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Ansell considers divestment as profits dip 15 per cent

Glenn Freeman  |  15 Aug 2016Text size  Decrease  Increase  |  

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Ansell (ASX: ANN) has reported US$159 million in net profits for fiscal 2016, down 15 per cent from US$188 million a year earlier.

Its dividend payout for the year was 1.2 per cent higher on fiscal 2015, with a 23.5 US cents a share second-half dividend bringing the annual total dividend to 43.5 US cents, to be paid on 8 September 2016.

The negative results reflect a challenging environment for the business, with weakening currencies in a number of markets, including the euro, Australia dollar and Canadian dollar all taking their toll--at an estimated cost of US$70 million.

Poor performance of the medical segment hit profits, with overall sales of US$1.57 billion for fiscal year 2016 down from $1.64 billion in fiscal 2015.

At the same time, Magnus Nicolin, Ansell's chief executive officer, announced Ansell is considering selling its sexual wellness division. Ansell has engaged Goldman Sachs to review options in this regard.

Having generated US$220 million in sales in fiscal 2016, the move would fit with Ansell's strategy to divest non-core assets to shore up its high-value protective equipment business selling into the industrial, medical and scientific industries.

However, the balance sheet wasn't all red ink. Despite the headwinds Ansell faces from currency and international markets, its long-term drivers of growth performed well.

Sales across its industrial, single-use and sexual wellness business units were up 5 per cent, 2 per cent and 13 per cent, respectively, while medical sales were down 5 per cent.

During the 2016 fiscal year, Ansell in May announced the sale of its footwear protection business, Onguard, for US$41.5 million.

It also bought back more than 6.3 million shares, for a total of US$88.1 million.

Looking ahead, the business is forecasting modest organic growth of between 2 per cent and 4 per cent, amid continuing subdued international conditions.

It tips underlying earnings per share of 17 per cent in fiscal year 2017, up 2 per cent from fiscal 2016. This will be partially offset by the Onguard divestment.

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Glenn Freeman is Morningstar's senior editor.

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