Colgate Palmolive earnings call highlights: Real impact of COVID-19 will be seen in Q2, Q3 of this calendar year

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Colgate Palmolive has posted 3.3 percent jump in its March quarter (Q4FY20) net profit at Rs 204.1 crore against Rs 197.6 crore, while net sales of the company declined 7.3 percent at Rs 1062.35 crore against Rs 1146.63 crore.

The board of directors of the company declared a second interim dividend of Rs 16 per equity share of Re 1 for the financial year. The total dividend would be Rs 28 per share for the year 2019-20.

Here are the highlights of Colgate Palmolive's Q4FY20 earnings call compiled by Narnolia Financial Advisors:

In the pre-COVID-19 period, the company was witnessing better growth, while the sales were impacted in the last 10 days of March.

The rural market was facing slowdown from Q3CY19 due to liquidity pressure which was accelerated further due to Covid-19.

Its toothpaste category grew by 4% in value terms and remained flat in volume terms in CY19 while in Q1CY20 witnessed a value growth of 2% and volume decline of 3%.

The company is currently working at 70-80% of its overall capacity.

Market share:

The company's market share was slightly down in 2019. While in last three months of CY20, the company is witnessing pick up in overall market share. Its overall market share improved by 80 bps YoY on national basis in the month of March.

In natural category, market share improved by 20-30 bps.

Product launches

In 4QFY20 the company relaunched Colgate strong teeth , while new launches were Kids toothpaste (with premium pricing), Charcoal clean, Bamboo toothbrush, Colgate ZigZag, Colgate Superflexi Charcoal, Colgate ZigZag Charcoal, Battery brushes and Palmolive Hand Sanitizer, bodywash & shampoo.

Colgate household penetration improved by 300 bps YoY in Q1CY20 versus Q1 CY18.

Distribution:

The company is focusing towards ecommerce and modern trade for distributuion. The company gained market share of 200 bps YoY in Q1CY20 (vs Q1CY19) in ecommerce.

The company’s efforts in modern trade boosted the growth and helped in gaining market share of 160 bps YoY in 1QCY20 versus Q1CY18.

Going forwards, management will keep balance between volume and margin. The real impact of Covid-19 will come in Q2, Q3 of this calendar year.

The company’s focus would be on improving gross margin, while EBITDA margin may be impacted due to change in ad expenses.