RNS Number:6622O
Ansell Limited
14 August 2003
NEWS RELEASE
Ansell Limited
A.C.N. 004 085 330
Level 3, 678 Victoria Street,
Richmond, Victoria 3121,
Australia
GPO Box 772H, Melbourne,
Victoria 3001, Australia
Telephone (+61 3) 9270 7270
Facsimile (+61 3) 9270 7300
www.ansell.com
14th August, 2003
Ansell Limited Full Year Results 2003
Double-digit EBITA Growth Achieved
Highlights:
* Double-digit US$ EBITA growth achieved, with a 10.5%
improvement in Healthcare segment EBITA, up from US$84.7 million (A$162.3
million) to US$93.6 million (A$159.5 million).
* Profit attributable at US$29.3 million (A$49.9 million) vs.
last year's loss of US$60.5 million (A$115.8 million).
* Earnings per share (EPS) of US15.7c (A26.7c), vs. last
year's loss of US32.3c (A61.9c).
* Further reduction in Net Debt (Cash Generated) of US$82.9
million.
* Gearing improved further to 18.1%, from 29.4% last year.
* Reinstatement of a dividend of A11c cents per share
(unfranked) for the full year, payable 9 October, 2003.
14th August, 2003
Ansell Ltd Full Year Results 2003
30th June, 2002 30th June, 2003
US$ m A$ m US$ m A$ m
Operating Revenue - Healthcare Segment * *738.5 *1,414.2 758.7 1,293.6
Operating Profit (Healthcare Segment EBITA) 84.7 162.3 93.6 159.6
Profit Attributable (60.5) (115.8) **29.3 49.9
Total Funds Employed - Ansell Ltd. 703.0 1,241.8 687.2 1,030.7
Assets Employed - Healthcare Segment 521.4 921.1 498.7 748.1
Earnings Per Share (32.3c) (61.9c) **15.7c 26.7c
* Excludes Discontinued Businesses. Including Discontinued Businesses, 2002
revenue was US$1,160.7 million (A$2,222.8 million).
** Excluding Ambri write down, Profit Attributable is US$32.9 million (A$56.0
million) and Earnings Per Share is US 17.6c (A 30.0c)
Ansell's Chairman, Dr Ed Tweddell, today announced Ansell's results for F'03,
including:
* Profit Attributable to Shareholders of US$29.3 million (A$49.9), up
strongly from the previous year's loss of US$60.5 million (A$115.8 million),
* Earnings Per Share (EPS) of US15.7c (A26.7c), up on the previous year's
loss of US32.3c (A61.9c),
* Reinstatement of a dividend payment, set at A11c per share (unfranked),
Dr Tweddell commented, "The Board and Management are pleased to be able to
announce earnings in line with expectations, in the first full year under the
Ansell banner. Based on this result, Directors have reinstated a cash dividend,
signaling confidence in the future and a new phase for Ansell. The dividend is
part of a balanced capital management strategy which includes maintaining a
conservative balance sheet, and initiating a share buy-back program, while
retaining the financial capacity for bolt on acquisitions."
Operating results were sound in difficult trading conditions. The Company's
commitment to deliver double-digit growth in US$ Healthcare segment EBITA was
achieved, with growth from US$84.7 million (A$162.3 million) to US$93.6 million
(A$159.6 million), a 10.5% increase.
This result was achieved on 2.7% growth in continuing business revenues to
US$758.7 million (A$1,293.6 million), up from last year's US$738.5 million
(A$1,414.2 million). In contrast with recent years, the stronger Euro and A$
significantly assisted Ansell Healthcare's US$ operating results.
Commenting on the results, the Company's CEO, Mr. Harry Boon, said "The
Occupational Division, which accounted for almost half of FY03's revenues,
recorded outstanding results during a period of slower economic activity,
reflecting the strength of the Ansell business and brands."
