Ansell (ASX:ANN)

Magnus R Nicolin
MD & CEO
Market Cap (AUD): 3.55B
Sector: Health Care
Last Trade (AUD): 26.98 +0.18 (+0.67%)
Tab Bar

1. About

Ansell is a leading global provider of protection solutions. The Company designs, develops and manufactures a wide range of protection solutions that meet the ever-changing needs and demands of its markets and industries. The Company is an innovator striving to create advanced solutions and technology that will solve the challenges industrial workers, countries work to create a safer and protected world.

For 125 years, the Company has delivered the most advanced protection solutions to people all around the world. With operations in four regions, offices and plants located across 55 countries and a team of more than 12,000 employees

Ansell Limited is a Public Company that is ranked number 240 out of the top 2000 companies in Australia. The company generates the majority of its income from the Natural Rubber Product Manufacturing in Australia industry.

2. Business model

 

The Company generates the majority of its income from the manufacture and sale of natural rubber products in Australia:[1]

 

Divisions

Revenue ($M)

% of Revenue

% of Profit (bef. Int & Tax)

Profit Drivers[2]

Healthcare

$774.3

50.0%

20.3%

  • Surgical & Safety Solutions were up 1%. The prior year figures benefitted from a one-time gain during FY17 following the ban on powdered gloves in the USA and was a factor in the modest headline growth in this category
  • Exam and Single Use products grew 3.2% with strong growth coming from industrial and non-acute applications. Company’s acute medical exams declined in the face of stiff price competition however Company’s TouchNTuff® and MICROFLEX® branded products grew strongly
  • Life Sciences products grew by 8.4% with solid growth coming from Company’s newly acquired Nitritex business and its range of clean-room focused BioCleanTM products

Industrial

$715.5

46.2%

12.5%

  • Growth Brands up 10% on the
    back of strong gains in HyFlex® (9%), AlphaTec® (17%) and EDGE® (46%)
  • Emerging markets (up 12%) once again grew strongly with Latin America continuing to lead the way from an already solid foundation
  • Mechanical products up 6% with HyFlex® (up 9%) leading the way in achieving $275m in sales globally. The cut protection category was also up 9% for both gloves and sleeves, whilst expansion in INTERCEPTTM Cut Resistance Technology and FORTIXTM
  • Chemical products grew a more modest 1.4%. Strong growth was achieved in clothing from the AlphaTec® expansion (up 10%) and MICROGARD® products (up 9%)

Unallocated

N/A

N/A

(6.2%)

N/A

Discontinued
Operations

$57.7

3.7%

73.3%

N/A

3. Strategy

 

Ansell’s continued ability to build and maintain its leading positions in these attractive markets arises from the differentiated offering, which is summarised under Ansell’s Eight Dimensions of Differentiation:[3]

 

Eight Dimensions of Differentiation

  •     Customer Intimacy and Safety Focus
  •     Product Range and Innovation
  •     Ansell Brand Equity
  •     Geographic and Vertical Coverage
  •     Regulatory and Compliance
  •     Materials Science
  •     World Class Manufacturing and Engineering capability
  •     Strong Balance Sheet and Cash Conversion

 

Business Priorities

Business priorities for advancing Company’s strategic goals in FY18 were oriented around the following main objectives:

  • Transformation into a sharper focused safety solutions business, particularly following the divestment of the Sexual Wellness business early in the year
  • New product development
  • Grow Company’s emerging market footprint
  • Stronger brand performance by expanding existing Growth Brands such as HyFlex®, as well as recently acquired product ranges such as MICROFLEX®, MICROGARD® and BioCleanTM globally
  • Build stronger and deeper partnerships with Company’s key distributor partners;
  • Work to resume growth of Company’s leading synthetic surgical range and reduce waste levels in Company’s key manufacturing plants
  • Continue improvement in service and quality metrics to ensure Ansell is the leading company globally on these criteria as well as in product performance
  • Ongoing productivity savings stemming from Company’s capital investments and Company’s sharper focus Transformation Program
  • Strategic and disciplined acquisition evaluation

 

M&A initiatives

Through a disciplined acquisition strategy Company have:

  • Strengthened Company’s core market positions
  • Increased Company’s ability to differentiate in material science
  • Added near adjacent product portfolios which Company are demonstrating and can grow rapidly on a global basis

4. Markets

 

The Company operates in markets including:[4]

 

Industry (Australia)

Industry Revenue (2018)

Annual growth Rate (13 -18)

Natural Rubber Product Manufacturing

$870 Million

(0.2%)

Medical and Scientific Equipment Wholesaling

 $18 Billion

3.6% (14 -19)

5. Competition

 

Major competitors include:[5]

 

  • Church & Dwight Co., Inc. (NYSE:CHD)
  • Sperian Protection
  • Wells Lamont LLC

6. History

 

1888[6]  

John Boyd Dunlop invented the pneumatic tire in Ireland and sets up the successful Dunlop Pneumatic Tyre Company. It will quickly expand worldwide.

 

1893  

Dunlop UK established a bicycle tyre manufacturing plant in Melbourne Australia

 

1899 .

