Ansell (ANN) shares bounced sharply higher yesterday, jumping more than 17%, despite reporting as 15.1% slide in full-year profit to $US159.1 million ($A207.8 million).
That was better than the 21% slide at the December 31 halfway mark report in February.
But there were no nasty surprises, unlike the last two reports where surprises saw shareholders mark down the shares.
But there was one ‘encouraging’ surprise, the company is looking to perhaps sell its condoms (sexual wellbeing) operations, a move that might generate cash for capital management or another big acquisition.
That news helped send the shares sharply higher yesterday.
Despite again warning of challenging trading conditions, investors lifted Ansell shares more than 17% to $23.16 yesterday. That was a new 52-week closing high.
The group’s shares were down more than 8% per cent over the year to last Friday, but are now up more than 9% after yesterday’s leap. Ansell lifted its final dividend half a cent to an unfranked 23.5 US cents per share, bringing the year’s total distribution to 43.5c a share – a 1% lift from 2014-15.
The company says sales revenue was flat on a constant currency basis, but dropped 4.4% to $US1.573 billion once exchange rate fluctuations were taken into account. Earnings before interest and tax was also 8% higher in constant currency.
Ansell, which sells protective clothing to industrial and mining companies as well as medical services (condoms and other products, such as surgical gloves) said it was expecting organic revenue growth in the low to mid-single digits over the next two to three years, even in a low growth economic environment.
Chief executive Magnus Nicolin said achieving 8% constant currency EBIT growth in challenging market conditions was “a solid result and cash flow was strong”.
“Overall our FY16 results were at the low end of our original guidance, we nevertheless made significant progress particularly in the second half, delivering against all the key priorities we outlined midyear,” Mr Nicolin said in a statement to the ASX. Chairman Glenn Barnes said Ansell had been anticipating the challenging year, which was marred by a weak global economy and currency fluctuations.
“Nevertheless, we continued to make progress against our strategic priorities and again demonstrated the strong cash generating characteristics of our businesses,” he said.
And Ansell is looking at shaking up its product line up – perhaps getting rid of its long held condoms business (called sexual wellbeing), which generated $US220 million in sales in 2015-16. As a result, CEO Nicolin said fiscal 2017 would see the company increase its focus on opportunities for portfolio optimisation.
"We continually review our existing portfolio in a disciplined way," Mr Nicolin said.
"This will include consideration of options for the sexual wellness business and opportunities to enhance our positions in the industrial and medical businesses with value-enhancing acquisitions.
"Goldman Sachs has been retained to assist us in the review of options for the sexual wellness business."
And that’s why the shares went for a big run yesterday.
