Ferret's Stock to Watch: ANSELL LIMITED 07:42, Thursday, 10...

Ferret's Stock to Watch: ANSELL LIMITED
07:42, Thursday, 10 February 2005

Sydney - Thursday - February 10: (RWE Australian Business News
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COMPANY RETRIEVES ITS IMAGE AS A RELIABLE PROFIT EARNER

OVERVIEW
********

Ansell Ltd has turned in impressive half year result confirming
its recovery from some lean years until the company reorganised itself in
2002.

Analysts now have to admit that Ansell is back as a reliable
profit earner and could well return to blue chip status.

The company yesterday caught the market's attention after the
shares climbed strongly on a day when the market retreated.

Ansell Ltd reported a profit attributable to shareholders of
US$31.7 million, for the December 31 half year, up 35 per cent on the
previous corresponding period.

Based on this result and the completion of an buyback of
16.8 million shares, Earnings Per Share rose from US12.7c to US18.1c, or
42 per cent.

Directors declared an interim dividend of 7c a share
franked to 57 per cent and payable on April 8.

This is up a cent or 17 per cent increase on the previous year.

Chairman Dr Ed Tweddell said the result was a solid first half
performance, broadly in line with expectations.

"EBITA has again grown by double digits and combined with our
recently completed $A155 million off market share Buy-Back has helped
produce another outstanding EPS increase.

"The Board is encouraged by the continuing progress of Ansell as
it moves closer to delivering the F'05 segment EBITA commitment made in
F'02," Dr Tweddell said.

New CEO Mr Doug Tough, said: "During the half $US sales
increased by 3 per cent the previous year, again led by Occupational
which grew 9 per cent, while Professional held its ground, and Consumer
fell by 7 per cent, due mostly to lower condom tender business than in
the comparative period."

Asked about the outlook for the full year, Mr Tough told
Corporate File yesterday that "We're confident the initiatives underway,
driven by additions to the European Sales & Marketing team, will improve
our profitability."

In the December half report, Mr Tough continued, "Our
Occupational business continues its record of improved Sales and EBITA
margin."

Ansell is one of the world's largest manufacturers and marketers
of condoms, with its three plants having a combined annual production
capacity of 1,600 million pieces.

Condom marketing support programs in the US have paved the way
for further growth although there has been a substantial increase in
competition in a number of markets, especially in the UK where Ansell is
revising its approach.

The Professional business has seen a stabilisation of sales and
slight improvement in EBITA margin and we are working through some
changing market dynamics in the Consumer business".

"The company has continued to focus on selling value-added
products and reducing costs while investing in research and development
programs including the recent roll out of the new StageGate New Product
Development process.

"I am also pleased to report that the disruption to our business
caused by the tsunami has been negligible and more importantly, there has
been no Ansell employee loss of life.

Our people have been wonderfully generous with their time and
donations and the Company has been pleased to be able to assist the
relief effort by donating over 500,000 pairs of gloves and making some
cash donations.

"We will continue to assist where possible Mr Tough said."


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

Shares of Ansell yesterday surged ahead 35c to the high for the
rolling year of $9.65. Low was $6.38. Dividend is 13c to yield 1.36 per
cent. Analysts are looking for a higher distribution for the full year
although the company is clearly in the capital appreciation category and
could be skint on franking credits. The Ferret suggested supporting the
stock last September when the shares stood at $8.67.

*****

The Occupational glove business accounted for 50 per cent of
Ansell's revenues and 54 per cent of Segment EBITA in H1.

Sales growth came from higher volumes in the HyFlex family of
ergonomic gloves, industrial household gloves for food processing, and
disposable examination gloves used in a variety of industries.

The strong improvement in profitability came not only from these
volumes but from continued significant cost savings from operations.

HyFlex family volumes grew 28 per cent, helped by an expanded
product range.

Sales of higher valued-added knitted gloves increased. The
Vantage cut resistant line of knitted gloves made from proprietary
Intercept Technology yarn was launched in H1.

This period's EBITA comparison benefited from the closure of the
knitting plant in Wilkesboro in December 2003.

During H1, the Mexican knitting plant continued to improve its
efficiency and helped improve segment EBITA results.

****

The Professional business accounted for 34 per cent of Ansell's
revenues and 28% of Segment EBITA in H1.

Unit sales of our branded latex powder free (PF) surgical gloves
increased by 14% globally, led by the flagship brands of Encore, Gammex
and MicroTouch.

The Americas bounced back with a 10% volume increase - benefiting
from preferred provider status in 6 of the top 7 Group Purchasing
Organisation (GPO) contracts in the USA. Synthetic surgical glove growth
was lower, but is expected to increase with the planned launch of new
products.

Powdered surgical glove volumes fell 7 per cent as conversions to
PF continued and some tenders were lost due to price competition.

Examination glove volumes grew 5 per cent, while average selling
prices for latex PF gloves fell 3 per cent.

Competitive pricing pressure did not allow for recovery of
increases in the cost of latex, which is a high proportion of the cost of
this glove. Increases in the cost of petroleum-based materials, such as
nitrile and vinyl, also impacted margins.

*****

The Consumer business accounted for 16 per cent of Ansell's
revenues and 18% of Segment EBITA in H1.

Ansell's global branded condom businesses had mixed results. In
Australia, market leadership and share was maintained. In the US, softer
demand intensified the tough competitive environment.

In Europe, the "Play" sub-brand was launched for the youth market
with good early results.

The company gained market share in France but continued to suffer
from the UK's difficult competitive environment.

F'05 H1 comparisons were hurt by lower global tender sales.

The Brazilian tender business contributed $4 million to sales in
H1 last year and nothing this year due to a disruption in the Brazilian
government procurement process with obvious flow-through impact of lost
contributions and lower capacity utilization in the plants.

Lower US government funding for condom purchases adversely
impacted US.

Public sector sales through market share leadership was
maintained.

Demand from our retail household gloves partner continued to be
low. Major new promotions are now planned to support sales of the new
Foamlined glove.


BACKGROUND
**********

Ansell Limited is the new name of the company formerly known as
Pacific Dunlop Limited.

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.

It followed the disposition of a series of other business units
that did not fit with the new 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 Limited, (Pacific Dunlop) as the company was known, had 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.

Ansell Limited is an Australian publicly listed company with its
corporate Head office located in Richmond, Australia.

The company is listed on the Australian Stock Exchange as its
home exchange and has listings on the London and New Zealand exchanges.

In the US, Ansell Limited shares are traded in the form of American
Depository Receipts (ADR's) on the NASDAQ.

ENDS