"The Consumer Division continued to show solid margin improvement, benefiting
from manufacturing cost reductions, price increases in condoms and Operation
Full Potential initiatives" Mr. Boon said.
As previously announced, the Professional Division experienced an interruption
to supply of surgeons' gloves, as well as price reductions in examination gloves
in the first half of the year. This Division's lower profit reflects the impact
of these first half factors, as well as non-recurring airfreight for restocking
the market in the second half".
"Importantly, Ansell's surgeons' gloves supplies returned to normal during the
fourth quarter, and we have commenced the task of recovering lost USA market
share, estimated at 4 percentage points in the powder-free sector. In addition,
the world oversupply of examination gloves abated during the second half, and
prices have stabilized," Mr Boon concluded.
Occupational Healthcare
30th June, 2002 30th June, 2003
US$ m A$ m US$ m A$ m
Operating Revenue 334.3 640.2 366.5 624.9
Operating Profit (Segment EBITA) 19.3 37.0 36.9 62.9
Assets Employed 212.8 376.0 200.6 300.9
EBITA Margin 5.8% 10.1%
The Occupational Division accounted for 48% of Ansell's F'03 Sales and 39% of
Healthcare segment EBITA.
Occupational Sales increased by 10%, with exceptionally strong performances in
Asia Pacific and Europe. In the America's sales were flat due to a weaker US
manufacturing environment, and to some knitted product supply shortfalls during
the transfer of production from the US to Mexico.
The division's outstanding 91% increase in EBITA was driven by:
* world wide growth in volume, market share and margin of our flagship
HyFlex(R) range of ergonomic gloves,
* continuing benefits from the ongoing manufacturing rationalization and
restructuring program,
* an increased proportion of newer products.
The strategy of diversifying Occupational's customer base in order to reduce
exposure to economic cycles continued. Significant progress has been made in
expanding sales to the meat and food processing industries, thereby reducing our
dependence on the automotive and general manufacturing sectors.
The Occupational Value Proposition (OVP) concept of hand injury reduction
continues to run smoothly at Ford USA, and is being progressively introduced to
a number of other end users and distributors who have demonstrated interest in
this novel approach. Management expects the OVP initiative, which is a key plank
of Operation Full Potential, to develop steadily over time. OVP is a "
game-changing" concept that requires a change in the traditional way many
customers manage hand injury costs. Trials are currently underway at a number
of major potential customers' plants.
In the absence of further global economic decline, Management anticipate ongoing
strong results from the Occupational Division, as sales continue to grow,
assisted by a number of new additions to the HyFlex(R) product range,
progressive adoption of the OVP concept, better focus resulting from the
Operation Full Potential product rationalization program and lower costs flowing
from previously announced production relocations.
Professional Healthcare
30th June, 2002 30th June, 2003
US$ m A$ m US$ m A$ m
Operating Revenue 285.6 546.9 265.5 452.6
Operating Profit (Segment EBITA) 48.4 92.7 31.6 53.9
Assets Employed 228.9 404.3 221.0 331.5
EBITA Margin 17.0% 11.9%
The Professional Division accounted for 35% of Ansell's F'03 Sales and 34% of
Healthcare segment EBITA.
Professional Sales declined by 7%, and EBITA fell by 35%. Outstanding
performances in Asia Pacific and Europe were offset by first half surgeons'
gloves supply interruption and examination glove price reductions, especially in
the USA. Operating expenses were higher in the second half due to non-recurring
airfreight costs in resupplying the surgeons' gloves market, and to higher latex
raw material costs.
Surgeons' gloves supply improved markedly in the second half, and Distributor
inventories are now at normal levels. The US Sales and Marketing team is focused
on a number of initiatives designed to the regain the approximately 4 percentage
points of US powder-free surgeons' gloves market share lost during the supply
disruption. Importantly, no significant price erosion has been experienced in
PF surgeons' gloves.
