Ansell Limited (ASX: ANN) shares are trading flat today despite announcing a hefty dividend.
Own Ansell shares? You should read analyst Cathryn Goh’s full coverage of the Ansell report.
Here’s my short take on the ANN report…
It’s hand-in-glove for Ansell
Ansell was perfectly positioned for the onset of COVID-19 it seems, delivering strong growth across the board from its core medical equipment and gloves business.
Revenue increased 7.7% to $1.6 billion and that pushed earnings 37.9% higher to $219 million. Net profit rose 42.1% to $158.7 million.
The Ansell result was substantially higher than expected, with a dividend of 50 cents per share, up 7%. This makes it the 17th year of increasing its dividend, something that is known as a ‘Dividend Aristocrat’.
Both of Ansell’s core businesses, being Healthcare Gloves (HGBU) and Industrial Gloves (IGBU), were key beneficiaries of the demand for greater cleanliness, adding 13.8% and 4.2% in sales, respectively. Together, they contributed to 117% cash flow conversion to ensure the business remains well capitalised.
Similarly to CSL Ltd (ASX: CSL) Ansell is using the pandemic to solidify its position by spending $65 million to expand a number of production facilities and prepare for potentially higher raw material costs in 2021 and beyond.
With this in mind, management left broad guidance for a further 3-12% increase in earnings in FY21, suggesting the need for greater hygiene isn’t going away anytime soon.
My take: strong (but expected) result and the dividend is a highlight.