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Colgate Q2 net down slightly on high costs, ad spends
Colgate Palmolive India’s net profit for the second quarter fell 0.6% from a year ago to Rs 99.7 crore due to increased advertising and raw material expenses and costs related to a plant closure.
Colgate Palmolive India's net profit for the second quarter fell 0.6% from a year ago to Rs 99.7 crore due to increased advertising and raw material expenses and costs related to a plant closure.
The oral care product maker's net sales in July-September were up 19% year-on-year at Rs 657.24 crore. Volumes rose 13% during the three-month period, Colgate said on Monday.
Analysts had expected Colgate to report a net profit of Rs 111 crore on sales of Rs 640 crore, according to a CNBC-TV18 poll.
In the second quarter, Colgate closed its toothpowder production plant at Hyderabad. It incurred a cost of Rs 8.22 crore in relation to the voluntary retirement scheme offered to the employees at that plant, the company said.
That apart, the company's advertising and sales promotion expenses jumped 44% from a year ago to Rs 114.29 crore. Colgate has been aggressively promoting Sensitive Pro-Relief toothpaste, and Plax Complete Care and Sensitive mouthwash it launched in recent months.
Input cost pressures also continued during the second quarter. Raw material and packaging costs rose 24% to Rs 224.01 crore in July-September.
Colgate said it took "prudent" price increases to offset input cost pressures, which along with cost management helped it maintain gross margin at 60% in the second quarter.
The company said it has a volume market share of 52.6% in toothpastes, 36.3% in toothbrush category and 26.4% in mouthwash segment over the last one year.
Colgate Palmolive shares were slightly up at Rs 998 on NSE in afternoon trade.
