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FY-2015: Colgate-Palmolive?s marketing spends up 3.7% at Rs 714 crore

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BENGALURU: Colgate-Palmolive (India) Limited spent 3.7 per cent more towards advertisement and sales promotion (ASP) in FY-2015 (year ended March 31, 2015) at Rs 714.25 crore (17.9 per cent of Total Income or TI) as compared to the Rs 688.66 crore (19.2 per cent of TI) in FY-2014. In Q4-2015, the company?s ASP spend at Rs 154.49 crore (15 per cent of TI) was 6.9 per cent lower than the Rs 165.86 crore in the corresponding year ago quarter and 13.3 per cent less than the Rs 178.21 crore (17.9 per cent of TI) in the immediate trailing quarter.

Note: 100,00,000 = 100 Lakhs = 10 million = 1 crore

Colgate-Palmolive?s brands include Colgate for oral care, Palmolive, Charmis and Halo for personal care, and Axion for household care.

Please refer to Fig A below. Over a 12 quarter period starting from Q1-2013 until the current quarter (Q4-2015), Colgate-Palmolive?s ASP shows a linear increasing trend both in terms of percentage of TI as well as in absolute rupees. The slope of the broken maroon trend line shows that ASP in absolute rupees should intersect the Q4-2015 ordinate at Rs 190.076 crore as compared to the Rs 154.49 crore actually spent by the company. The corresponding slope of the broken olive green trend line indicates an intersection with Q4-2015 at 18.81 per cent of TI , again far more than the 15 per cent of TI actually spent the company

In Q2-2015, Colgate-Palmolive (India) Limited (Colgate-Palmolive) spent the highest amount towards advertisement and sales promotion (ASP) in terms of absolute rupees as well as percentage of TI in a quarter at Rs 201 crore and 20.1 per cent of TI during the period under consideration. The lowest ASP by the company during the 12 quarters was in Q4-2013 at Rs 82.1 crore and 9.7 per cent of TI.

Colgate-Palmolive?s TI in FY-2015 at Rs 3981.94 crore was 11.3 per cent more than the Rs 3578.81 crore in FY-2015. In Q4-2015, TI at Rs 1028.51 crore was 10.2 per cent more than the Rs 931.22 crore in Q4-2014 and 3.3 per cent more than the Rs 995.99 crore in Q3-2015. The company?s TI shows a linear increasing trend. The slope of the blue broken trend line indicates that the company?s TI intercept on Q4-2015 should be Rs 1032.648 crore, as opposed to the Rs 1028.51 crore TI achieved by the company.

Further, across 8 financial years starting FY-2008 until FY-2015, the company?s TI, ASP and ASP as percentage of TI show an upward linear trend, with the company?s marketing spends being the highest both in terms of absolute rupees and percentage of TI in FY-2015 at Rs 714.25 crore (17.9 per cent of TI).

Fig A1 above indicates the breakup of Colgate-Palmolive?s advertising and sales promotion across three financial years for which data is available. The breakup of ASP into Ad spends and Sales Promotion spends for FY-2015 is not available as yet.

Colgate-Palmolive profit after tax (PAT) in FY-2015 at Rs 558.98 crore (14 per cent of TI) was 3.5 per cent more than the Rs 539.87 crore (15.1 per cent of TI) in the previous year.

Please refer to Fig B above. PAT in Q4-2015 at Rs 163.63 crore (16 per cent of TI) increased 23.7 per cent as compared to the Rs 132.3 crore (14.3 per cent of TI) in Q4-2014 and was 25 per cent more than the Rs 130.86 crore (13.2 per cent of TI) in Q3-2015. During the 12 quarter period under consideration, PAT shows a linear increasing trend in absolute rupees. The slope of the orange broken trend line indicates that PAT in absolute rupees intercepts the Q4-2015 ordinate at Rs 140.914 crore, much lower than the actual PAT of Rs 163.63 crore achieved by the company in Q4-2015.

The slope of the broken blue trend line indicates that the company?s PAT in terms of percentage of TI shows a decline. This is likely to change over the next few quarters, if the company?s PAT continues to buck the trend as it has in Q4-2015. The slope of the broke blue trend line indicates an intercept with the Q4-2015 ordinate at 13.53 per cent, again much lower than the PAT at 16 per cent of TI actually achieved by the company.

Colgate-Palmolive?s PAT has been the highest at Rs 185.22 crore (21.5 per cent of TI) in Q1-2014 during the twelve quarter period under consideration, while the lowest PAT in absolute rupeesand in terms of percentage of TI was in Q2-2013 at Rs 109.52 crore and 12.2 per cent of TI.

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