The Ansell Limited (ASX: ANN) share price will be on watch this morning following the release of its earnings for the half year ending 31 December 2019.
What did Ansell report?
Ansell announced sales of US$753.3 million, which is growth of 3.9% on the prior corresponding period (pcp), and 5.3% growth in constant currency (CC), while organic growth was 2.4%.
Organic growth in the company's healthcare segment came in at 3.4%, with solid momentum being maintained, while organic growth in its industrial segment was 1.3%, with recovery in EMEA and continued APAC growth.
Earnings before interest and tax (EBIT) came in at US$91.8 million for the half year, up 4.8% year-on-year and 17.4% in CC. Ansell's profit attributable was $65.8 million, up 3.5%, year-on-year.
Earnings per share (EPS) was 50.1 US cents, up 8.7% year-on-year and up 25.7% in CC, which the company attributes to sales growth, transformation benefits, favourable raw material costs and a share buyback.
Healthcare segment
In Ansell's healthcare global business unit (which constitutes 52.4% of revenue and 59.5% of segment EBIT), sales grew 4.1% in constant currency and 3.1% on a reported basis, including 6 months contribution from Digitcare, which was acquired in October 2018.
Ansell reported that the segment's organic growth was up 3.4% and emerging markets continued to perform strongly with 7.1% growth. New product sales also remain strong with a 13.7% contribution.
Life Science and Surgical & Safety Solutions continued to perform well with 9.5% and 5.8% organic growth, respectively.
Surgical & Safety Solutions maintained its migration towards synthetic surgical products, offsetting a decrease in lower margin powdered surgical gloves. Life Science continued to expand its salesforce and partnerships.
EBIT in constant currency was 26.4% higher than the prior year, due to favourable raw material costs, particularly nitrile, as well as improved manufacturing performance and benefits from pricing initiatives.
Ansell also noted that currency was a negative headwind, and on a reported basis, EBIT was up 14.0%.
Industrial segment
For the company's industrial global business unit, (which constitutes 47.6% of revenue and 48.4% of segment EBIT), sales increased 6.5% in constant currency and 4.7% on reported basis including 6 months contribution from Ringers, which was acquired in February 2019.
Organic growth was up 1.3%.
Ansell noted that despite ongoing challenges persisting in the automobile sector, performance improved over pcp and EMEA saw a strong recovery with 5.1% growth. APAC growth remained elevated predominately due to China, while the segment's performance in the US and Mexico was lower than anticipated as a result of reduced business confidence and economic uncertainty.
FY20 outlook and guidance
In the second half of calendar 2019, Ansell noted that it observed continued uncertainties around global economies and trade. In the release, Ansell commented that there are now tentative signs that global growth may be stabilising, though at subdued levels. It further commented that the overall financial implications of the coronavirus outbreak are difficult to predict, however any impact is anticipated to be minimal at this time.
Ansell is continuing to maintain its FY20 EPS guidance range of 112 US cents to 122 US cents, compared to FY2019 adjusted full year EPS of 111.5 US cents.
