Australia’s Ansell shares jump 16 per cent on potential condom unit sale
SYDNEY: Australian rubber products maker Ansell Ltd said on Monday it may sell its profitable condom-making business to focus on its industrial and medical units, sending shares 16 per cent higher in their biggest one- day gain in nearly 30 years.
Report ing a previously f lagged 15 percent drop in annual prof it to US$ 159.1 million, hit by foreign exchange f luctuations, Ansell said its had hired Goldman Sachs to “review options” for the condom business. Cost cuts at the unit helped operating earnings jump 18 percent in the year ended June.
The maker of goods from rubber gloves to diving suits said a potential sale of the condom- making division – which accounted for 14 per cent of Ansell’s revenue – could fund purchases by its industrial or medical arms. Ansell didn’t say when it might decide on the condom unit’s future, nor how much it might seek for it.
Shares, which tumbled 19 per cent after the Melbourne-based firm issued its profit warning in February, posted their largest daily gain on Monday since 1987 and by 1353 GMT had reached A$ 23.10, their highest level since September 2015.
“It ( the condom business) has always been seen as a bit of an underperformer, and probably a lower-margin business and to sell that will enable them to recycle capital, pay down debt and allow them to do buy- backs or future acquisitions,” said Bill Keenan, general manager of direct equities research at broker Lonsec.
Though annual net profit and sales fell, Ansell raised its dividend, saying it had made progress in solving first- half manufacturing issues, when the company booked cost overruns of associated with starting up a new medical suppl ies line at its plant in Melaka, Malaysia.
The company raised its payout 1.2 per cent, paying a f inal dividend of 23.5 cents for a full-year dividend of 43.5 cents.
Revenue grew in the Asia- Pacific region in the 12 months ended June, but fell elsewhere and was down 4.4 per cent in total.
For the current fiscal year, Ansell forecast two to three per cent revenue growth, while targeting “mid- to- high single- digit” prof it growth in the mid- term future. — Reuters