Colgate Palmolive India – Exceptional Income Spurted Bottomline

India’s leading toothpaste maker Colgate Palmolive (India) announced its June 2013 quarter results. On a superficial level the results looked very good with the company posting strong topline and bottomline growth. To quantify the topline for the June 2013 quarter stood at Rs 859.69 crore as against Rs 756.09 crore in June 2012 and Rs 831.53 Crore in March 2013. On the bottomline front, for June 2013 quarter the net profit stood at Rs 185.22 crore as against Rs 117.42 core in June 2012 and Rs 123.20 crore in March 2013. However the noticeable factor is, the bottomline was higher due to exceptional item of Rs 71 Crore which included sale of its Global Shared Services Organisation to Colgate Global Business Services, a subsidiary of Colgate-Palmolive Co, USA. Analysts on average had expected the company to report a net profit of Rs 133 crore, on revenue of Rs 864 crore. 

According to the management the volumes grew 9 percent, led by 11 percent growth in toothpastes.The company remained the market leader with a near 56 percent volume market share in January-June 2013, up from 54.7 percent in the year ago period. However noticeable factor has been, higher market share has come at the cost of margins. Its first quarter EBITDA margin came in at 19.2 percent, versus 22.1 percent a year ago.  The company is facing tough competition from existing and new players. As on the advertising spends front, Colgate has increased its ad-spends to stay ahead of the competition. Its marketing expenses rose 21 percent to Rs 101 crore in April-June.