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Colgate Palmolive India has reported healthy results, with 18% increase in quarterly sales and 15% increase in net profits despite a challenging economic environment
Colgate Palmolive India (Colgate), a leading fast moving consumer goods (FMCG) company, reported net sales for the quarter ended March 2012 at Rs685.9 crore, 18% higher than the corresponding quarter last year. Its net profit was Rs446.5 crore, an increase of 15% over the March 2011 quarter, which stood at Rs114.1 crore. Its growth was fuelled by volume growth of 12%, with toothpaste leading the category with an impressive 14% growth. Also, prudent price increases and cost management has enable the company to maintain steady operating profit margins, which has grown at a CAGR of 29% over the last three-and-half years.
The FMCG major’s net sales grew by 18%, which is in line with its historic year-on-year sales growth for its last three quarters which stood at 19%. In a challenging environment, its operating profit grew at 21%, which is less than its average year-on-year growth over the last three quarters, but impressive nonetheless. In an industry characterised by purchasing power of consumers, the fact that consumers are buying despite inflation and low buying power, essential products like toothpastes will sell and hence ‘recession-proof’. Its valuation might look a bit overpriced with a market-cap to operating profit of 24.42 times. Like Hindustan Unilever, Colgate has performed well in benign market conditions. Hence the markets could be attaching a premium to it, as it hopes that economic condition improve, going forward. However, an aggressive valuation in times of uncertainty would make a value investor, or for that matter any investor, uneasy. Having said this, the company has had a good history of marketing solid products which there is always demand.
The company commands a market share of 54% in the toothpaste segment, which is up from 52.2%. In the mouthwash category, it has a volume share of 26.2%, up from 25.7%. Apart from its flagship brands Colgate Dental Cream, Active Salt, MaxFresh, Colgate Sensitive and Colgate Total, the company has launched new products. It has launched Colgate Super Shine Toothbrush that provides circular bristles that helps remove stains from teeth. In the mouthwash segment, it launched another variant of its Colgate Plax Fresh Tea, which contains natural tea extracts. It also released Palmolive body wash variants as well as Palmolive Thermal Spa range.
The company has paid a total dividend of Rs25 per share for the fiscal ended 31 March 2012, as against Rs22 for the corresponding period last year.
India's GDP growth tumbled to a 9 year low due to poor performance of the manufacturing and farm sectors and the falling rupee
New Delhi: India's economic growth rate slipped to 5.3% in the fourth quarter of 2011-12, lowest in nearly 9 years due to poor performance of the manufacturing and farm sectors, reports PTI.
The Gross domestic product (GDP) growth in the January- March quarter of 2010-11 was 9.2%, according to the government data released on Thursday.
GDP in 2011-12 also moderated to 6.5% from 8.4% in the 2010-11. During January-March quarter of 2003, India recorded a GDP growth of 3.6%.
During the quarter ending March 2012, growth in the manufacturing sector contracted to 0.3%, from 7.3% in the corresponding period of 2010-11.
Farm output also exhibited a similar trend and expanded by just 1.7% during the quarter, compared to 7.5% in the Q4, 2010-11.
However, mining and quarrying production growth stood at 4.3% during the quarter under review, as against a growth of meagre 0.6% in Q4 of in 2010-11.
Growth in the construction sector slowed to 4.8% during the January-March quarter of 2011-12, from 8.9% in the year-ago period.
The trade, hotels, transport and communications segment grew by 7% during in the quarter under review, as against 11.6% expansion in the year-ago period.
However, electricity, gas and water supply grew by 4.9% in the January-March period, compared to 5.1% growth in the corresponding period last fiscal.
The growth of the services sector, including insurance and real estate remained unchanged at 10% in the fourth quarter ended March.
Manufacturing growth in 2011-12 slowed to 2.5%, compared to 7.6% in the previous fiscal.
Besides, output of mining and quarrying sector declined by 0.9% last fiscal, as against the positive growth of 5% in 2010-11.
Further, the agriculture, forestry and fishing sector grew by just 2.8% last fiscal, as against 7% expansion in 2010-11.
Growth of the construction sector stood at 5.3% last fiscal, compared to 8% in 2010-11.
The only silver lining is the growth in electricity, gas and water supply segment where output rose by 7.9% in the last fiscal compared to 3% in 2010-11.
Persistent sluggishness in the economy due to slowdown in the manufacturing sector, coupled with decline in mining and quarrying, is likely to put pressure on the Reserve Bank to cut interest rates in its policy review in June.