Colgate Palmolive (Pakistan) Limited recently released its financial results for the fiscal year ended June 30, 2023, posting hefty growth in revenue and profitability compared to FY22. In FY23, the company’s net turnover jumped to Rs91.45 billion, posting a robust growth of 46.7% from Rs62.33 billion in FY22. Despite unfavourable operating conditions such as currency devaluation, restriction on imports, persistent inflation and rise in direct and indirect taxes, the company managed to grow substantially during this period. The gross profit surged by 62.7% to Rs26.09 billion in FY23 from Rs16.04 billion in FY22. However, the company’s administrative expenses rose by 30.09%. Despite the uptick in these expenses, the company posted 88.21% hike in profit from operations, which almost doubled to Rs16.68 billion in FY23 from Rs8.86 billion in FY22.

Furthermore, the profit-before-tax surged to Rs16.53 billion in FY23, registering a substantial increase of 89.57% from Rs8.72 billion in FY22. The company’s net profit shot up by 77.3% to Rs10.4 billion in FY23 from Rs5.87 billion in FY22. This rise in revenue and profit is attributed to a combination of price, volume and improvement in product mix.
The rise in net profit pushed the earnings per share to Rs42.88 in FY23 from Rs24.19 in FY22.

Analysis of profit or loss

Colgate Palmolive (Pakistan) Limited has shown persistent growth in its revenue, gross and net profits over the years from 2019 to 2023. The company’s revenue stood at Rs36.96 billion in 2019, which rose consistently, reaching Rs91.45 billion in 2023. Similarly, the gross profit stood at Rs10.47 billion in 2019 and moved up to Rs26.09 billion in 2023. The company’s administrative, selling and distribution costs continued to increase over the time period because of increase in local freight and advertising expenses. Likewise, the profit from operations, the pre- and after-tax profits showed an upward swing from 2019 to 2023, indicating effective implementation of business and cost management strategies over the period.

Statement of financial position

The company’s non-current assets increased from Rs4.3 billion in 2019 to Rs7.94 billion in 2023. Similarly, its current asset rose to Rs39.5 billion in FY23 from Rs14.62 billion in 2019. This increase in both current and non-current asset reflects the company’s efforts over the years to expand its business and secure its financial position in the market.
The current liabilities grew significantly to Rs21.2 billion in 2023 from Rs3.78 billion in FY22. Additionally, the non-current liabilities also grew from Rs341 million in 2019 to Rs1.9 billion in 2023. Though the company saw a rise in liabilities, its liquidity position was relatively stable to offset the increase.

Summary of cash flows

The cash flow from operating activities increased from Rs2.8 billion in 2019 to Rs7.69 billion in 2021. It then reduced considerably to Rs1.9 billion in 2022, but jumped to Rs16.9 billion in 2023. The cash flow from investing activities displayed negative cash flow of Rs2.65 billion in 2019 because of the company’s investment in assets. In 2020, the company was able to attain positive cash of Rs288.7 million, but failed to sustain it in the subsequent years.
Similarly, the company witnessed negative cash generation from its financing activities during the period under review. This indicates that the company paid off its obligations over the years.

The net increase in cash and cash equivalent remained positive in 2020 and 2023, with values of Rs2.66 billion and Rs2.51 billion, respectively. In 2019, 2021 and 2022, the net cash and cash equivalent remained negative. However, the cash and cash equivalent at the end of the year though varied over the time period but remained positive. It stood at Rs2.55 billion in 2019 and Rs5.49 billion in 2023.

Credit: Independent News Pakistan (INP)