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Ansell considers future of condom business

AAP logoAAP 14/08/2016 Trevor Chappell

Gloves and protective clothing specialist Ansell has flagged the possible sale of its condoms business after the division - the company's oldest - performed strongly in a tough year for the company.

Ansell unveiled a 15.1 per cent decline in profit for 2015/16 on Monday, down to $US159.1 million ($A207.8 million) amid a continuing weak global economy and adverse currency moves.

But shares in the business jumped more than 15 per cent after it raised the possibility of a sale of the profitable condoms division.

Ansell said its sexual wellness business - its oldest and smallest division - was the company's best performer courtesy of strengthened management, changed strategy, new products and growth in emerging markets including China and India.

Chief executive Magnus Nicolin said Ansell would be looking for opportunities for "portfolio optimisation" in the current financial year.

"This will include consideration of options for the sexual wellness business and opportunities to enhance our positions in the industrial and medical businesses with value-enhancing acquisitions," Mr Nicolin said.

Goldman Sachs has been retained to look at options for the condoms business.

Mr Nicolin said sexual wellness was Ansell's oldest business but also the group's only business-to-consumer operation. All of Ansell's other operations are business-to-business operations.

Mr Nicolin said Ansell's sexual wellness business was an attractive one, with a strong performance and a "tremendous" team.

"It's clearly not a reflection of us not being happy with the business per se, or its performance which is terrific, but more a reflection of the opportunity that we see to further focus Ansell in what we should be really good at, which is to sell protection and productivity," Mr Nicolin said.

Ansell's sales and earnings from industrial gloves and clothing lifted in constant currency terms, boosted by the acquisition in 2015 of the chemical protective clothing maker Microgard.

The medical gloves business generated lower sales and earnings due to manufacturing issues in the first half and weakness in emerging markets partly because of constrained spending on public healthcare.

The medical business is expected to return to growth in 2017.

Ansell expects that over the next two to three years it will generate organic revenue growth on the low to mid-single digits as growth brands and new products gain traction.

Earnings per share for 2016/17 is expected to be between 98 US cents and $US1.12.

Shares in Ansell were up $3.07, or 15.6 per cent, at $22.73 at 1322 AEST.

IG market strategist Evan Lucas said the market had largely expected the Ansell result given that the company had been knocked about by currency fluctuations in recent years.

He said the big uplift in the share price showed that investors were excited by the prospect of a return on the possible sale of the sexual wellness business.

Ansell's net profit fell 2.5 per cent in constant currency terms, allowing for exchange rate averaging.

ANSELL PROFIT DOWN 15PC

* Annual profit down 15.1pc to $US159.1m

* Sales down 4.4pc to $US1.57b

* Final dividend up half a cent to an unfranked 23.5 US cents per share.

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