InvestorQ : How did Colgate manage to report such sharp growth in profits in Dec-20 quarter?
Juvina Maggie made post

How did Colgate manage to report such sharp growth in profits in Dec-20 quarter?

Deepa Salunkhe answered.
1 year ago

Colgate Palmolive, one of India’s and also the world’s most reputed FMCG brands, reported PAT growth of 24.7% on yoy basis at Rs.248.36 crore for the quarter ended Dec-20. This growth in profits was largely triggered by lower input costs as most of the key inputs used by Colgate in the manufacture were down sharply in the last quarter.

In the midst of the pandemic lag effect, Colgate also managed to extend its top line revenues by 7.4% for the Dec-20 quarter to Rs.1,232 crore. Colgate is giving a more natural twist to its portfolio of products It is expanding its product range with toothpastes for diabetics to keep their gums strong and a strong focus on the naturals portfolio.

The naturals portfolio has been in the limelight after the pandemic as people are increasingly shifting to non-synthetic products. Operating profits were up 22.9% at Rs.325 crore on the back of a 15% fall in cost of materials consumed. As a result, the OPM or the operating profit margin improved by 333 bps at 26.39% in the Dec-20 quarter.

The operating advantages also transmitted to the bottom line with 24.4% growth. The big challenge for Colgate is perhaps now to replicate its success and dominant market share in the toothpaste market to other FMCG products. That is the challenge the company has been grappling over the last few years and naturals may be the answer.