Shares in protective products group Ansell fell more than 9% after it warned that its earnings could fall, because of cost uncertainties and the impact of tariffs on US imports.
The company said yesterday that its adjusted earnings per share for 2018-19 could fall by 5 to 6 US cents from its guidance range of $US1.00 to $US1.12 if raw material costs continued to increase and tariffs introduced on US imports were implemented at the higher levels (25%) proposed.
While Ansell said plans were being drawn up to “substantially offset” these headwinds by the June 30 end of 2018-19, but some short-term negative impact was possible.
The company said it would look at adjusting share buybacks and any acquisitions to help offset any slide in earnings per share this financial year.
While Ansell had previously warned about the impact of higher rubber costs earlier this year investors saw yesterday’s warning as signs that the cost problems will not be going away any time soon and sold off the shares.
Ansell shares were down 10% at one stage before rising a tough to end the day off 7.2% at $25.80.
The warning and fall also overshadowed a tripling of net profit for the year to June 30.
Ansell’s net profit surged to $US484.3 million ($662.4 million) from $US147.7 million a year earlier, bolstered by that US$345 million gain on the sale of its condoms business, Sexual Wellness.
Underlying earnings before interest and tax rose 9% to $US193.1 million for the year to June 30.
Ansell lifted its final dividend 5% to US25¢ (23.75 US cents previously) after profit margins recovered in the second half of financial 2018 after a sharp rise in rubber prices caused headaches in the first half.
Chief executive Magnus Nicolin said the group’s industrial division delivered a strong performance while the healthcare division produced only moderate growth amid tough conditions in its surgical supplies business.
Total revenue from continuing operations was up 8.4% to US$1.49 billion.
