COMPANY
REPORT
SUBMITTED TO: ABID MEHMOOD
MASOOMA
PREPARED BY: MUHAMMAD BILAL KHAN
MUHAMMAD ABDULLAH
8TH DECEMBER, 2021
Company Background & Current Market Status:
Overview:
Colgate-Palmolive (Pakistan) Ltd is involved in the manufacturing and sale of detergents,
personal care, and other related products. The company's operating segment includes Personal
Care, Home Care, and Others, out of which the majority comes from Home Care. The firm
markets its products under the brand name Colgate. Its products include toothpaste, toothbrush,
soaps, dishwashing bars, and others.
 KEY STATS
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Open77.22
Day High77.67
Day Low76.69
Prev Close77.21
52 Week High85.61
52 Week High Date01/06/22
52 Week Low67.84
52 Week Low Date10/10/22
Market Cap64.487B
Shares Out835.21M
10 Day Average
Volume3.41M
Dividend1.88
Dividend Yield2.43%
Beta0.52
YTD % Change-9.53
 RATIOS/PROFITABILIT
Y
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EPS (TTM)2.29
P/E (TTM)33.67
Fwd P/E (NTM)25.82
EBITDA (TTM)4.258B
ROE (TTM)317.89%
Revenue (TTM)17.741B
Gross Margin (TTM)57.68%
Net Margin (TTM)11.90%
Debt To Equity
(MRQ)1,326.05%
 EVENTS
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Earnings Date01/27/2023
Ex Div Date10/20/2022
Div Amount0.47
Split DateSplit Factor-
Financial Analysis:
Horizontal Analysis:
Horizontal Analysis
2018
2019
2020
2021
2022
30-Jun2018
30-Jun2019
30-Jun2020
30-Jun2021
30-Jun2022
Cash and Short Term Investments
--
-1.76%
21.62%
74.41%
37.24%
Total Receivables, Net
--
53.44%
49.21%
-1.32%
27.31%
Total Inventory
--
23.11%
45.11%
69.80%
201.78%
Prepaid Expenses
--
-10.81%
-21.62%
24.32%
216.22%
Other Current Assets, Total
--
-20.00%
116.67%
-33.33%
3.33%
Total Current Assets
--
13.29%
33.15%
63.62%
94.14%
Property/Plant/Equipment, Total - Gross
--
15.66%
35.94%
66.40%
87.81%
Intangibles, Net
--
-44.00%
-44.00%
-64.00%
-84.00%
Note Receivable - Long Term
--
-2.33%
-23.26%
6.98%
81.40%
Other Long Term Assets, Total
--
5.56%
16.67%
261.11%
16.67%
Total Assets
--
13.40%
34.38%
67.99%
97.04%
Liabilities
--
Accounts Payable
--
3.34%
2.71%
83.12%
197.38%
Accrued Expenses
--
26.42%
51.97%
86.62%
123.56%
Notes Payable/Short Term Debt
--
Current Port. of LT Debt/Capital Leases
--
Other Current liabilities, Total
--
Total Current Liabilities
Period End Date
Assets
42%
71.00%
546.00%
452.00%
26.47%
57.06%
156.76%
167.65%
--
18.46%
37.70%
110.01%
169.37%
Total Long Term Debt
--
0.00%
593.00%
963.00%
1089.00%
Total Debt
--
0.00%
664.00%
1509.00%
1583.00%
Deferred Income Tax
--
1.23%
-36.81%
-63.80%
60.74%
Other Liabilities, Total
--
104.65%
86.05%
355.81%
477.91%
Total Liabilities
--
19.76%
52.55%
135.81%
203.45%
--
19.79%
19.79%
31.88%
51.67%
Shareholders’ Equity
Common Stock, Total
Additional Paid-In Capital
--
0.00%
0.00%
0.00%
0.00%
Retained Earnings (Accumulated Deficit)
--
11.66%
30.38%
51.15%
70.30%
Unrealized Gain (Loss)
--
-4.00%
0.00%
0.00%
0.00%
Other Equity, Total
--
30.97%
66.37%
49.56%
78.76%
Total Equity
--
11.76%
29.67%
50.43%
69.48%
Total Liabilities & Shareholders' Equity
--
13.40%
34.38%
67.99%
97.04%
2018
2019
2020
2021
2022
30-Jun2018
30-Jun2019
30-Jun2020
30-Jun2021
30-Jun2022
Return On Assets (ROA)
Return on Equity (ROE)
19.44%
18.48%
21.61%
20.17%
17.79%
24.48%
23.61%
28.20%
28.37%
26.04%
Return on Invested Capital (ROIC)
24.63%
23.80%
27.65%
27.47%
25.20%
Total Revenue
Cost of Revenue, Total
32341.00
36961.00
43530.00
50563.00
62330.00
20851.00
26490.00
30913.00
35716.00
