Colgate-Palmolive Pakistan Ltd (COLG) is among the leading multinational consumer goods company in Pakistan. A member of Lakson Group Company, it began its operations back in 1985 when the US based Colgate-Palmolive granted the firm license to manufacture and market Colgate-Palmolive products in Pakistan. At the moment, the company is one of the top manufacturers of personal care and consumer products within the country.
The firm produces and markets leading global brands of oral and personal-care products. Additionally, the company brought few of the world's most trusted household names such as Colgate Toothpaste and Palmolive Naturals to the Pakistani market. The company's principal class of the product comprises Personal Care, Home Care, etc. Colgate Palmolive's sales of Home Care accounted for 75 percent of its total sales of all product classes.
The company took steps during this period to keep its core cost low and intensify the cost-saving measures that enabled to offset the higher input prices hindering most other manufacturers. Up until FY12 COLG performed well in its sales and profit. During FY12, the company saw its bottom line scored Rs 1.62 billion versus Rs 1.17 billion recorded in FY11, which was a 39 percent increase in year-on-year comparison. This massive increase in profit after tax came from 29 percent increase in sales during the period. However, then came FY13, when revenue growth slowed to 8 percent. The company also saw major problems with regards to energy woes and had to rely heavily on producing in-house power. These costs become a heavy burden on the margins of the company.
Additionally, adverse exchange rate movement caused the company to buy the raw material at higher prices that in return decreased the firm's gross profit margin to 28 percent, a 100 basis point fall. However, on a brighter note Colgate-Palmolive invested significantly during this period in plant and machinery, and that paid them well in subsequent years.
Again, Colgate put considerable money in its brands and store marketing. The company rolled out campaign to increase engagement at relevant touch points to drive market share. But it saw a massive competition in Palmolive soap by the influx of imported soaps at a price much lower than the raw material cost of manufacturing it.
Although, COLG claims to be a market leader in the dental care sector and commands the sector, it is facing massive competition in fabric detergents and dishwashing. But despite that in home care category the company is still at the leadership position. During the period under discussion, the company reported 22 percent sale in personal care, 75 percent in home care and 4 percent in other sale items. During the financial year, Colgate took advantage of the declining commodity prices and raw material costs, which helped to increase its gross profit margin by about 320 bps.

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Colgate Palmolive Pakistan Ltd
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Rs (mn)                           FY13       FY14       FY15           YoY
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Net turnover                    20,267     23,226     24,310         4.67%
Cost of Sales                   14,595     16,646     16,631        -0.09%
Gross Profit                     5,673      6,580      7,679        16.69%
Selling and Distribution         3,120      3,811      4,214        10.58%
Administration Expenses            182        224        268        19.96%
Operating Expenses                 181        209        263        25.78%
Other Income                        89        141        362       157.03%
Profit from Operation            2,278      2,477      3,295        33.01%
Finance Cost                        15         18         20        14.69%
Profit before Tax                2,263      2,460      3,275        33.14%
Taxation                           674        766      1,053        37.36%
Profit After Tax                 1,589      1,693      2,222        31.24%
Gross profit margin                28%        28%        32%    UP 400 BPS
Operating profit margin            11%        11%        14%    UP 300 BPS
Net profit margin                   8%         7%         9%    UP 200 BPS
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