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Informist, Monday, Jul 29, 2024

By Avishek Rakshit

KOLKATA – Continued uptick in rural demand helped dental care major, Colgate-Palmolive (India) Ltd beat the Street's estimates about its financial performance for the Apr-Jun period. The company reported a sharp 33% year-on-year increase in net profit at 3.6 bln rupees as against the Street’s projection of 3.3 bln rupees.

The profit growth, however, was much higher on account of an exceptional item in the year-ago period. In the year-ago period, the company had incurred an exceptional expense of 195 mln rupees which was spent as severance and related expenses in respect to changes in its organisational structure. Discounting this one-time spending in the last financial year, the company's net profit grew 26.3% on year.

The company’s revenue from operations at 14.9 bln rupees also beat the Street's view of 14.4 bln rupees, and grew 13% year on year.

Colgate India reported a net profit of 2.7 bln rupees on revenues of 13.1 bln rupees in the year-ago period. In Jan-Mar period, its net profit was at 3.8 bln rupees and revenues were at 14.8 bln rupees. Thus, sequentially, the revenue growth in the quarter under review was mostly flat, while net profit declined 4.2%.

Despite cost control measures which the company has been stressing on, its total expenses increased 8.5% year on year, and by 3% sequentially, to 10.3 bln rupees. Even after undertaking employee severance in the year-ago period, Colgate India’s employee benefit expenses surged 17.3% year on year and by 12.4% sequentially to 1.1 bln rupees.

Finance costs were lower at 9.8 mln rupees from 10.7 mln rupees a year ago, and tax outgo for the June quarter was 1.25 bln rupees as against 950.8 mln rupees a year ago. Other income for the quarter rose to 234 mln rupees from 149.7 mln rupees a year ago.

In a statement, the company said that the Apr-Jun quarter witnessed a continued pickup in demand in the rural markets outpacing growth in urban markets for the second quarter in a row. Led by this and good all-round performance of toothpaste, toothbrush, and personal care products, domestic revenues grew by 12.8% year on year for the quarter.

"Our toothpaste portfolio witnessed double-digit growth driven by high-single digit volume growth,” said Prabha Narasimhan, the company's managing director and chief executive officer, in the statement. "Our continued investments in perceivable superiority in product, brand building and innovation are yielding significant results while strengthening our brand metrics to highest ever levels."

Colgate India’s toothbrush portfolio saw a significant positive shift in the competitive growth trajectory with strong double-digit growth in topline, Narasimhan said. Its earnings before interest, tax, depreciation, and amortisation margins remained consistent despite a 10% year-on-year increase in advertising spends.

During the quarter under review, Colgate India launched a whitening booster gel toothpaste to tap the fast-growing whitening toothpaste segment in the country, and continued focus on category growth through its 'BrushatNight' campaign which pulled up its advertising spend. Despite the increase in advertising costs, Narasimhan maintained it as a necessity and reasoned that following the campaign, Colgate's brand equity touched its highest historical levels.

Today, Colgate-Palmolive India shares ended 1.4% higher at 3,210 rupees on the National Stock Exchange.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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