Colgate Palmolive Q1 net profit seen up 6% to Rs 130 cr

Colgate Palmolive is expected to report 6% rise in first quarter FY12 net profit to Rs 130 crore against Rs 122 crore in the year ago period.

Net sales are seen going up 12.5% to Rs 619 crore from Rs 550 crore year-on-year.

EBITDA is likely to go up 3.4% to Rs 166 crore from Rs 160 crore year-on-year.

However, EBITDA margin is expected to decline 26.7% against 29% and even PAT margin is likely to be at 20% versus 22%.

Factors:

Consistent revenue growth of around 13% driven by a 13% volume growth primarily driven by toothpaste

Toothpowder and toothbrushes likely to see flat growth

Impact of price hike in toothpastes of around 5-6% to impact topline

New launch Colgate Sensitive Pro-Relief to raise realizations and profits

Gross margins: estimate a 330 basis points YoY contraction in gross margins to 59.5%

Higher prices of sorbitol and other packaging costs are likely to impact gross margins

Expect advertising spends to be firm and EBITDA margin pressures are likely to be sustained over 2-3 quarters

Key metrics to watch: Gross margins, A&P-to-sales ratio