Colgate Palmolive on steady growth

Colgate Palmolive (Pakistan) Limited (PSX: COLG) is a multinational company operating in consumer goods segments: Oral care, personal care, fabric care, and surface care. The firm announced its sanguine half-yearly financial statement earlier this week along with an interim cash dividend of Rs15 per share.

For the first half of FY17, the firms net turnover posted a growth of 13.2 percent year-on-year, which was primarily driven by volumetric growth in all categories. The firms increase in gross profit and improvement in margin for the same period is a clear inidication of lower input costs such as raw material, freight, and utilities; and this decrease in costs emanated from lower oil prices. The firm has been able to report lower input costs in FY15 and FY16 as well due to low oil price environment.

Selling and distribution costs that are around 20 percent of the net revenues of the company increased significantly on the back of increased spending of media and promotion. The firm has been spending on advertising and promotion in an attempt to invest in the brand.

COLGs bottomline for 1HFY17 saw a jump of 20 percent year-on-year, and along with better revenues, cost of sales played a significant role in boosting the periods earnings. The firm has been doing well in all its business segments. In FY16, the company re-launched its two brands: Bright and Bonus Tristar that powered the powder detergent category growth. The re-launch was highly supported by increased level of media advertising and marketing. In the soap category, the Palmolive bar has been witnessing double-digit growth. In FY16, the firm launched a new variant, Flawless Clean. The firm continued to lead in the oral care category with strong performance of its flagship brand, Colgate Maximum Cavity Protection in FY16.

The firm has continued its fervor in FY17. This can be seen by its efforts in brand investment in the first quarter of FY17. COLG is looking to add and enhance its hyper-sensitivity management range in the oral care category where the firm added a new variant to the Colgate Sensitivity Pro Relief portfolio. The firm has also entered the hair care segment with its Palmolive Naturals Shampoos a range that has six variants.