Dunlop UK sold it business in Australia and the Dunlop Pneumatic Tyre Company of Australasia Limited established

 

1905  

Eric Norman Ansell acquired the condom machinery owned by his employer the Dunlop Pneumatic Tyre Company of Australasia Ltd. and founded what was to become the Ansel Rubber Company

 

1920  

Dunlop Pneumatic Tyre Company Of Australasia Ltd changed its name to the Dunlop Rubber Company of Australia Limited and became a listed public company on the Melbourne Stock Exchange. It would subsequently become Ansell Limited

 

1925  

Its rubber product range now included household, surgical, and industrial gloves

 

1929  

Eric Norman Ansell established the first Ansell entity E. N. Ansell & Sons Pty. Ltd

 

1933  

Founded of the Edmont Manufacturing Company (to become a world leader in industrial hand protection and later an Ansell company)

 

1934  

The Company changed its name from E. N. Ansell & Sons to The Ansell Rubber Co. Pty. Ltd

 

1941  

Increased research into synthetic rubber compounds and produces gas masks, surgeon’s gloves and meteorological balloons in support of the war effort

 

1946  

Developed the first automated glove dipping machine

 

1960  

Acquired Nutex Rubber Company of Sydney, which was the start of a large-scale expansion into the US and European markets

 

1965  

Introduced its Gammex® gamma-sterilised disposable surgeon’s glove

 

1969  

The Ansell Rubber Co. Pty Ltd was acquired by Dunlop Australia Limited (previously the Dunlop Rubber Co of Australia Ltd). The Group continued under the name “Ansell Rubber Company”

 

1975  

Startup of the first offshore manufacturing plant in Melaka, Malaysia, in the midst of a period of explosive growth

 

1976  

Exported household gloves from Melaka to UK 1980s A decade of acquisitions worldwide and the establishment of factories in Thailand and Sri Lanka, plus the purchase of factories in the US. UK. Mexico, Germany and France

 

1980  

A decade of acquisitions worldwide and the established factories in Thailand and Sri Lanka, plus the purchase of factories in the US, UK, Mexico, Germany, and France

 

1989  

It took over Edmont, a US-based industrial glove manufacturer, thereby doubling its size. Edmont brought a wealth of expertise in plastic, chemical and synthetic industrial gloves

 

1991  

Became world’s largest provider of medical, household and industrial gloves

 

1995  

Acquired Perry Glove Division of Smith and Nephew, a leading manufacturer of advanced medical gloves. Acquired Manix (France)

 

1997  

Takeover of Golden Needles Knitting, the largest glove knitting facility in the world

 

1998  

Acquired Suretex (Thailand and India) condoms and gloves

 

2000  

The Company acquired the Johnson & Johnson medical glove business and acquires the Shah Alam factory. Launch of HyFlex®, the flagship product line

 

2002  

Pacific Dunlop Limited (previously Dunlop Australia Ltd) changed its name to Ansell Limited. Ansell Limited continued to be listed on the Australian Stock Exchange (ASX)

 

2005  

Celebrated 100 Years of protection

 

2006  

Acquired Wuhan Jissbon Sanitary Products Company Ltd. (Jissbon), a leading Chinese condom marketer

 

2007  

Acquired condom businesses in Brasil (Blowtex). Acquisition of condom businesses in Germany/Poland (Unimil)

 

2008  

Acquired military Hawkeye Glove Mfg. Inc., in the US

 

2010  

New Strategy and organisation focused on accelerating growth

 

2011  

Acquired Sandel Medical Industries, LLC, and an innovator in surgical safety solutions

Ansell Limited acquired a minority share in Yulex Corporation

 

2012  

The Company settled acquisition of Trelleborg’s Protective Products Business

Ansell Limited invested in Lakeland Industries, Inc

Entered into a multi-year agreement with Koreca Industries, based in Korea

The Company also acquired Comasec SAS and Hércules Equipamentos de Proteção Ltda

 

2013  

The Company acquired Korean glove manufacturer Midas Corporation and opens a 16,000 square foot state-of-the-art research and development facility outside of Colombo, Sri Lanka

 

2014  

The Company acquired BarrierSafe Solutions International and Hands International

 

2015  

Restructure of four GBU's with Single Use addition, accelerates brand development

Acquired microgard Ltd (UK)

Ansell celebrated 50 years of innovation with Gammexi surgical gloves.

