The history of the company starts with launching of 'Brite' in 1981 and 'Express Powder' in 1983. After the licensing agreement with Colgate-Palmolive USA in 1985 products such as 'Max Dishwash', 'Palmolive' Soap were launched. Toothpaste manufacturing was launched in 1988 and subsequently 'Colgate' toothpaste was produced for the Pakistani market.
The company launched 'Bonus' detergent powder in 1992 targeted towards the middle-class. This detergent has gone on to become one of the best-selling detergents in Pakistan.
Colgate-Palmolive Pakistan is part of the Lakson Group which is one of the biggest groups in Pakistan with presence in various industries. The group includes companies like Century Paper, Century Insurance, Lakson Investments.
Historical Performance Over the year Colgate-Palmolive Pakistan has shown excellent growth. The company achieved its first billion rupees sales in 1996, crossed 5 billion rupees in 2006 and hit the 20 billion rupees mark in 2012. From 2003 to 20013 gross sales CAGR of the company was 20 percent. At the end of FY2015, the company crossed 30 billion rupees in gross sales.
During the last five years, the company has improved on all metrics. Expenditure on in-store promotion, advertisements and the distribution network has been regulated which has translated into revenue growth and customer retention. During FY13 the company's financial had a slow year because of exchange rate surge which resulted in gross margin decline as price of raw material went up.
In FY14, as the exchange rate stabilised, the performance of the company got back on track. The competition in the soap market increased as imported products started to hit the stories which meant that market share of Palmolive, the flagship soap product of the company, market share went down. Imported soaps pricing was quite lower and it put pressure on the company to reduce its prices as well. On the other hand, toothpaste segment maintained its leadership position in the market.
In FY15 and FY16, the sales of the company grew but not at the same pace. The law of large numbers and high base caught up with the financials. Also, competition in all the segments increased tremendously. During these years, home care and personal care segments saw many infiltrate the Pakistani market. The company was able to increase its gross margins in such an intense competition phase because of prior investment in plant and machinery.
Recent Performance Colgate-Palmolive Pakistan in its HYFY17 report a 12 percent increase in its top line. The company witnessed volumetric growth across all its segments. Variant of Colgate toothpaste was revitalised, while new products were also added in the toothpaste category. Over the last few quarters, the company has also been able to improve its product-mix and reduce input costs. All these efforts coupled with a stable exchange rate has resulted in an increase of 200bps in gross margins.
Shareholding Pattern The shareholding pattern of the company closely follows the Lakson group companies' pattern where majority of the holding lies with the associate companies and related parties. Colgate-Palmolive USA still maintains a 30 percent holding. The group companies combined hold about 58 percent shares of the company. The general public owns about 1.8 percent of the shares.
Performance vs. KSE-100
The share price performance of Colgate compared to the benchmark KSE-100 index over the past one year has been not been good. The share price has underperformed the index since last April. Underperformance can be attributed towards the fact that the stock already had a very significant run-up during the previous years and the investors felt that some consolidation at these levels is necessary before financials catch up with the stock price.
Future Outlook The future of the company remains 'Brite' as one of its products. With economic growth on the horizon, consumer spending will also increase especially in personal care and home-care categories. The company has been able to take full advantage of the up tick in consumer demand by introducing new products each year across all categories. To keep competition in check, the company has been spending heavily on advertisement and shopper experience. To maintain its market share, the company will have to stay vigilant as new brands are popping up every year.
========================================================================
Colgate-Palmolive Pakistan Pattern of Shareholding (As of June 30, 2016)
========================================================================
Shares Percentage
========================================================================
Colgate-Palmolive Co.USA. 14,386,466 30.00%
Siza Services (Pvt) Limited 12,123,267 25.30%
Siza (Pvt) Limited 8,334,616 17.40%
Premier Fashions (Pvt) Limited 5,841,299 12.20%
Arisaig India Fund Limited, Hongkong 2,542,808 5.30%
Siza Commodities (Pvt) Limited 1,471,562 3.10%
Century Insurance Company Limited 17,639 0.01%
Directors and their Spouses and minor Children 2,338,893 4.90%
Iqbal Ali Lakhani 2,327,687 4.90%
Financial and Insurance Companies 3,504 0.01%
General Public 884,352 1.84%
------------------------------------------------------------------------
Source: Company Accounts, Zakheera (some shareholders are repeated)
========================================================================
=======================================================
COLGATE-PALMOLIVE PAKISTAN HYFY17 SNAPSHOT
=======================================================
PKR ('000) HYFY17 HYFY16 YoY
=======================================================
Net Sales 14,118,782 12,467,224 12%
Cost of Sales 8,825,422 8,503,075 4%
Gross Profit 5,293,360 4,414,149 17%
Distribution Costs 2,798,919 2,268,556 19%
Admin expenses 180,216 146,916 18%
Other charges 179,884 158,267 12%
Other income 135,757 114,238 16%
Finance cost 12,231 11,334 7%
Profit before tax 2,257,867 1,943,314 14%
Taxation 652,273 609,306 7%
Profit after tax 1,605,594 1,334,008 17%
EPS 33.48 27.82 17%
Gross margin 37% 35% up
200bps
Net margin 11% 11% -
-------------------------------------------------------
Source: Company Accounts
=======================================================
Copyright Business Recorder, 2017