Colgate Palmolive did not budge too much after coming out with results that just about met expectations, inching up 0.11% to Rs 134.90.

By 14:58 IST on Friday, the scrip of the oral care major recorded volumes of 22,762 shares on BSE.

During the afternoon on Friday, Colgate Palmolive released third quarter ended 31 December 2002 results that showed a 32.7% rise in net profit to Rs 21.1 crore compared to Rs 15.9 crore in the corresponding period of the previous year. Total income decreased 8.04% to Rs 274.5 crore (Rs 2.74 billion) from Rs 298.5 crore (Rs 2.98 billion) in DQ 2001.

A capitalmarket.com poll (of six FMCG analysts) had projected a 12.6% to 34% growth in net profit in the range of Rs 17.9 crore and Rs 21.3 crore. Top line was expected at between Rs 274.5 crore (Rs 2.74 billion) and Rs 289 crore (Rs 2.89 billion).

The company's focussed programmes and concerted efforts to reduce operational costs and improve efficiencies continue to yield positive results, as reflected in the latest results. Savings from the programmes have been used to fund a VRS scheme at the company's Sewree plant (Mumbai) during the quarter.

The company's top line is feeling the pressure of the poor monsoon of the last year. This has kept the stock subdued. Besides, unorganised players and new entrants have been eating into the company's market share. Analysts fear the top line may be in for further scaling down in the coming quarters as sales dwindle.

Analysts say the slowdown in the FMCG sector in general and the toothpaste category in particular, continues to pose a major challenge to Colgate. Overall, analysts are pessimistic about the company's prospects, considering factors like the slowdown in the overall oral care segment, stiff competition and a poor macro environment. However, they say the company could continue to show a moderate rise in bottom line due to its sustained efforts towards improving operating efficiency and lowering materials costs.

The slowdown in sales of the FMCG sector is due to lowered spending by consumers, especially in rural areas. The rural segment accounts for almost 60-65% of the revenues of the FMCG sector. The poor monsoon (last year) is likely to have further repurcussions on the sales revenues of the sector for the current quarter.

Colgate Palmolive, a 51% subsidiary of Colgate Palmolive, USA, is India's largest toothpaste maker by market share. In the Rs 1,000-crore toothpaste market, the company commands around 50% share. Its product range includes tooth pastes, tooth powders and tooth brushes under the ‘Colgate' brand. The company is also a leading producer of personal care products under the ‘Palmolive' brand.

BSE Code: 500830