Colgate
Colgate Palmolive posted a set of disappointing Q2FY14 numbers. Though the company reported a 16% (YoY) rise in total income at Rs.896 crore, net profit showed a decline of 24% at Rs.110 crore. The 600 bps (YoY) decline in the operating margin for Q2 at 16.2% was more disappointing that the fall in net profit. This was due to two factors – firstly increased competition in the sector has forced the company to increase its advertising, which in current Q2 rose 34% and secondly, this led to the overall hike in operating costs, which was up 46%.
The quarter otherwise saw some good volume growth of 10% (YoY). This was led by a 9% growth in the toothpaste category and it remains a market leader with a market share of 56% for Jan-Sep’13 period, up from 54.6% in Jan-Sep’12. So it does seem as though the increased advertising spending is helping. In the toothbrush category, market share stands at 41.4% v/s 39.3%. Cash and bank balance at end of 30th Sept’13 stands at Rs.410 crore and reserves at Rs.771 crore.