Analyst Presentation 2005

Welcome !
May 2005
Meeting Outline
• Business Update
• Financial Overview
• Questions & Answers
Team
- Graeme Dalziel
- Moses Elias
- Management
CP India – Management Team
Graeme Dalziel
VP South Asia & MD
Moses A. Elias
Exec V P & CFO
Deepak Chhibba
Exec V P – Mfg. & Prod.Supp.Chn
Arun Pande
VP – Info Tech
Vinay Hegde
Exec V P Marketing
K V Vaidyanathan
Vice President – Legal & Co. Sec
Debashish Roy
Vice President - HR
Vinod Nambir
Vice President – Sales
Dr S P Manek
V P – Res.& Tech Centre
Results Overview
• Strategies are working
–Acceleration of volume growth
–Strong market shares
• Marked recovery in Toothpaste Market
• Record Earnings
Strategic Strength
Category
Value SOM
%
Toothpaste
47.3
Toothpowder
48.4
Toothbrush
27.8
Shower Gel*
47.6
Liquid Handwash*
8.4
Shaving Cream (exc
12.9
Gel,Foam)
Cold Creams
4.1
*urban only
Market
Position
1
1
1
1
3
Relative
Share
1.5
1.5
1.2
1.1
0.2
1
4
1.1
0.1
Market Size & Growth Trend (Volume)
Toothpaste (Tons)
% Chg vs PY
Toothpowder (Tons)
% Chg vs PY
Toothbrush (MM Pcs)
% Chg vs PY
2002
2003
2004
2005 YTD
86320
83213
89012
23580
-5.3
-3.6
+7.0
+10.2
27295
26866
24785
6013
-3.3
-1.6
-7.7
-4.9
351.1
359.9
357.6
88.4
-2.6
+2.5
-0.6
-2.9
Toothpaste market strongly back on growth track
Toothpaste Market Growth by Quarter
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
19780
20320
20729
21657
21793
% Chg vs PY
+1.1
+6.1
+8.3
+12.5
+10.2
Value (LC MM)
4712
4772
4786
4960
4992
% Chg vs PY
-8.1
-3.0
+1.4
+7.5
+6.0
Volume (Tons)
Recovery in market value also from Q3 04 – volume
growth more than offsetting 2003 price reduction
Toothpaste – LPP Segment Trend
% Volume Shares
2002
2003 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05
Cibaca
5.0
5.4
5.6
7.7
9.3
9.5
9.6
Anchor
6.4
6.5
5.1
4.7
4.5
4.7
4.8
Ajanta
-
2.6
6.9
6.3
5.7
5.2
4.3
Babool
3.8
5.0
5.2
5.1
4.7
4.3
4.4
Others
1.7
1.6
1.1
1.0
1.0
1.1
1.1
Total LPP
Segment
16.9
21.1
23.9
24.8
25.2
24.8
24.1
LPP segment showing signs of plateauing
Cibaca to Colgate Cibaca Rebranding
Till August ’03
Till March ‘04
60:40 Transition
effective April’04
Toothpowder Category Trend
Q2 03 *
Q3 03
Q4 03
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
Category Vol (Tons)
7066
6554
6258
6322
6196
6107
6161
6013
% Chg vs. Year Ago
+3.6
-2.1
-10.2
-9.5
-12.3
-6.8
-1.6
-4.9
% Chg vs. Prior Qtr
+1.1
-7.3
-4.5
+1.0
-2.0
-1.4
+0.9
-2.4
Signs of category volume stabilizing in H2 2004
* Toothpaste SPD in this Quarter
Strategic Priorities
• Driving Growth
• Funding Growth
• Become The Best Place To Work
Driving Growth Priorities
•
•
•
•
•
Grow Oral Care Market Shares
Reignite toothpaste market growth
Launch innovative new products
Compete aggressively in LPP segment
Strategic consumption & penetration building
activities
• Build strong presence in emerging Personal
Care categories
TOTAL COMPANY -DOMESTIC (EXCL SOAPS)
Total
Revenue
6,000
3 per. Mov. Avg.
