Colgates Q4FY13 revenue came in line (up 18% y-o-y), though PAT was 5% below estimate due to higher-than-expected jump in costs. Key positives include: (i) robust 12% y-o-y overall volume growth (8% in Q3FY13) despite high base and heightened competitive intensity; (ii) strong volume growth (11% y-o-y) and market share gain in toothpaste (up 130bps y-o-y); and (iii) market share gain in toothbrush (up 380bps y-o-y). The only key negative was Ebitda margin contraction likely due to heightened competitive intensity. Margin could come under pressure due to P&Gs likely entry.
Colgates gross margin expanded 35bps YoY. Ebitda margin declined a massive 388bps y-o-y due to higher ad spends (up 158bps y-o-y on a low base at 8.3% of sales), staff costs (up 100bps y-o-y) and other costs (up 165bps y-o-y). The company maintained leadership in toothpaste with 55.4% volume share (Jan-Apr 2013), up 130bps y-o-y, with 11% y-o-y volume growth.