Colgate-Palmolive Q2 profit falls 2% on declining revenues
Mumbai: Colgate-Palmolive India Ltd, the Indian arm of the world’s largest toothpaste maker, on Monday said fiscal second quarter profit fell 2.06% as toothpaste sales declined.
Net profit declined to Rs177.57 crore in the three months ended 30 September, from Rs181.31 crore a year ago. Revenue from operations declined 9.7% to Rs1,077.98 crore and volume declined 0.9% from a year-ago period.
“Reported net sales declined 10% due to changes in treatment of indirect taxes post-GST (goods and services tax) implementation,” the company said in a statement on Monday. “With overall GST transitions, volumes declined 0.9%,” the firm added.
This comes even after tax rates for toothpastes dipped by nearly 8-9% with the new GST regime, under which they are now taxed at 18%. Colgate reduced prices for its toothpastes by 8-9% after GST was implemented, the firm said.
“While wholesale demand was soft at the start of the quarter, we saw gradual recovery and expect continued improvement in the coming quarters,” Issam Bachaalani, managing director, Colgate-Palmolive India, said in the statement.
“Direct trade has seen a good pick-up post-GST, both in retail and cash and carry.”
The company’s share in the toothpaste market stayed at 54%, while in toothbrushes it was 45.5%, the statement said.
Analysts say the results are in line with their estimates, but market share for the quarter may have fallen significantly.
“Primary analysis suggests the company has lost 110 bps (basis points) and 240 bps market share in the toothpaste and toothbrush categories, respectively, considering there is no change in MS (market share) calculation methodology,” said Sachin Bobade, an analyst at brokerage Dolat Capital.
A basis point is one-hundredth of a percentage point.
Colgate, the leader in India’s toothpaste market, had seen its market share drop by 2.8% in the quarter ended March 2017 and again by 1.3% year-on-year in the quarter ended June, Mint reported on 3 August.
This was the first series of market share drops since 2007 for Colgate. The company has been locked in a fierce competition for consumers with Baba Ramdev-led Patanjali Ayurved Ltd whose toothpaste brand Dant Kanti now reaches 45% of Indian households, according to market research firm Kantar Worldpanel.