At the same time, continuing growth of Ansell's powder-free surgeons' gloves was
achieved in Europe, with branded sales up 19%, and in Asia Pacific (up 15%).
In examination gloves, global oversupply led to significant price reductions
earlier in the year. A number of competitors reported financial difficulties as
the combined result of increases in the cost of latex raw material, and the
first half selling price reductions. In recent months, prices of higher end
examination gloves have stabilized, and prices at the low end of the market have
begun to rise.
Consumer Healthcare
30th June, 2002 30th June, 2003
US$ m A$ m US$ m A$ m
Operating Revenue 118.6 227.1 126.7 216.1
Operating Profit (Segment EBITA) 17.0 32.6 25.1 42.8
Assets Employed 79.7 140.8 77.1 115.7
EBITA Margin 14.3% 19.8%
The Consumer Division accounted for 17% of Ansell's F'03 Sales and 27% of
Healthcare segment EBITA.
Consumer sales grew by 7%, including growth from public aid and assistance
agencies in the fight against HIV/AIDS. Ansell's condom business continues to
build on a reputation for high quality from our low cost Asian plants. The
European Region saw gains in market share in the UK and France, based
significantly on the new "Xtra PleasureTM" condom. This success was replicated
in the Asia Pacific Region, where sales grew 14%, with strong improvement in New
Zealand, Malaysia and Thailand. In the Americas Region, USA total branded retail
condom market share held steady at 23% in volume and 20% in value, while the
important Public Sector segment remained strong.
In retail household gloves (HHG), 9% volume growth was achieved in Europe, while
volumes declined in the USA, as the Company withdrew from an unsatisfactory
customer relationship in preparation for a relaunch in 2004. A new range of
foamlined HHG continued to gain market share in Europe and Australia, and
expansion of manufacturing capacity for this unique product technology is
planned in FY04.
Operation Full Potential (OFP)
June 2003 marked the completion of the first phase of the three-year OFP
program, which is designed to lift Ansell's US$ EBITA by 50% from the 2001 level
by the end of 2005.
The global launch of OFP was completed, as were the initiatives that were
planned as part of Waves I and II of the program. In the coming year, OFP will
concentrate on completing the implementation of growth initiatives from Wave II
in the Professional and Occupational Divisions, and on the launch of Wave III of
the program.
During this second year of the program, the activities and capabilities
developed within OFP will be fully integrated into the business Divisions,
thereby reinforcing the new "performance culture" into the core of Ansell's
business.
Non-Core Investments and Discontinued Businesses
During the first half, two investments were sold, Pacific Marine Batteries and
BT Equipment, with resultant cash generation of US$9.4 million (A$16.7 million).
A premium to book value was received. The Company has also made significant
progress in resolving various remaining "legacy issues" from discontinued
businesses.
South Pacific Tyres (SPT)
Ansell retains its 50% investment in the South Pacific Tyres partnership with
the Goodyear Tire and Rubber Company. The joint venture is accounted for as an
investment, with operating results excluded from Ansell's results.
The Directors at this time believe that SPT's performance and 3 year EBIT
projections continue to justify retention of the asset at full value on Ansell's
books.
Ambri
In reviewing the carrying value of assets, the Company has found it necessary to
write down the value of its non-core residual investment in the listed company,
Ambri Limited. The book value was the original float price of A$1.11 per share,
while, at June 30, 2003, the market price was A$0.375. A non-recurring, non-cash
write off of US$3.6 million (A$6.1 million) was incurred before and after tax on
the Group's 8.3 million shares, to bring the written down book value to US$2.1
million (A$3.1 million) into line with the market price.
Corporate Costs
Outstanding progress was made during the year in reducing the Corporate Office
costs to US$6.7 million (A$11.5 million), down 47% on the previous year, on a
comparable basis. Staff numbers are now at appropriate levels and Regional
Ansell staff in Australia have been relocated to the Melbourne Corporate Office
for greater efficiency. OFP costs of US$6.4 million (A$10.9 million), last year
US$1.9 million (A$3.7 million), were incurred as a corporate expense.
