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Ansell Ltd. February 13, 2013

Ansell Limited Half Year Results 31 December, 2012


  • Sales of US$648.1m, up 6%
  • EBIT of US$68.8m, down 8%
  • Earnings Per Share of US43.7¢, down 14%
  • Free Cash Flow was US$48.1m, up 660%
  • Interim dividend increased to A16.0¢, up 7%
  • New 2 - 3 million share buyback announced



“In H1, three acquisitions were completed and one announced, and additional investments made in Sales and Marketing, all providing the basis for significant future growth and returns. However, in a difficult economic environment, H1 results (as foreshadowed at the AGM in October) were below expectations.

Free Cash Flow was strong. Given our strong Balance Sheet, cash generation and H2 EPS growth expectations, your Board is announcing an increased interim dividend as well as a new on-market share buyback of 2 to 3 million shares” said Ansell’s Chairman Mr Glenn Barnes.



The Company re-affirms previously communicated EPS guidance for F’13 of US$1.07 to US$1.12 (being mid-single to low double digit growth). This guidance includes modest accretion from the acquisitions. Within this guidance, the net EPS impact of Deferred Tax Asset and Non-Operational Tax Item (DTA/NOTI) adjustments remains in the previously forecast US4¢-US6¢ range.

Note: US dollars used unless otherwise specified. The USD is Ansell’s predominant global currency and the one in which the business is managed. The USD information contained in this press release is purely a convenience translation of IFRS AUD financial information.



Ansell Limited (ASX:ANN) today announced Profit Attributable to Shareholders in the first half of F’13 of US$57.1m, down 14% on the F’12’s US$66.6m.

EPS in Ansell’s operating currency, the US dollar, fell 14% to US43.7¢. However, given Ansell’s strong Balance Sheet, free cash flow, and expected second half improvement, the Board declared an interim dividend of A16¢ a share unfranked, payable on 20 March 2013, and announced a buyback of 2 to 3 million shares.




   F'12 H1A$M  F'13 H1A$M  %  F'12 H1 US$M  F'13 H1US$M  %
 Sales  594.1  624.2  5  611.5  648.1  6
 EBIT  72.7  66.2  (9)  74.7  68.8  (8)
 Profit Attributable (PA)  64.9  55.0  (15)  66.6  57.1  (14)
 Earnings Per Share (EPS)  49.3  42.0  (15)  50.6  43.7  (14)
 Dividend  15.0¢  16.0¢  7      


Ansell’s results in AUD show lower year on year growth than the translated USD results due to the AUD’s ~ 1% appreciation vs. the USD.



Ansell’s CEO Magnus Nicolin commented “The acquisitions of Comasec, Preferred Surgical Products (PSP) and our Guangzhou distributor in H1 plus the completion of the Hércules (a Brazilian clothing and Fall Protection leader) acquisition in January, are exciting developments as we add scale and new capabilities in key geographies. The integrations of these companies are progressing well.

Overall organic sales were flat, mostly due to economic weakness (particularly in Europe), FX and distributor destocking. GPADE margins remained strong with some newly launched products such as the HyFlex® 11-518 glove doing very well. However, SG&A rose as we invested in additional sales personnel, advertising and promotions around our SKYN® condoms, increased R&D and product launches.

We expect a strong H2, with seasonality, new product releases, and the acquisitions all expected to contribute.”



   A$M  US$M
   F'12 H1  F'13 H1  F'12 H1  F'13 H1
 Sales  167.4  159.2  172.2  165.3
 Segment EBIT  16.0  16.5  16.3  17.2
 EBIT/Sales  9.6%  10.4%  9.5%  10.4%


The Medical GBU accounts for 25% of total Revenue and 24% of total Segment EBIT .

Surgical glove sales grew ~4%, with range extensions continuing and polyisoprene and neoprene synthetics selling well. This should continue in H2, as Ansell’s new Gammex® SensoPrene® glove (which was launched in NA in late December) gains traction. The Sandel range of operating theatre safety products is also growing and will be expanded as Ansell integrates PSP. Exam sales fell ~21% due to reduced NA and EMEA volumes and to price erosion (in line with lower raw material costs).

Segment EBIT grew by ~6% due to product mix, operational efficiencies and SG&A management. Synthetic surgical manufacturing capacity has been increased to support growth and this will help reduce production costs in the future.


Industrial GBU

   A$M  US$M
   F'12 H1  F'13 H1  F'12 H1  F'13 H1
 Sales  236.6  255.5  243.6  265.4
 Segment EBIT  38.5  36.7  39.7  38.1
 EBIT/Sales  16.3%  14.4%  16.3%  14.4%


The Industrial GBU accounts for 41% of total Revenue and 52% of total Segment EBIT .

Sales were up ~9% including Comasec and up 2% excluding Comasec, while segment EBIT was down as strong margins (from better product mix and lower costs) were offset by higher investments in Regional Sales and in R&D.

