Ansell sees double-digit growth in first half, anticipates price increases to offset tariffs, cost of materials

RICHMOND, Australia—Ansell Ltd. has reported double-digit top- and bottom-line growth for the first half of fiscal year 2025, ended Dec. 31. Growth in the second half, however, is expected to slow as the company looks to potential price increases to offset rising costs.

The Australian personal protection safety solutions firm reported sales of $1.02 billion (USD), representing 12.5-percent growth on an organic constant currency (CC) basis and 29.9-percent growth on a reported basis.

The company reported EBIT of $127.4 million, representing 20.9 percent organic CC growth and 62.9 percent reported growth.

Organic CC, Ansell said, compares 2025's first half to that of 2024 at constant currency and adjusts for the effects of acquisitions, divestments and business exits. This includes the Kimberly Clark PPE acquisition—now branded as the Kimtech and KleenGuard Business Unit (KBU)—completed in July 2024 and the firms exit from retail household gloves in 2024.

The company also reported an operating cash flow of $53.5 million, supported by cash conversion of 104 percent from strong working capital management.

"We achieved strong growth in the first half and made good progress against our key strategic objectives," CEO Neil Salmon said in a statement. "I am encouraged by the momentum in our underlying business and pleased that we are on track to complete the complex integration of KBU within 12 months while continuing to deliver our productivity program (APIP) objectives."

APIP refers to the firm's multi-year Accelerated Productivity Investment Program launched in 2023, comprising a series of productivity initiatives to adjust Ansell's business in response to post-pandemic operating conditions and position the company for its "next phase of growth."

Ansell's Industrial Segment—which makes up 45 percent of segment sales and 52 percent segment EBIT—reported $457.4 million in sales for the first half, an increase of 8.1 percent on an organic CC basis and 19.0 percent on a reported basis.

EBIT was $70.9 million, an increase of 12.2 percent on an organic CC basis and 21.8 percent on a reported basis.

This growth, Ansell said, "was driven by higher sales, improved manufacturing utilization and increased APIP savings, partially offset by higher freight costs, including temporarily higher use of air freight to deliver accelerated sales growth in Mechanical."

Within the industrial segment, Ansell saw 10.9 percent organic CC growth for Mechanical, "driven by success with new products and augmented by a benefit to sales of about $10 million as customers built safety stocks of the top-selling Ringers R840 to target levels."

For Chemicals, the firm reported organic CC growth of 5.7 percent. This, Ansell said, was "driven by growth across both hand and body protection ranges, particularly in the higher margin range of high-end chemical protection solutions."

The company's Healthcare Segment—which makes up 55 percent of segment sales and 48 percent of segment EBIT—reported $562.3 million in sales, an increase of 16.3 percent on an organic CC basis and 40.4 percent on a reported basis.

EBIT was $64.4 million, an increase of 30.0 percent on an organic CC basis and 135.9 percent on a reported basis.

Ansell attributed this growth to increased sales, including KBU products, better operating leverage in manufacturing as production increased, and APIP savings.

These savings, however, were "partially offset by higher freight costs including temporarily higher use of air freight to accelerate the reduction in surgical back orders, and higher raw material costs."

Within the health care segment, Ansell noted growth in exam and single-use gloves, up 9.3 percent, including growth in its Microflex, TouchNStuff and Kimtech products.

Surgical sales, Ansell said, have recovered from the effects of destocking, growing 25.8 percent in the first half of fiscal 2024. Cleanroom sales also rebounded from destocking, growing 22.4 percent, with particularly strong growth with the Kimtech cleanroom products.

KBU reported $140.9 million in sales, representing organic CC sales growth of 7.4 percent, Ansell reported. EBIT was $34.8 million, representing organic CC growth of 22.1 percent.

KBU sales growth, Ansell said, was driven by strong growth in the Kimtech cleanroom and laboratory products, which offset declines in KleenGuard industrial safety products. EBIT, it added, was supported by higher sales and "overall margin favorability."

"Good top and bottom-line results in our Industrial Segment were supported by a significant contribution from new products, helping to overcome muted demand conditions in key manufacturing end markets, and our Healthcare Segment rebounded from the effects of distributor destocking in the prior period," Salmon said. "Higher sales drove strong earnings growth in both segments, including a contribution from KBU, which was ahead of our acquisition business case, and growing savings from APIP."

KBU is on track to complete integration by the end of fiscal 2025, Ansell said, noting the unit's performance is "ahead of expectations."

Ansell has been operating KBU under a "transitional services agreement" with Kimberly-Clark, which has provided commercial and business support services.

"Cutovers to Ansell systems are planned to occur in a phased manner during the second half of FY25, and by the end of FY25 the provision of transitional services by Kimberly-Clark is expected to conclude, with integration complete," the company said.

In the first half, the company created an integrated Ansell and KBU organizational structure, certified Kimtech and KleenGuard products and has planned for an expansion of the RightCycle product recycling service.

"During the first half, we began to implement integrated organizational and go-to-market structures designed to leverage the best of both KBU and Ansell's positions in the attractive scientific vertical," Salmon said. "We expect to complete the integration of KBU and exit transitional services arrangements earlier than originally assumed, potentially accelerating the achievement of our $10 (million) net pre-tax cost synergies target."

Ansell expects continued sales growth for the remainder of FY25 with price increases to offset growing costs likely.

Sales growth, however, is anticipated to be slower than the first half, as demand conditions remain "muted in manufacturing end markets," the company said, and growth in key health care markets will no longer see enhancements from destocking recovery, with "no expectation of significant one-time order benefits."

Ansell said it will support its earnings with pricing "to offset the impact of higher raw material costs" seen in the first half of FY25, as well as the reduced reliance on air freight and the initial realization of KBU cost synergies.

Plans also are in place to adjust pricing to offset tariff increases, the company said, noting the U.S.'s implementation of tariffs on Canada, Mexico and China.

"Entering the second half, we see a path to continued organic constant currency sales growth, despite subdued industrial demand and uncertainty stemming from changing trade policies in various countries, underpinned by the opportunity and flexibility provided by Ansell's balanced end market exposure and diversified global supply chain," Salmon said.