Board and Senior Management
As previously announced, the Board was strengthened further during the year with
the appointment of Mr. L. Dale Crandall, who comes with a strong international
finance and accounting background, having been a Managing Partner with Price
Waterhouse in the U.S. and more recently, President and Chief Operating Officer
of a major American healthcare company.
A number of senior management appointments were also made during the first half,
augmenting Ansell's capabilities in Supply and Logistics (Mr. Scott Papier),
Finance (Mr. Rustom Jilla), Program Management (Mr. Duane Dickson), and Science
and Technology (Dr Michael Zedalis).
In the second half, management ranks were further strengthened with Mr. Rainer
Wolf joining as Head of Global Manufacturing. He has extensive experience in
manufacturing operations and quality systems with 3M, and is based at Shah Alam,
Malaysia.
Finance
The Company's financial structure remains robust. Cash flow is strong, net
interest bearing debt (NIBD) was reduced by US$82.9 million, and gearing (NIBD
to NIBD plus equity) has further improved to 18.1%, down from 29.4% last year.
Interest cover was 6.4X, significantly better than last year's 4.5X.
This strong cash flow came from improved profits (EBITDA) of US$98.9 million
(A$168.6 million), up from last year's US$92.1 million (A$176.4 million), and
reductions in working capital, tax, net interest paid and capital expenditures.
Significantly, the Company has converted over 80% of Operating EBITDA to cash.
Liquidity continues to be a strength, with available cash on deposit of US$190.2
million (A$285.4 million), and an unused bank facility of US$100 million (A$150
million).
The share buy-back element of the balanced capital management strategy has
progressed well and, at June 30 almost 1.5 million shares had been repurchased
at an average price of approximately A$5.80. The Company intends to continue
the previously announced buy-back program.
Dividend
At the end of the first half, Directors announced a share buy-back, as part of
the balanced capital management strategy, as well as a review of dividend policy
after the full year results were known. Based on strong and sustainable
operating profit improvements, cash generation and low gearing, the Board is
pleased to announce an unfranked dividend of A11.0c per share for the year,
payable on 9 October, 2003.
Outlook
The Chairman, Dr Ed Tweddell commented ''The world economy is far from buoyant
and challenges remain. Management is aggressively addressing the task of
regaining PF surgeons' gloves market share in the USA, continuing to produce low
cost high quality product and maintaining regulatory compliance. Ansell has
emerged from a tough year with a strengthened management team, an enhanced
competitive position, strong brands and is well positioned to continue to meet
its previously stated growth objectives.''
Annual General Meeting
The Annual General Meeting of the Company will be held on Thursday October 9,
2003 in the Latrobe Theatre, Melbourne Convention Centre, corner Spencer and
Flinders Street, Melbourne, commencing at 10:00am.
================================================================
Ansell Limited is a global leader in healthcare barrier protective products.
With operations in the Americas, Europe and Asia, Ansell employs more than
12,000 people worldwide and holds leading positions in the natural latex and
synthetic polymer glove and condom markets. Ansell operates in three main
business segments: Occupational Healthcare, supplying hand protection to the
industrial market; Professional Healthcare, supplying surgical and examination
gloves to healthcare professionals; and Consumer Healthcare, supplying sexual
health products and consumer hand protection. Information on Ansell and its
products can be found at http://www.ansell.com.
For further information:
Media Investors & Analysts
Australia USA Australia
Richard Colquhoun Rustom Jilla David Graham
Cannings Chief Financial Officer General Manager - Financial & Treasury
Tel: (61) 0412 007 699 Tel: (1732) 345 5359 Tel: (613) 9270 7215
Email: rcolquhoun@cannings.net.au Email: rjilla@ansell.com Email: dgraham@ap.ansell.com
This information is provided by RNS
The company news service from the London Stock Exchange
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