A hesitant relief rally in Ansell (ANN) shares yesterday after the company followed up the earnings and guidance downgrade of late last week, with a set of interim figures that contained no new surprises.
Yesterday global glove and condom maker reported a 21.6% slide in first-half net profit to $US69.6 million ($A98.4 million) as sluggish industrial demand and the stronger US dollar held back sales growth and ate into profit margins.
When Ansell released a warning to that effect on Wednesday evening, the shares reacted (typically these days) on Thursday with a 20% plus slide to $14.80, then recovered to $15.04 on Friday and then another 7.3% yesterday to $16.14.
The attitude of investors was that the company is on a sort of probation until it proves it has its operation performance under control.
Ansell’s revenue dropped 7.4% to $US784.8 in the six months ended December 31, with the company citing an “economic environment that has become more challenging than expected”.
However, excluding the impact of currency fluctuations, sales were flat as anticipated.
CEO Mr Magnus Nicolin said that business is being pressured by a protracted period of “extreme turbulence” in foreign exchange rates, the lower oil price, and raw material prices.
He said this has made a lot of companies “very nervous” and Ansell’s customers have been cutting back on their inventory stocks from three months to as little as six weeks worth of inventory.
And the impact is being felt greatest among the group’s cyclically exposed customers, which includes the oil and gas, mining, chemical, and automotive sectors.
Mr Nicolin said he is optimistic that second-half earnings will be stronger than in the first six months despite difficult global markets.