46288.00
Gross Profit
11490.00
10471.00
12617.00
14847.00
16042.00
Net Income
3257.00
3511.00
4865.00
5677.00
5872.00
Net Income Before Tax
Tax Rate
4668.00
4964.00
6712.00
7963.00
8722.00
0.30
0.29
0.28
0.29
0.33
Operating Income
4697.00
5003.00
6808.00
8081.00
8865.00
NOPAT
3277.23
3538.58
4934.58
5761.12
5968.27
Interest Bearing Debt
Total Long Term Debt
0.00
0.00
593.00
963.00
1089.00
Notes Payable/Short Term Debt
0.00
0.00
0.00
0.00
42.00
Total Equity
13304.00
14868.00
17251.00
20013.00
22548.00
Invested Capital
13304.00
14868.00
17844.00
20976.00
23679.00
Ratio Analysis:
Ratio Analysis
Period End Date
Results and Interpretation
 Horizontal Analysis
The horizontal analysis helps investors compare the performance of the company over the
financial periods by comparing the growth of same line items such as inventory, trade payables
etc. The following excerpts were taken from the horizontal analysis of Colgate Palmolive.
1) Total Assets
For the last five years, Colgate’s assets have been increasing rapidly. The table below shows
the percentage change from 2018 to 2022.
Year
2018
2019
2020
2021
2022
Growth
-
13.40%
34.38%
67.99%
97.04%
The figure 13.40% represents that in 2019, there is a percentage increase of 13.40 in the total
assets of Colgate Palmolive as compared to the total assets of the base year 2018. It can be seen
that the recent growth for the year 2022 is 97.04% which is the indicator of better performance
for the company for the last 5 years. This growth is mainly because of fixed assets’ acquisition
over the last five years.
2) Total Liabilities
If we compare the Colgate’s current year’s total liabilities with the base year, the growth is
203.45%.
Year
2018
2019
2020
2021
2022
Growth
-
19.76%
52.55%
135.81%
203.45%
It means that the Colgate has increased its liabilities up to 200% since 2018. This increase is
greater than the increase in the total assets of Colgate. This leads to having an adverse impact
on the current ratio of Colgate.
3) Total Equity
Colgate Palmolive has been increasing its common stock every year except for in 2020 when
Pandemic affected the market adversely. the following table summarizes the results from
horizontal analysis of total equity of Colgate Palmolive:
Year
2018
2019
2020
2021
2022
Growth
-
11.76%
29.67%
50.43%
69.48%
The results show that keeping 2018 as base year, there was 11.76% growth in total equity of
2019, 29.67% growth in 2020, 50.43% growth in 2021 and 69.48% growth in 2022. Although
this growth is not as rapid as liability and asset growth depicted above, it still shows a positive
aspect in terms of increasing share capital and profitability of the company.
 Ratio Analysis
Ratio analysis is important for company as well as investors. It benefits the investors in terms
of information about profitability, risk and liquidity of company in comparison to the overall
market. For company, it provides the insights into financial health and what areas are needed
to be focused upon such as capital structure, payout ratio etc. This report overviews such ratios
for Colgate Palmolive.
1) Return on Assets (ROA)
The term ROA refers to a financial ratio which indicates how profitable a company is in terms
of its total assets. It means that with help of ROA, it can be determined that how efficiently
Colgate is using its assets to generate the profit. As we got to see that the total assets of Colgate
for the year 2022 are Rs. 33,005,000,000 and the net income for the year 2022 is Rs.
