Ansell Full Year Result: ANN profit misses consensus forecasts

CommSec

2017 will be the last full year period in which Ansell’s (AAN) Sexual Wellness unit will make a financial contribution to its bottom line. The previously announced sale of the Sexual Wellness business for $600 million, has meant the result comprised of figures for discontinued and continuing operations. The sale meant that costs previously absorbed by the Sexual Wellness were allocated to the remaining business units.

ANN’s operations are comprised of four business divisions. Industrial – which makes and sells, hand and body protection products for a range of uses across a broad range of industries. The Single Use segment focusses on the sale of single use gloves for a variety of uses from chemical & food services to electronics. The Medical segment manufactures and markets surgical gloves along with other healthcare safety devices that might be used in a surgical environment such as disposable scalpels. The recently sold Sexual Wellness unit manufactures, sells and markets a range of branded condoms, lubricants, devices and fragrances globally.

In geographical terms, ANN operates in Asia Pacific, Europe, Middle East and Africa (EMEA), Latin America & Caribbean and North America. North America is ANN’s largest geographic market with sales in the period totalling $628 million or 40% of sales revenue. The next largest market for ANN is Europe the Middle East & Africa – sales revenue for this segment was flat for the12 month period at $485 million.

In pre-tax earnings terms (EBIT), the Sexual Wellness business was the most improved, with the measure rising 29% to $40 million. Although sales for the segment rose only 2.4% to $225.2 million. In outright terms, pre-tax earnings (EBIT) were highest in the Industrial business coming in at almost $80 million, although the measure declined 10.3% from $89 million for the full year, in part reflecting the increased corporate costs which were allocated due to the sale of the Sexual Wellness business. Latin America and Caribbean is the smallest region in terms of sales, although it was the most improved over the year with an increase of 23%.

Looking ahead, the main challenge for ANN will be to effectively use the $600 million from the sale of the Sexual Wellness business. To that end, ANN maintains that acquisitions and share buybacks are both key elements of the future road map as they seek to grow the business. Revenue growth from existing business is expected to be in the range of 3% to 5% plus additional revenue from price increases. Earnings per share (EPS) for FY18 is expected to be in the range of 91¢ to 101¢ which represents an increase (from continuing operations) of 10% to 22% compared to the prior year. Price increases are expected to fully balance any additional increase in raw material costs in FY18.

ANN declared an interim dividend of $US 0.2375, with an Ex-Dividend date of Friday 18 August 2017 & a record date of Monday 21 August 2017 with the payment to be made on Friday, 8 September 2017.

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