Ansell increases sales, but suffers drop in net incomeBy Mike McNulty
ISELIN, N.J.—A major global restructuring program that Ansell Ltd. recently put in place has resulted in a drop in net income for the fiscal year ended June 30, although revenues showed a significant improvement.
Sales rose 16 percent to $1.59 billion over those recorded in fiscal 2013 while underlying net profit came in at $157 million, up about 13 percent from last year.
However, income was impacted by a $115 million write-off related to the restructuring plan, which dropped the company's profit to $42 million, down 70 percent from the prior year.
The rubber latex glove and condom manufacturer's one-time restructuring charges are largely non-cash.
Ansell's global restructuring program was put in place in late June to create a more efficient and profitable business, company officials said.
Included in the plan is the eventual closure of Ansell's U.S. Hawkeye glove operation in Eupora, Miss. That decision was made because of decreased demand in the U.S. for the specialty gloves produced at the factory, principally for the U.S. military, a spokesman said.
Ansell—which is based in Iselin in the U.S. and Melbourne, Australia, globally—has not determined when the plant will close, he said.
Also included in the plan are relocation of the company's condom headquarters from Australia to Brussels; closure of a Malaysian medical goods production plant and moving capacity to lower cost facilities in southern Malaysia and Sri Lanka; and cutting 30 brands, 100 products and 20 legal entities.
The cutbacks will lead to the elimination of about 250 jobs in the next year.
In mid-August, when the company released its full fiscal year report, Magnus Nicolin, CEO and managing director, said Ansell's results “were underpinned by successful acquisitions and delivery against our innovation strategy with new product releases driving encouraging 4 percent organic growth in hand protection.”
He said the recent restructuring program “has created an opportunity to streamline parts of the business and improve our focus on the verticals where we see the greatest growth potential.”
The firm's most recent acquisitions—Midas Co. Ltd. in Korea and BarrierSafe Solutions International in the U.S.—are performing very well, he said, and give it new capabilities and access to markets where it only had a limited presence.
The restructuring program and the BSSI acquisition are expected to provide $10 million to $11 million in pre-tax benefits in fiscal 2015, the firm said.
A breakdown of Ansell's fiscal 2014 results show that its Industrial business, its largest, had sales growth of more than 10 percent with organic growth of 1 percent overall and 3 percent in its hand protection segment.
Its Medical and Single Use businesses both had strong sales for the fiscal year. Medical revenue rose about 20 percent, while Single Use jumped 68 percent. Both benefited from the recent acquisition of BarrierSafe and strong organic growth, company officials said.
On the medical side, surgical glove revenues increased 5 percent due to a strong performance by the firm's advanced synthetic rubber glove range in mature markets, as well as growth in natural rubber latex products in emerging markets.
Ansell's synthetic rubber glove sales helped boost revenues 3 percent on the examination product end of the operation.
Sales in the firm's Sexual Wellness business declined 7.4 percent, partially because of lower mature brand sales impacted by increased competition in Brazil and China and a revision in worldwide distribution agreements, the firm said.
In fiscal 2015, Ansell expects market conditions in some emerging countries—principally Russia, Turkey and Brazil—to remain challenging, but it sees improved demand in developed economies.
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