5,872,000,000. By dividing the net income for the year with total assets at the reporting date,
we got the return on assets of 17.79%. This figure represents that 17.79% is the amount of
return that Colgate received in year 2022 in relation to the total assets acquired. This ROA
shows the profitability of the company because generally more than 5% ROA is considered
good. This shows that the assets of Colgate are able to generate a good amount of return. The
following table summarizes the ROA of Colgate over the period of 5 years. For the year 2020,
the company had earned highest ROA of 21.61%.
Year
2018
2019
2020
2021
2022
Return On Assets (ROA)
19.44%
18.48%
21.61%
20.17%
17.79%
2) Return on Equity
Return on equity (ROE) is a financial ratio that shows how well a company is managing the
capital that shareholders have invested in it. It shows the amount of net income generated by
the share capital. It is calculated by dividing the net income by total shareholder equity. In case
of Colgate, the net income for the year 2022 is Rs. 5,872,000,000 and total shareholder equity
is Rs. 22,548,000,000. This gives the ROE of 26.04%. This figure means that Colgate’s total
equity for the year 2022 generated 26.04% return. Generally, 10% ROE is considered good. It
means Colgate is performing better. Following table summarizes ROE of Colgate for 5 years.
Year
2018
2019
2020
2021
2022
Return On Equity (ROE)
24.48%
23.61%
28.20%
28.37%
26.04%
3) Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) is a financial ratio which shows that how well a company
allocates its capital to profitable projects or investments. It is the amount of money a company
makes that is more the average cost it pays for its debt and equity capital. In simple terms, it is
how much return a company generated on the total amount of capital invested in it by
shareholders and debtholders. It is calculated by dividing the Net Operating Income After Tax
(NOPAT) by total capital invested which is the sum of equity capital and interest-bearing debt.
In case of Colgate, NOPAT is Rs. 5,968,270,000 and total invested capital for the year 2022 is
Rs. 23,679,000,000. It results in ROIC of 25.02% for the year 2022. This ROIC shows that
Colgate is in good position in terms of earning from total invested capital. But it has been
performing lower since the past years. As the table shows that the return for 2020 was 27.65%
and for 2021 it was 27.47%. However, it declined in 2022. Colgate needs to grow the ROIC or
at the least, maintain the same over years. The table summarizes the ROICs for five years for
Colgate.
Year
2018
2019
2020
2021
2022
Return On Invested Capital (ROIC)
24.63%
23.80%
27.65%
27.47%
25.20%
Discussion
We have been comparing the performance of Colgate Palmolive with its previous years’
performance. While the investors also compare the company’s performance with that of other
companies in the same industry to analyze its position. As Colgate is a part of chemical
industry, so the ratios of Colgate are compared with the on average chemical industry ratios in
order to analyze the market condition. Following table presents the ratios for Colgate Palmolive
and on-average chemical market ratios for the third quarter of 2022. This comparison with the
market shows that Colgate Palmolive’s performance is much better than the market on average.
The figure 8.03% shows that Chemical industry on average is generating 8% Return on Assets
while Colgate is generating 17.79% which shows the efficiency of use of assets by Colgate.
Ratio
Colgate
Chemical Industry
Remarks
Return on Assets
17.79%
8.03%
Good
Return on Equity
26.04%
14.47%
Better
Return On Invested Capital (ROIC)
25.20%
19.97%
Fair
Conclusion and Recommendation
The results above showed that in most cases, Colgate’s performance in the year 2022 is not as
good as in previous years. As we saw in horizontal analysis, Colgate made a growth in 2022
but that growth wasn’t as rapid as done in 2021. Similarly, in ratio analysis, we came to find
that Colgate’s performance has slightly declined in 2022 than in other years. This decline is
not only faced by Colgate but entire chemical industry because the ratios of chemical industry
on average were less for 2022 as compared to 2021. Yet the company remained profitable
throughout the year in terms of earning the positive returns on each investment. It needs to
utilize its resources with similar efficiency in order to beat the market. Otherwise, the strong
competitors in chemical industry would take over the market.
This report has helped in analyzing the financial performance of Colgate over the period of last
5 years. The results show that the company has been continuously growing and it is consistently
maintaining its profits while competing with other companies in chemical industry like Engro.
The performance of Colgate is the reason one should invest in such a giant. The company
would provide handsome returns keeping in view the continuous growth in profits over the last
5 years.