The Ansell Limited (ASX: ANN) share price has jumped 6% in early trade this morning after the company released its FY19 results and announced a dividend that easily beat analyst estimates. Here’s what you need to know.
About Ansell
In 1905, Eric Ansell founded the Ansell Rubber Company, initially a balloon & condom company that eventually expanded into surgical, household and work gloves. Today, Ansell has sales operations in over 50 countries and end-users in many more.
According to its annual report, Ansell estimates that over 90% of its revenue is sourced offshore with developed markets generating most of the takings. Importantly, a large majority of its future sales is expected to come from emerging markets which will only grow as global socio-economic prospects improve.
The 5 Key Points
- Sales grew by 3.2% to US$1.499 billion
- Adjusted earnings before interest and tax (EBIT) increased by 4.4% to US$202.8 million
- Adjusted earnings per share grew 11.3% to US 111.5 cents per share
- Profit after tax from continuing operations declined by 19.2% to US$111.7 million
- A final dividend of US 26 cents was declared
Analyst Estimates
Analyst estimates varied widely between Bell Potter and Bloomberg, with net profit after tax (NPAT) estimates of US$146 million and US$124.9 million respectively. Ansell fell short of both of these targets with a profit after tax of US$113.1 million.
However, the final dividend of US 26 cents far exceeded Bloomberg estimates of AUD 20.85 cents per share.
Management Commentary
Ansell Chairman Glenn Barnes said global trade tensions had produced uncertainty:
“The global markets in FY19 were tumultuous with periods of heightened uncertainties and increased trade tension,” he said.
“Ansell delivered EPS at the top end of guidance with tempered organic sales growth, higher raw material costs and rising effective tax rates.”
“Disciplined strategic capital deployment to enhance profitability and shareholder value saw $75.5m invested in M&A and $43.5m in capital investments this year to drive growth and productivity.”
FY20 Outlook
Ansell expects sales growth in FY20 of 3-5%, assuming minimal disruptions in terms of tariffs and Brexit. Ansell expects FY20 EPS to be in the range of US 112 cents to 122 cents.
Is Ansell A Buy?
While some of Ansell’s results are impressive, there is a lot of talk of deteriorating market conditions and uncertainty, and the FY20 EPS forecast ranges from no growth to growth of nearly 9.5%. For now, I’ll keep Ansell on the watchlist.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