 

2016  

Ansell portfolio organization program

Explored options for Sexual Wellness Business

 

2017  

Ansell limited announced the closing of the sale of its sexual wellness business

Ansell confirmed sale of its brazilian condom business

7. Team

 

Board of directors[7]

 

Glenn L L Barnes – Chairman

Magnus R Nicolin – Managing Director and Chief Executive Officer[8]

John A Bevan – Non-Executive Director & Deputy Chairman

Ronald J S Bell – Non-Executive Director

W Peter Day – Non-Executive Director

Leslie Desjardins – Non-Executive Director

Marissa T Peterson – Non- Executive Director

William G Reilly – Non- Executive Director

Christina Stercken – Non-Executive Director

Christine Y. Tan – Non-Executive Director

 

Management team

 

Magnus R Nicolin – Managing Director and Chief Executive Officer

Neil Salmon – Chief Financial Officer

Peter Dobbelsteijn – SVP Global supply chain

Rikard Froberg – Chief Commercial Officer EMEA & APAC Region

Steve Genzer – President IGBU

Michael Gilleece – Senior Vice President, Corporate General Counsel

Francois Le Jeune – Senior Vice President Business Development and Transformation & Corporate Marketing

Joe Kubicek – President HGBU

Debbie Lynch – Chief Human Resources Officer

Darryl Nazareth – Senior Vice President, Operation and R&D

Mark Nicholls – Chief commercial officer Americas & Global Accounts

Giri Peddinti – Senior Vice President, and Global Chief Information Officer

Catherine Stribley – Company Secretary (Effective from 18 April 2017)[9]


read more

8. Financials

 

2018 Full Year Results Presentation

   

Financial Year 2017/18 (ended 30 June):[10]

 

Divisions

 Revenue ($M)

 % Change

Profit (before Int & Tax) ($M)

 %Change

Healthcare

$774.3

7.8%

$110.8

0.6%

Industrial

$715.5

9.1%

$68.0

(14.8%)

Unallocated

N/A

N/A

($33.5)

3.7%

Discontinued Operations

$57.7

(74.4%)

$399.2

898.0%

Total

$1,547.5

(3.3%)

$544.5

179.1%

9. Risk

 

Foreign exchange risk[11]

The Group is exposed to a number of foreign currencies, however, the predominant operating currency is the US dollar (US$). As such, the Group has determined it appropriate to manage its foreign currency exposure against the US$.

 

Interest rate risk

The Group has a broad aim of managing interest rate risk on its debt by setting a minimum level of interest rate risk days (the weighted average term of all interest rates in the portfolio) and a minimum fixed/floating interest rate ratio. The Group enters into interest rate swaps that enables parties to swap interest rates (from or to a fixed or floating basis) for a defined period of time. Maturities of the contracts are principally between 1 and 10 years.

 

 Credit risk

 The credit risk on financial assets (excluding investments) of the Group, is the carrying amount, net of any provision for impairment, which has been recognised on the Balance Sheet. The Group is exposed to credit risk from its operating activities, primarily from customer receivables and from its financing activities, including deposits with financial institutions, foreign exchange transactions and other financial instruments. The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group does not hold any collateral over any of the receivables.

 

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its obligations when they are due.

 

Commodity price risk

Ansell is a significant buyer of natural rubber latex and a range of synthetic latex products. It purchases these products in a number of countries in Asia, predominately Malaysia, Thailand and Sri Lanka. The Group is not active in hedging its purchases on rubber exchanges but may, from time to time, buy from suppliers or brokers at a fixed price for up to several months into the future. To the extent that any increases in these costs cannot be passed through to customers in a timely manner, the Group’s profit after income tax and shareholder’s equity could be impacted adversely.

References

  1. ^ Annual Report 2018, P. 73
    https://www.listcorp.com/asx/ann/ansell/news/full-year-statutory-accounts-and-amp-2018-annual-report-1954113.html
  2. ^ Annual Report 2018 P. 18 - 20
    https://www.listcorp.com/asx/ann/ansell/news/full-year-statutory-accounts-and-amp-2018-annual-report-1954113.html
  3. ^ Annual Report 2018 P. 14
    https://www.listcorp.com/asx/ann/ansell/news/full-year-statutory-accounts-and-amp-2018-annual-report-1954113.html
  4. ^ http://www.ibisworld.com.au/industry/default.aspx?indid=196
    http://www.ibisworld.com.au/industry/default.aspx?indid=353
  5. ^ http://www.hoovers.com/company-information/cs/competition.ansell_limited.51a025259a447e61.html
  6. ^ http://www.ansell.com/en/About/Corporate/Ansell-Limited-Story.aspx
    https://www.listcorp.com/asx/ann/ansell/news/ansell-announces-closing-of-the-sale-of-its-sw-business-1674034.html
    https://www.listcorp.com/asx/ann/ansell/news/ansell-confirms-sale-of-its-brazilian-condom-business-1697128.html
  7. ^ https://www.ansell.com/us/en/about-us/our-people/board-of-directors
    https://www.ansell.com/us/en/about-us/our-people/executive-leadership
  8. ^ https://www.listcorp.com/asx/ann/ansell/news/ansell-leadership-succession-1606618.html
  9. ^ https://www.listcorp.com/asx/ann/ansell/news/company-secretary-appointment-resignation-1575497.html
  10. ^ Annual Report 2018 P. 73
    https://www.listcorp.com/asx/ann/ansell/news/full-year-statutory-accounts-and-amp-2018-annual-report-1954113.html
  11. ^ Annual Report 2018 P. 93 - 97
    https://www.listcorp.com/asx/ann/ansell/news/full-year-statutory-accounts-and-amp-2018-annual-report-1954113.html