Organic sales growth was negatively impacted by FX and distributor destocking in EMEA and NA. Ansell regained its positions with North American Tier 1 distributors (after F’12’s Fusion issues), but faced a weak European economy (though Russia, Germany, and Benelux grew) and a slowdown in China. The Comasec acquisition strengthened Ansell’s leadership position in EMEA and early signs are positive.

The new product pipeline is strong with a number of H1 releases and more planned for H2 across our 3 leading brands HyFlex®, AlphaTec® and TouchNTuff® (which now has new polyisoprene and sterile ranges for life science applications).



   A$M  US$M
   F'12 H1  F'13 H1  F'12 H1  F'13 H1
 Sales  84.0  98.9  86.4  102.6
 Segment EBIT  4.7  2.5  4.8  2.6
 EBIT/Sales  5.5%  2.5%  5.5%  2.5%


The Specialty Markets GBU accounts for 16% of total Revenue and 4% of total Segment EBIT.

H1’s ~19% sales increase came from Ansell Protective Solutions (APS) and Comasec. EBIT declined as investments in R&D, selling and marketing offset the benefits of a mix driven gross margin expansion. Organic sales were impacted by reduced or delayed military spending by passing through lower NRL costs in the consumer segment (as per contract terms). However, H1 saw a number of new products launched across verticals with more planned for H2.

APS (purchased in May 2012) is well along the integration path, and trading in line with the business case.



   A$M  US$M
   F'12 H1  F'13 H1  F'12 H1  F'13 H1
 Sales  106.1  110.6  109.3  114.8
 Segment EBIT  18.2  14.0  18.8  14.5
 EBIT/Sales  17.2%  12.6%  17.2%  12.6%


Sexual Wellness accounts for 18% of total Revenue and 20% of total Segment EBIT.

Sales increased ~5% for the half, (~10% but for FX). However the major advertising and promotion program for the SKYN® brand and the US packing facility relocation impacted Segment EBIT. These significant investments in SKYN® brand advertising and promotion programs greatly raised awareness of the product in targeted markets, and resulted in very strong sales growth.

Private label and government tender sales were lower while amele® new product sales and the a:muse® line of products in the US helped offset this.



Ansell has a solid balance sheet, generates strong free cash flow, and has completed 5 acquisitions since May 2012 that must be fully integrated. A new on- market buyback of between 2 to 3 million shares over the next 12 months was therefore announced today. Ansell remains committed to growth through acquisitions, but also believes that a modest buyback is appropriate. EPS accretion in F’13 from the buyback is expected to be insignificant.



Sales and EBIT were both negatively impacted by FX rates in H1, with the half on half translation impact on sales being approximately $18m.

Free cash flow was a solid US$48.1m up from the previous year’s low $6.3m. The major contributor to the year-on-year improvement was Working Capital. The major cash usage in the half came from acquisitions, Comasec ~$132m and Preferred Surgical Products ~$4m. Net debt rose by $146.1m.

Working capital, after adjustment for acquisitions, was up marginally on June 2012 but was substantially better vs. December 2011, which was adversely affected by Fusion. Working Capital days were up slightly, due to Comasec.

Interest cover is a healthy 18.9x (F’12 H1 35.0x), Net Debt to EBITDA is 1.2x (F’12 H1 0.3x) and gearing (NIBD / NIBD + Equity) was 20.6% (F’12 H1 13.5%). After Hércules, gearing increased to ~27%.

Cash at 31 December was US$338m, of which $77m was used for the Hércules acquisition on 2nd January 2013. New bank facilities were also established during the half, and Ansell has $120m of unused facilities available after the Hercules acquisition. Liquidity therefore remains quite strong.

The effective book tax rate of 8.8%, up from F’12’s 6.2%, reflects lower DTA/NOTI adjustments of $5.8m in F’13 vs. $8.0m in F’12.



Ansell has announced an interim dividend of A16¢ (vs. F’12’s interim dividend of A15.0¢) per share unfranked, an increase of 7% with a record date of 27 February, 2013 and a payment date of 20 March, 2013. For non-resident shareholders, the dividend will not attract withholding tax as it is sourced entirely from the Company’s Conduit Foreign Income Account.



F’13 H1 saw the global economic slowness negatively impact organic sales, although GPADE margins were strong. SG&A spending was higher, and included substantial investment in future growth.

In H2, Ansell expects profit contributions from new product sales, seasonality, and acquisitions, with SG&A spending growth moderating. These factors are expected to drive a strong recovery in H2 EPS.

Ansell reiterates the previously communicated guidance for F’13 of US$1.07 – US$1.12 (being mid-single to low double digit growth).


This guidance includes:

  • A modest positive contribution from acquisitions
  • Net Deferred Tax Asset/Non Operational Tax Items (DTAs/NOTIs) adjustments estimated at US4¢ - US6¢ per share.



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