Ansell Ltd (ANN)

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25 August 2020

Results 

Full Year 2020

Full Year 2019

Change

Sales (US$m)

1,613.7

1,499

+7.7%

Healthcare Sales (US$m)

894.6

795.3

+12.5%

Industrial Sales (US$m)

719.1

703.7

+2.2%

Statutory Earnings Before Interest & Tax (EBIT) (US$m)

219.7

157.3

+39.7%

Statutory NPAT (US$m)

158.7

111.7

+42%

Adjusted NPAT (US$m)

158.7

150.9

+5.2%

Final Dividend (US$)

0.2825

0.26

+8.6%

Ansell (ANN) lifts profits on increased demand for protective equipment     

What happened?

  • Ansell (ANN), maker of protective gear and solutions, reported an overall improved performance in FY20. Sales lifted by 7.7%, or 9.3% in constant currency, to US$1.6 billion. Both EBIT and profit rose for the year against FY19 statutory and adjusted figures with statutory profit jumping 42% while EBIT surged 39.7%. Adjusted gains were more modest as they excluded transformation costs that were concluded in FY19.
  • ANN announced a final dividend of US28.25 cents per share, which is also an improvement on the same time last year. That makes it the 17th consecutive year of dividend growth. The dividend will be payable on 17 September 2020.

Why did it happen?

  • Ever since ANN exited its sexual wellness business several years ago, the company now focusses in two main areas of Industrial and Healthcare for its safety protection solutions across the Americas, Europe, Middle East, Africa (EMEA) and Asia-Pacific.
  • With the onset of the COVID-19 pandemic, ANN has several products highly sought after as Personal Protective Equipment (PPE). This includes gloves and chemical protective clothing, commonly used for the fight against the virus. The demand for such products has helped its Healthcare unit record a solid lift in revenue and EBIT for the year. The Healthcare unit makes up ~55% of group revenue and ~60% of total EBIT. Full year sales came in at US$894.6 million which represented growth of 12.5% in reported terms and 13.8% in constant currency terms. Its Exam/Single Use products enjoyed organic growth of 18% as COVID-19 increased demand significantly, and ANN is expecting demand to likely remain elevated for a further 12 months minimum. EBIT for the Healthcare unit saw an even more impressive 23% increase or 34.7% in constant currency on higher volumes, improved pricing, favourable raw material costs and improved manufacturing performance.
  • Industrial sales growth was a much more subtle 2.2% to US$719.1 million, or 4.2% in constant currency. This included a full year’s contribution of Ringers (acquired in February 2019). Sales were actually weaker for its mechanical products with a decline of 2% due to slower activity in auto and heavy industry markets. Chemical products sales growth fared much better rising 7.9% particularly for cleaning and sanitisation products like gloves and other Chemical Protection Clothing. EBIT for industrials was lower on the year before, falling 6.4% in reported terms to US$92.4 million. 
 

Where to now?

  • Like many other companies, COVID-19 is likely to continue to create uncertainty for ANN. It is expected that Exam/Single Use products will continue to see supply shortages which could lead to increased supply costs and EBIT margin pressures. The strong growth in chemical, surgical and life science is likely to be offset by weakness in mechanical for the year ahead. But organic growth is still expected to be well above the 3-5% long term targets set by the company
  • Overall, FY21 Earnings Per Share (EPS) is expected to be between US126c to US138c (FY20 EPS was US122c).

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