The COVID-19 pandemic has boosted Ansell’s sales.
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The Ansell Limited (ASX: ANN) share price will be one to watch when trading resumes on Tuesday. That’s after the personal protective equipment (PPE) manufacturer released its full-year results for FY21 this morning.
At close of trade Monday, shares in the company were trading at $40.50 – down 0.49%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, ended the day 0.39% higher.
Let’s take a closer look at today’s results.
Ansell share price in focus after 54% dividend growth
Sales of approx. US$2 billion – up 25.6% on the prior corresponding period (pcp).
Earnings before interest and taxes (EBIT) jumped 56% to US$338 million.
Net profit after tax (NPAT) surged 57% on the pcp to US$248 million.
Basic earnings per share (EPS) of US$1.922 – up 60% on the pcp.
Full-year dividend of US76.8 cents per share (US43.6 cents final + US33.2 cents interim). This is 54% higher than the pcp and represents a dividend yield of 2.63%.
What happened in FY21 for Ansell?
The biggest story around the world, which has also been impacting the Ansell share price, is the coronavirus pandemic. Ansell chair John Bevan conceded the emergence of new strains of the virus has benefitted the company’s bottom line.
“The COVID-19 pandemic has continued to be the dominant influence on the global economy this year as countries recover or succumb to new waves. As a result, Ansell’s mission to provide innovative safety solutions in a responsible and reliable manner has never been clearer. This partly contributed to the company upgrading EPS guidance three times throughout 2021 financial year and achieving EPS of 192.2¢,” he said.
As well, in June, Ansell announced the appointment of a new CEO. Neil Salmon was an internal hire who was previously president of Industrial GBU at the company. The Ansell share price fell on the day of this announcement. He will take the job come 1 September this year.
What did management say?
Bevan had more to say on today’s results, including:
To meet higher demand for some of our products, we increased our capital expenditure to $82.7m, a 36.5% increase on the prior year. We plan on maintaining the spend at elevated levels for financial year 2022 and are confident that we can deliver the desired returns from these investments. It is important that our shareholders are rewarded and as a result, we have declared a final dividend of US43.6¢ which takes full year dividend to US76.8¢, a 53.6% increase compared to the prior year and a 40% payout ratio. We will also continue to assess share buybacks from time to time as part of our capital allocation strategy.
Retiring CEO Magnus Nicolin added:
The focus for us this year has been to continue serving our customers and bringing our major capacity expansions into production despite the challenging operating environment. We were able to get 12 new glove lines and several new body protection smart lines live which helped to deliver the results we saw for 2021 financial year and will also support growth for 2022 financial year and beyond. In addition to this, we ensured that the business is well positioned for the post COVID-19 environment by continuing to invest in our sales force, customer experience, product innovation and digital capabilities.
What’s next for Ansell?
Ansell says the continuing impact of COVID-19 will be material to the company’s performance in FY22. Investors will be interested to watch how the Ansell share price performs as the economy starts to open up.
The company says it has a diversified portfolio of products and, whilst it expects demand for medical PPE to taper off as the impacts of COVID-19 lessen, it maintains this should be offset by sales of other products. These include “Mechanical, Surgical, Life Sciences and internally manufactured Single Use gloves.”
Conversely, Ansell said the impacts of the pandemic in rubber rich South-East Asia may hamper supply in FY22:
A number of Ansell’s factories and suppliers in the region have had short term closures or reduced operations. This may impact sales during FY22 H1. Increased freight costs and shipping delays are also expected to persist throughout FY22.
Ansell expects EPS for FY22 to be within the range of US175 cents and US195 cents.
Ansell share price snapshot
Over the past 12 months, the Ansell share price has increased 0.5%. The ASX 200 has outperformed it by more than 21 percentage points over the same period. Year to date, however, Ansell shares have climbed 15.6% compared to the ASX 200’s gains of 12.1%. Ansell has a current market capitalisation of about $5.2 billion.
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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.