Ansell Reports 19% Profit Fall

Ansell, the safety glove manufacturer, has reduced its dividend following a 19% decline in first-half profit. The company, based in Australia and reporting in U.S. dollars, announced a net profit of $19.4 million for the six months ending in December. Revenue also decreased by 6.0% to $784.9 million, mainly due to lower demand for healthcare products and the lingering impact of high-cost inventory.

Analyst Expectations and Future Projections

Despite the reported figures falling short of the average analyst forecast of a $47 million net profit on $803 million in revenue, there is optimism for improvement in earnings and profit starting from fiscal 2025, commencing on July 1, 2024.

Impact of Covid-19 Pandemic

Ansell faced challenges amidst the Covid-19 pandemic. Initially benefiting from increased demand for single-use gloves and protective garments, the company later experienced setbacks due to rising input costs and customer stockpiling. The recent decrease in demand was further exacerbated by the easing of Covid-related restrictions.

Dividend Adjustment

In response to these financial challenges, Ansell has lowered its dividend to 16.5 U.S. cents from 20.1 U.S. cents compared to the previous year. The company is optimistic about a gradual recovery in demand for its safety products throughout the remaining fiscal year.

Second Half Expectations by Ansell

Chief Executive Neil Salmon expressed optimism as Ansell enters the second half of the year, noting improvements in business performance amid easing headwinds.

Sales Insights

• Healthcare Sales: Decreased by 14% to $400.5 million, or 15% after accounting for currency fluctuations due to customers reducing inventory.
• Industrial Sales: Increased by 4.4% to $384.4 million, showing a growth of 1.9% in constant-currency terms.

Strategic Decisions

Ansell took strategic steps, including:

• Cutting 1,200 manufacturing jobs in the previous December half to align with production adjustments.
• Investing in automation technology for future demand surges.
• Planning to phase out low-margin legacy chemical gloves production by early fiscal 2025, resulting in accelerated depreciation against related assets.

Financial Performance

The company reported:

• First-half adjusted earnings-per-share of $0.16, down from $1.07 in the prior fiscal year and $0.51 year-on-year.
• Adjusted EPS of $0.55.

Revisions and Guidance

• Revised full-year EPS guidance range to $0.54-$0.70 from $0.57-$0.77.
• Narrowed adjusted EPS guidance range to $0.94-$1.10 from $0.92-$1.12.

For more information, contact Stuart Condie.