest 3.5 percent to P1.204 billion in the first half, as rising costs and thinner margins tempered the impact of double-digit sales growth.

The home improvement and finishing construction supply retailer said Tuesday the first-half net income increased by P41 million from a year earlier, even as net sales climbed at a faster pace.

Net sales rose 10.9 percent to P18.977 billion, P1.868 billion higher year-on-year, driven mainly by a 6.6 percent increase in comparable sales.

Positive sales growth

All regions, including project sales, recorded positive comparable sales growth during the six months.

The stronger sales performance was partly offset by margin pressure as lower-margin non-exclusive products grew faster than Wilcon’s exclusive and in-house brands.

Gross profit increased 7 percent to P7.077 billion, while gross profit margin narrowed to 37.3 percent.

Exclusive and in-house brands accounted for 50.5 percent of total net sales, down from 52.3 percent in the same period last year.

Operating expenses, including lease-related interest expense, meanwhile, rose 8 percent to P5.708 billion, mainly due to higher depreciation and amortization, manpower expenses, utilities and trucking costs.

The majority of the increase in expenses was recorded in the second quarter, largely due to bulk lease renewals, annual salary adjustments and rising utility rates.

Operating other income was steady at P194 million as higher rental income, supplier support and other fees were offset by lower delivery fees and other customer charges.

Total other income increased 5.2 percent to P224 million, mainly due to higher interest income.

Encouraged by gains

“We are encouraged by the gains in customer count and sales volume. These show we are reaching more customers and give us room to improve the product mix and manage costs in the second half,” Wilcon President and CEO Lorraine Belo-Cincochan said.