That helped spur creation of the transformation program.
Four areas the firm said are being targeted under the plan are:
• Streamline its three global business units and support cost. Starting in fiscal 2018, the firm's Single Use and Medical businesses will be merged into a new Healthcare business unit that will manage all single use exam, surgical and life science products, and account for about $750 million in sales. Ansell's industrial business unit will continue to manage all mechanical and chemical hand and body protection products, accounting for about $700 million in sales.
Ansell's Medical global business unit produces a unique combination of safety products to protect patients and health care professionals alike, a company spokesman said. Those include surgical and examination gloves and health care safety devices, he said, that are designed to prevent allergic reactions, staff injuries in clinical settings and medical errors. The business serves a wide range of industries.
Its Single Use unit manufactures and markets hand protection products for a similar group of markets, with a particular focus on the life sciences, food, chemical and automotive aftermarket industries.
The Industrial unit makes and markets multi-use protection products for hand, foot and body protection, and serves almost every industry, the spokesman said, including automotive, military, first responders, mining and food.
• Improve the effectiveness of Ansell's global supply chain. All sales and operations planning, transportation, and distribution will be pulled together in a single global function reporting to Nicolin. According to the firm, benefits are expected to include reduced distribution costs, improved service to customers and a targeted improvement in inventory turns benefiting cash flow by at least $30 million.
• Optimize manufacturing operations. Ansell's 13 global plants will be linked more tightly to the streamlined global business units. Three factories will be part of the Healthcare business unit and nine plants will fall under the Industrial operation, while its Sri Lanka site will support both business units. The Industrial business plans to execute a comprehensive manufacturing optimization plan, with detailed productivity targets expected to be implemented over the next two to three years.
Ansell said a number of benefits will be achieved through site productivity initiatives and some realignment of product manufacturing locations, including delivering lower costs, improved flexibility and further enhancing the company's leadership in product performance and quality.
• Accelerate investment in technology and automation and add capacity to support its fastest growing and most innovative new products.
All of the initiatives will be implemented over the next 30 months, with the profit and loss, investment and cash impacts of the transformation program also being incurred during that period, according to Ansell.
It said it plans to release further details on the transformation plan when the company releases its financial results on Aug. 14 and in October during the firm's Investor Capital Markets Day in Sydney that will be followed by road shows in Europe and North America.
Sexual Wellness divestment
Ansell set the stage for creation of the transformation program when it executed a binding agreement to sell the Sexual Wellness business to Humanwell Healthcare and CITC Capital on May 25.
Included in the transaction are all of its condom, lubricant and devices business, and manufacturing plants in Thailand, India and Brazil, which recorded revenues of $160 million in 2016, with the exception of the company's 50 percent interest in the joint venture in India.
However, the company currently is in discussions with its Indian partner on the future of the JV, the spokesman said. The company added that its objective is to best position Ansell for the success of its ongoing Healthcare and Industrial global business units in that country.
Ansell's manufacturing plants in Thailand, India and Brazil are part of the divestment, as are the firm's commercial activities in its primary locations of Iselin; Sao Paolo, Brazil; Brussels; Paris; Krakow, Poland; Wuhan, China; Melbourne, Australia; Bangalore, India; Bangkok; and Surathani, Thailand.
However, another Ansell spokesman said only the commercial activities are part of the transaction—not the sites themselves, which will remain with Ansell, or other activities at the facilities. The company will operate the Iselin site in the U.S. as one of its hub operations and its U.S. base as it has in the past, he said.
In terms of its polyisoprene intellectual property, Ansell will continue to own it but will provide a fully paid-up license to the consortium for use in its SW business.
Ongoing litigation against Reckitt Benckiser in the U.S., Australia and the United Kingdom for alleged infringement of Ansell's patents relating to its SKYN polyisoprene condom technology will be continued by the company, it said.
Ansell has been considering the sale of the SW business for some time. It commenced a review of the business in 2016 "to determine whether it was of greater value to another company or with Ansell," according to the spokesman.
"As a consumer-facing business, it had a different focus" than Ansell's other business-to-business units, he noted. "The decision was made to sell."
Ansell estimated that after the transaction is finalized, net proceeds to the company will be about $529 million, and that it will realize a net profit after taxes of about $365 million, which is expected to be recorded in fiscal 2018.
"We see Humanwell as a natural home for the business and wish them well with the purchase," Nicolin said. "They will be inheriting an outstanding team under the leadership of Jeyan Heper," president of the SW division.
