Ansell FY24 Earnings Call Highlights

Ansell (ASX: ANN) shares rallied almost 9% on Tuesday after a strong FY24 result that topped analyst forecasts and expectations of a return to growth for FY25.

FY24 Earnings Summary

The below figures are on a constant currency basis and refer to Macquarie estimates as at 8 July)

• Revenue down 2.9% to $1.61bn

• EBIT margin up 20 bps to 12.5% (beat estimates by 10 bps)

• Adjusted EPS down 6.9% to 106 cents (beat estimates by 9.2%)

• Final dividend 21.9 cents

• Full year dividend 38.4 cents (40% payout ratio)

  • Missed 45 cent estimates due to lower-than-expected payout ratio

• FY24 adjusted EPS 107 to 127 cents

  • This was largely in-line with estimates (117 midpoint vs. 116 ests)

Earnings Call Highlights

The below topics have all been answered by CEO Neil Salmon and CFO Zubair Javeed.

FY24 performance: "Delivering above the midpoint of the guidance range we set out originally one year ago."

Healthcare segment performance: "At the beginning of the year, we said for Healthcare that we expected some destocking ... We had a much clearer view of forward trends in our industry ... The demand on Ansell is now normalising back to ongoing end-user demand."

Healthcare EBIT margins: Still below where we expect them to be for this business, but I'm satisfied with that second-half improvement versus the first half."

Single use and life sciences performance: "Exam/Single Use reporting good volume growth throughout the year ... Our Life Sciences business products sold into cleanroom environments achieved double-digit growth in the second half."

Kimberly Clark PPE acquisition: "Since the 1st of July, when those transition services went live, the business has continued on its track without missing a beat ... My confidence in them has certainly improved as we've gone through the steps of acquisition and integration so far."

Red sea shipping issues: "Frustratingly, we had the orders to also achieve growth in Surgical in the second half, but a sizable chunk of those orders were deferred through congestion and disruption that we've seen arising as a result of the Red Sea container shipping impacts."

FY25 guidance: "I hope that we will demonstrate higher growth ambition for this business going forward into FY25 and beyond."

Analyst Q&A Highlights

On Kimberly-Clark synergies: "Synergy delivery won't begin till FY26 ... Our focus is taking the business and quoting it over from Kimberly-Clark systems, processes to Ansell systems and processes."

Why is the Red Sea freight issue such a big problem: Because the Red Sea is no longer available to containerships worldwide... product is spending longer in the water... So that's why it's a more immediate impact to our Surgical business."

Will the above affect any other segments: "As things stand now, no... As we began this year, we’re starting to work away that back order situation. I think it will take us some months before we work it away fully... But clearly, it’s an uncertain situation and things could still change externally."

Raw materials headwind into FY25: "I mean, it’s a low millions figure... a single digit millions figure. But there’s still some uncertainty to it... spot rates are elevated in the industry... And as I said to you before, we will seek to take a longer-term view of all of those over the next 12 to 18 months."

Any headwinds relating to macroeconomic environment: "Industrial demand conditions, they’re not very exciting... Across most of the European Union, you see PMIs sub-50... Importantly, we’re not seeing those trends change... In emerging markets, I’m encouraged... Healthcare also is a pretty steady end-use demand situation."

This article was generated with the support of AI and reviewed by an editor.