Oral care major Colgate-Palmolive reported a nearly 4% decline in net profit for the quarter ended December 31, 2012 to Rs 111.1 crore as the company upped ad spends to fight competition from rivals such as GlaxoSmithKline Consumer, which launched products such as Sensodyne in the marketplace.
Colgate's advertising and sales promotion expenditure was up nearly 45% to almost Rs 100 crore in the December quarter from Rs 69 crore last year indicating the pressure on it to retain its hold in the sensitivity segment—an area it first forayed into a few years ago.
But with the launch of GSK's Sensodyne in January 2011, Colgate had to launch an update to its existing brand Colgate Sensitive and keep up visibility and noise levels as GSK attempted to educate consumers to the problem of sensitivity-a condition where the patient is sensitive to anything hot or cold he or she consumes.
Colgate also took the battle for control of niche oral care to the next level by launching two variants of its Plax mouthwash. The latter competes head-on with Johnson & Johnson's Listerine, the worldwide leader in the mouthwash category.
The higher ad spends, however, helped turn in good sales numbers for the company, with the latter growing nearly 14% to Rs 784 crore during the December quarter.
Underlying volume growth for Colgate was 9%, while price-led growth was 5%, the company said.
Colgate retained its hold over the toothpaste market with a share of 54.2%. In the brushing segment, Colgate has a share of 39.5%, which is marginally higher than the 39% market share it reported in the September quarter.
The company also declared and paid its second interim dividend of Rs 6 per share in December 2012. Including the first interim dividend of Rs 13 per share paid in October 2012, the company has paid a total of Rs 19 per share so far. For the fiscal ended March 31, 2013, Colgate has declared a total dividend of Rs 25 per share.
