ferrets stock to watch: ansell limited

Ferrets Stock to Watch: ANSELL LIMITED
09:07, Monday, May 07, 2007

LOCAL COMPANY NOW PRODUCING 20pc OF CONDOMS IN BRAZIL

Sydney - Monday - May 7: (RWE Aust Business News)
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OVERVIEW
********

Ansell, the global condom and surgical glove maker, had a rough
half year due the rise in the cost of latex but could be making up for it
with business expansion.

The company announced on Friday that it has acquired Fabrica de
Artefatos de Latex Blowtex Ltda of Brazil.

Terms of the transaction were not disclosed.

Blowtex is a leading player in Brazil's attractive retail condom
market, with sales of around $US10 million and a manufacturing facility
near Sao Paulo.

It has steadily grown to about 20 per cent of the Brazilian
retail market, giving it the third largest share in the country.

Scott Papier, Ansell's vice president and regional director of
the America's consumer division, remarked; "Brazil is the fifth largest
condom market in the world, equal to the United Kingdom, with a youthful
population and double-digit growth rates."

He said Blowtex is a well-regarded brand and has major share
strength in a number of regions of the country and Ansell looks forward
to developing the business even more quickly.

Doug Tough, Ansell's CEO, then said; "As per our strategy,
Ansell continues to look for bolt-on acquisitions in countries where we
are not represented.

"Blowtex fulfills all the criteria; strong and respected brands,
solid market share, entrepreneurial and innovative management with
efficient manufacturing and the opportunity to extend marketing reach,
thereby allowing for significant growth potential.

"We welcome the Blowtex team to Ansell," Mr Tough said.

Rustom Jilla, Ansell's CFO, noted that the acquisition was
expected to be earnings per share neutral for the remainder of the 2007
financial year and accretive from FY 2008 onwards.

In February, Ansell reported net profit of $US38.3 million for
the first half ended December, down 11.5 per cent compared with the
previous corresponding period.

Profit was down 15.7 per cent if the previous corresponding
period's $US4.1 million write-down relating to the South Pacific Tyres
(SPT) joint venture is excluded.

EPS was $US0.226, down 5.4 per cent and EPS for the full year
to June should be in the range of $US0.46 to $US0.50, compared with
$US0.573 last year.

Mr Tough told Corporatefile that early in the 2007 financial year
the company said that the net negative impact of latex costs was expected
to be approximately $US10 million for the year and that the company had
invest an additional $US12 million in "growth" expenses and
initiatives.

The net negative impact of latex is now likely to be higher,
with lower selling price increases than expected.

However, the CEO said the company has had had stronger sales
growth at 16 per cent, and are comfortable with the trade-off.

The investment in growth expenses and infrastructure will
continue as planned.

Ansell's believes that the second half will produce higher sales
volumes and a better mix will offset the latex price impact and the
higher operating expenses.

Mr Tough declared, "We expect that this will enable us to be at
the higher end of our EPS guidance".

SHARE PRICE MOVEMENTS
*********************

Shares of Ansell on Friday slipped 5c to $11.63. Rolling high
for the year is $12.40 and low $10.52. dividend is 22c a share to yield
a meagre 1.91 per cent. Earnings per share is 71.2c and p/e ratio 16.14.
The company has 145 million shares on issue with a market cap of $1.6
billion.

Mr Tough added the growth was partly due to the initiatives
flagged in recent years and mostly due to a change where Ansell has moved
from a focus on delivering the four-year operation full potential
segment EBIT targets to seeking faster growth.

"More importantly, this is not profitless growth," he said.

"Yes, we sold additional lower margin exam gloves, but the major
part of the increase came from higher value added HyFlex gloves,
surgical gloves and condoms.

"We expect sales increases to continue, though not at first-half
growth rates.

CFO Rustom Jilla said there was no profit erosion due to higher
sales.

The first half's broad based sales growth brought higher gross
margins roughly in line with the previous year.

The reduction in first-half margins was basically due to
absorbing higher latex costs.

Mr Tough said raising selling prices has been harder than
expected.

"The substantial fall in latex prices early in the financial
year made it difficult to convince customers the full increases we
sought were necessary.

"In other developments, the major initiatives were China, where
we set up a new organisation that has doubled sales; Japan, where we
continued to invest in our occupational business and where sales have
grown 60 per cent, and in channel expansions in our more mature markets
in the US and Europe.

"We continued to invest in sales and marketing in general and
our occupational business also bore about half the infrastructure
expense increase," Mr Tough declared.

BACKGROUND
**********

Ansell Ltd, headquartered in Melbourne, is the name of the
company formerly known as Pacific Dunlop Ltd.

The company's name was changed in April 2002 as a result of a
strategic repositioning of the company to concentrate on its core
business, protective products and services in a broad healthcare
context, and following the disposition of a series of other business
units that did not fit within the strategy.

The new direction now being taken by the company leverages the
solid foundation provided by the Ansell Healthcare business that has
been a major part of the parent company's portfolio of businesses since
it was acquired in 1969.

Ansell has a long and distinguished career dating back to when
its first business, pneumatic bicycle tyre manufacture, commenced in
Australia in 1889.

Since its commencement the company has changed its name on many
occasions to reflect the nature of the businesses in which it was
involved at the time.

ENDS

Copyright © 2007 RWE Australian Business News. All rights reserved.