(Revenue)
5,500
5,000
4,500
4,000
3,500
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Funding Growth Priorities
• Scale up of new incremental capacity
manufacturing facility in Himachal Pradesh
• Exit from unprofitable manufacturing operations
• Upgrade existing manufacturing operations to
support product innovations
• Selling price increases
• Reducing business complexity
• Aggressively seeking out savings opportunities
across the business
• Continuous improvement gains from supplier
partnerships for strategic materials
Baddi Plant
CONTINUED ABSOLUTE FOCUS ON:
• Strategic Prioritization
• Strict Financial Discipline
• “As Perfect as Possible” Execution
• “Go to Market” Excellence
• Motivational, Values Driven Culture
• Constant and Clear Communications
Renewed Focus on Innovation
• Category Innovation Centre
• Full pipeline of new products
• Innovation across the organization
Battery Toothbrushes
Colgate Motion
Rs. 395 /-
Manual Toothbrushes
Colgate Massager
Rs. 50 /-
Colgate ZigZag Plus
Rs. 26 /-
Colgate Designer
Rs. 15 /-
Colgate ZigZag Jr
Rs. 12 /-
Colgate Classic
Rs. 6 /-
Manual Toothbrushes
Colgate Super Flexible – Relaunch
with ‘Tongue-Cleaning’ feature
Rs. 13 /-
CP Market Share Trend (Volume)
2003
2004
YTD 04
YTD 05
+/- YA
Latest 3 Periods
Jan05
Feb 05
Mar 05
Toothpaste
47.6
47.7
45.8
49.2
é
48.6
48.5
50.4*
Toothpowder
46.8
49.9
48.6
48.9
é
50.3
48.3
48.0
Toothbrush
31.0
31.0
29.5
30.2
é
30.3
30.2
30.1
* Highest monthly share since June 2002
CP Market Share Trend (Value)
2003
2004
YTD 04
YTD 05
+/- YA
Latest 3 Periods
Jan
05
Feb 05
Mar 05
Toothpaste
47.7
46.6
46.4
47.3
é
46.8
46.8
48.3
Toothpowder
47.1
48.5
48.2
48.4
é
49.0
47.9
48.3
Toothbrush
28.4
28.6
27.0
27.8
é
27.8
27.6
27.8
Market vs. CP Growth
YTD Mar 05 vs. YTD Mar 04
Value Growth %
Volume Growth
%
Market
CP
Market
CP
Toothpaste
+5.9
+7.9
+10.2
+18.2
Toothpowder
-4.6
-4.2
-4.9
-4.2
Toothbrushes
+0.8
+3.7
-2.9
-0.7
Note : Growth in Market & CP offtake as per Nielsen
Meeting Outline
• Business Update
• Financial Overview
• Questions & Answers
- Graeme Dalziel
- Moses Elias
- Management
Team
SIMPLE FINANCIAL STRATEGY
Reduce Costs
Reduce Overheads
Invest in Brand Building
/ New Products
Grow NPAT
2004-05 Highlights
• Real volume growth with VFM pricing
• Continued Cost and Expense reductions
• Rationalization of Assets
• Stronger Balance Sheet
• Record Earnings
• Higher Dividend
Sales
1,100
1,050
1,073
1,057
(Rs. Crores)
1,042
1,000
950
964
947
939
+2.7%
+2.7%
900
850
2002-03
2003-04
Gross Sales
Net Sales
2004-05
Costs (Excl. Advt.)
665
660
660
655
+2.3%
(Rs. Crores)
650
645
645
640
635
A’bad VRS = 6.4
Idle Assets = 6.2
630
625
632
620
615
2002-03
2003-04
2004-05
Advertising
190
19.5%
20%
19%
180
170
185
17%
160
(Rs. Crores)
18%
15.7%
16%
150
14.2%
140
148
15%
14%
130
137
120
-7.4%
13%
12%
110
11%
100
10%
2002-03
2003-04
Advertising
2004-05
% Sales
EBITDA
180
17.4%
170
(Rs. Crores)
160
15.6%
19%
17%
167
+14.4%
13.8%
15%
150
13%
146
140
11%
130
120
130
9%
110
7%
100
5%
2002-03
2003-04
EBITDA
% Sales
2004-05
EBIT
150
16%
15.0%
140
145
(Rs. Crores)
14%
+18.9%
130
120
15%
13.0%
11.7%
13%
12%
122
11%
110
111
10%
100
9%
90
8%
2002-03
2003-04
EBIT
% Sales
2004-05
Profit Before Tax
185
19%
18.5%
175
178
18%
+17.9%
(Rs.Crores)
165
17%
16.1%
155
15.5%
16%
151
145
15%
147
135
14%
125
13%
2002-03
2003-04
PBT
% Sales
2004-05
Income Tax
80
45%
70
60
39%
70
68
40%
36%
(Rs. Crores)
50
30%
29%
40
35%
59
25%
30
20%
20
15%
10
0
-5
-10
5%
-15
-10
10%
-20
0%
2002-03
2003-04
Curr Tax
Def Tax
2004-05
Tax Rate
Profit After Tax
120
12%
11.7%
115
11.5%
113
110
(Rs. Crores)
105
108
+4.6%
11%
100
95
90
85
80
10%
89
9.4%
75
9%
2002-03
2003-04
PAT
% Sales
2004-05
EPS, DPS & Payout
9.0
100%
95%
8.0
7.9
7.0
90%
8.3
85%
85%
(Rs.)
7.0
6.0
5.0
6.5
6.0
80%
75%
70%
69%
65%
4.0
3.0
95%
60%
4.3
55%
2.0
50%
2002-03
2003-04
EPS
DPS
2004-05
Payout
Yield
5.0%
4.6%
4.5%
4.2%
4.0%
3.5%
3.2%
3.0%
2.5%
2002-03
2003-04
2004-05
PE
21.0
20.5
20.7
20.0
19.5
19.0
18.5
18.3
18.0
17.8
17.5
17.0
16.5
16.0
2002-03
2003-04
2004-05
Net Working Capital
(Rs. Crores)
0
0.0%
-20
-2.0%
-40
-4.0%
-60
-6.0%
-80
-8.0%
-123
-100
-133
-120
-140
-153
-16.0%
-16.1%
2002-03
-12.0%
-14.0%
-14.2%
-160
-180
-12.8%
-10.0%
-18.0%
2003-04
NWC
% Sales
2004-05
Cash Gen. from Operations
200
180
160
176
(Rs. Crores)
140
120
116
100
80
60
75
40
20
0
2002-03
2003-04
2004-05
Cash + Bank + Investments
330
310
315
290
299
(Rs. Crores)
270
250
260
230
210
New Plant = 70
190
170
150
2002-03
2003-04
2004-05
Return on Capital & Equity
Thank You