Colgate-Palmolive market share falls again as pre-GST destocking hits volumes
Mumbai: Colgate-Palmolive India Ltd on Thursday reported its market share in toothpastes fell to 54.3%, a sequential decline of 1.3%, even as its net sales declined by 3% year-on-year (y-o-y) for the quarter ended June 2017, while net profit rose 8.4% year-on-year.
This marks the second quarter of decline in market share for the toothpaste market leader. In financial year 2016-2017, the company lost its share in the toothpaste market for the first time since 2007 when it fell to 55.6% from a high of 57.4%.
Colgate-Palmolive reported a 2.7% decline y-o-y in net sales to Rs1,109.88 crore as its sales volumes fell 5% for the quarter. This was largely because distribution channels reduced stocks in the months before the goods and services tax was introduced on 1 July, the company said in a press statement.
However, the company’s net profit rose 8.4% y-o-y to Rs136.38 crore, accompanied by a 1.5% increase in Ebitda (earnings before interest, tax, depreciation and amortization), the company said.
“In the run up to the implementation of GST, we did expect many challenges including an impact on trade pipeline inventory,” Issam Bachaalani, managing director of Colgate-Palmolive, said in a press statement. “Despite the transition challenges leading to softness in sales, we are pleased to report an 8% increase in profits, margin expansion of 50 bps (basis points) and Ebitda by 150 bps,” he said. A basis point is one-hundredth of a percentage point.
Colgate-Palmolive also said it was able to reduce prices of its toothpastes and toothbrushes by 8-9%.
The oral care leader has been facing intense competition from Baba Ramdev-led Patanjali Ayurved’s flagship product, herbal toothpaste Dant Kanti. Colgate-Palmolive had launched its own herbal toothpaste last year called Cibaca Vedshakti.
Shares of Colgate-Palmolive were trading at Rs1,096.20 at 1:54pm, up 5.52%, while the benchmark Sensex index was at 32,333.15 points, down 0.44%.