Protective equipment maker Ansell (ANN) is looking for new buys after reporting that its half-year net profit rose by just over a third to $US87.7 million ($A113 million) for the half year to December 31.
Driving this surge, and the 18% lift in interim dividend to 20c share, was the successful integration of two recent acquisitions which Ansell said had performed ahead of expectations.
Revenue rose 20% to $US847.3 million in the six months to December 31, 2014, and net earnings were around a million dollars ahead of market forecasts.
Analysts had expected net profit of $US86.7 million, compared to $US65.6 million in the same period last year.
Chief executive Magnus Nicolin said Ansell expects to grow its full year pre-tax earnings by somewhere between 25% and 30%
“Ansell continues to expect F15 EBIT (earnings before income and taxes) percentage growth against underlying F14 EBIT to be in the high 20s based on organic growth and the successful integration of recent acquisitions," the Mr Nicolin said.
Ansell now expects continued growth in sales and earnings for the full year, thanks to the improved performance of US-based BarrierSafe Solutions International, and a small purchase in South Korea.
ANN 1Y – Acquisitions pay off for Ansell
Speaking to analysts, Mr Nicolin said that acquisitions are now back on the agenda after the two major deals last year did better than expected.
The $US615 million purchase of BarrierSafe Solutions International a year ago saw Ansell decide to put off any further acquisitions while it integrated the new subsidiary into its global business structures and allowed the balance sheet to rebalance.
But BarrierSafe and the Midas gloves business in South Korea Ansell purchased in late 2013 have settled down much more quickly than expected and the company said they played a major part in the 33.7% boost in earnings and the surge in sales.
And that has allowed Ansell to start looking for new purchases.
"We do see a number of attractive opportunities in our space that we feel confident could yield strong returns," Mr Nicolin said on the outlook for acquisitions. “As always we’re gong to be very picky,” mr Nicolin told a media conference yesterday.
Removing the impact of the two new business, Ansell said “organic growth” across its portfolio was 2.6% for the half year – so the impact of the new acquisitions was considerable given the much stronger growth.
Investors reacted positively to the news with shares jumping 5.4% in a weak market to $24.30, adding to the 26% gain in the past year (it’s one of the big favourites to benefit from the lower dollar).
While the company maintained guidance of earnings per share growth of between 7% to 15% for the year to June, Mr Nicolin said the lower level of expected growth (compared to the actual first half performance) was due to the mixed state of key markets, such as Russia where the weak economy and currency volatility were causing problems.
