Colgate profits dip by 59

MUMBAI, Oct 26: Colgate -Palmolive India, which incurred a sharply higher marketing expenditure, has posted a significant 59.49 per cen...

MUMBAI, Oct 26: Colgate -Palmolive India, which incurred a sharply higher marketing expenditure, has posted a significant 59.49 per cent drop in net profit in the first half of the current fiscal to Rs 17.71 crore from Rs 43.72 crore in the corresponding period last year.

Net sales dropped by 9.2 per cent to Rs 460.93 crore during the period from Rs 508.12 crore last year.

Net profit in the quarter ended September 30, 1998, also witnessed a similar drop of 59.4 per cent to Rs 9.16 crore from Rs 22.58 crore in the corresponding period last year. Net sales dropped 11.27 per cent to Rs 243.17 crore in the quarter ended September 30, 1998, from Rs 274.06 crore in 1997-98.

The company said that the second quarter results reflect a significant step-up in marketing investments to pursue the company8217;s goal of enhancing oral care leadership and expanding the oral care market size.

Operating profit witnessed a 56 per cent drop to Rs 33.7 crore from Rs 76.42 crore in the first half. Operating profit marginshalved to 7.3 per cent in the first half from 15 per cent last year. Net profit margins dropped to 3.8 per cent during the period from 8.6 per cent last year.

Interest charges stood at Rs 10 lakh in the first half as against Rs 2 lakh in the same period last year. Provision for taxation dropped to Rs 10.67 crore from Rs 25.33 crore last year. Depreciation was pegged at around Rs 10 crore.

According to a company release, a 12 per cent increase has been registered in net sales in the second quarter of 1998-99 over the first quarter of the current year. quot;In spite of 11 per cent lower sales compared to the second quarter last year, the company has further reinforced its commitment to its Investing for the Future8217; programme by increasing its marketing investments by 22 per cent over the first quarter.quot;

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The second quarter has seen an unprecedented rise in marketing investments and activity with the launch of four new oral care products following the launch of Colgate Double Protection in the previousquarter.

The company said that Colgate Double Protection toothpaste, launched in the last quarter, is gaining strong consumer acceptance with continued aggressive marketing support.

Analysts said that the company is on the right track as far as investing in marketing efforts is concerned which, even if not in the near future, will reap results by the turn of the century. quot;Colgate has shed its complacent attitude when it was beaten flat by competitors in the dental care market. It has started aggressively investing in marketing and this should pay off at a later stage,quot; said an analyst.

The Colgate-Palmolive scrip moved up to Rs 178.50 on the BSE on Monday from its previous close of Rs 168.4.