Ansell Limited · ASX:ANN
Ansell — H1 FY2017 Earnings Presentation
34 slides from Ansell's earnings presentation, Feb 13, 2017
Slide 1: Half Year Results to December 2016
For personal use only ANSELL LIMITED Half Year Results to December 2016 Magnus Nicolin – Chief Executive Officer Neil Salmon – Chief Financial Officer
Slide 2: Disclaimer
Disclaimer For personal use only The following presentation has been prepared by Ansell Limited for information purposes only. The presentation may contain forward looking statements or statements of opinion No representation or warranty is made regarding the accuracy, completeness or reliability of
Slide 3: Contents
Contents For personal use only 1. Business Overview Magnus Nicolin 2. GBU & Region Performance Magnus Nicolin 3. Financial Report Neil Salmon 4. F’17 Outlook Magnus Nicolin 3
Slide 4: 1. Business Overview
For personal use only 1. Business Overview Magnus Nicolin 4
Slide 5: Improving Margins Drive EBIT Growth
F’17 H1 Improving Margins Drive EBIT Growth For personal use only US Dollars Millions F’16 H1 F’17 H1 % CHANGE CC² % CHANGE Sales 784.8 775.8 -1.1% -0.6% EBIT 99.3 104.6 +5.3% +6.3% Profit Attributable 69.6 69.8 +0.3% +0.7% EPS (US¢) 45.6 47.4 +3.9% +4.4% Operating Cash Flow³ ($m) 46.4 43.6 -6.0% Di
Slide 6: Ansell Strategy Delivers In Mixed Global Environment
F’17 H1 Ansell Strategy Delivers In Mixed Global Environment For personal use only KEY STRATEGIC UPDATES H1 RESULTS SUMMARY • Innovation strategy delivering strong results • Organic revenue growth improving • Sales of new products in Industrial up almost 50% • Up 1.4% at CC, (reported revenue down 1
Slide 7: Ansell Remains Focused on Long Term Strategic Priorities
F’17 H1 Ansell Remains Focused on Long Term Strategic Priorities For personal use only ORGANIC GROWTH PROFITABILITY & CASHFLOW CAPITAL DEPLOYMENT Achieve growth above market Efficient manufacturing and High return capex and acquisitions rates in selected verticals where reliable global supply chain
Slide 8: Nitritex Acquisition – Strengthening Ansell Life Science Position
F’17 H1 Nitritex Acquisition – Strengthening Ansell Life Science Position For personal use only Strategic Rationale Life Science a priority vertical with attractive growth potential and customer requirements well matched with Ansell's global capability Performance of existing Ansell business improvi
Slide 9: Ansell's Global Footprint Provides Opportunities To Grow
F’17 H1 Ansell’s Global Footprint Provides Opportunities To Grow In Mixed Global Environment For personal use only Recent data indicates an uptick in manufacturing activity in the US & Eurozone, though forecasts remain moderate and distributors not yet reporting uptick in end user demand. Russia / B
Slide 10: Strategic Drivers of Long Term Growth Performing Well
F’17 H1 Strategic Drivers of Long Term Growth Performing Well For personal use only The focused areas of investment that will drive long term growth and sustain Ansell’s competitive advantages performed well in H1 F’17 (In Constant Currency) GLOBAL BRANDS EMERGING MARKETS (EM) (26% Total Sales) • So
Slide 11: Strong Emerging Markets Performance
F’17 H1 Strong Emerging Markets Performance For personal use only Though macro economic volatility remains a challenge within Emerging Markets (EM), Ansell’s core product, position and distribution strategies continue to drive underlying penetration and growth. F’17 H1 RESULTS1 RESULTS BY REGION1 F’
Slide 12: Growth Brand Performance
F’17 H1 Growth Brand Performance For personal use only H1 F’161 H1 F’17 GROWTH2 H1 COMMENTS Growth $M 135 150 11% • Growth brand sales up 11% organic • HyFlex® growth 12%; Alphatec® +11% INDUSTRIAL All Other $M 178 176 (1)% • EDGE® up 93% supporting emerging Growth % Sales 41% 46% market performance
Slide 13: 2. GBU & Region Performance
For personal use only 2. GBU & Region Performance Magnus Nicolin 13
Slide 14: Industrial GBU – New Product Sales Accelerating
F’17 H1 Industrial GBU – New Product Sales Accelerating For personal use only SUMMARY HIGHLIGHTS F’16 H1 F’17 H1 % CC* % SALES Sales $329.9m $325.9m -1.2% -0.8% • Organic sales +4.2% (CC down 0.8%) • Good result across most geographies with organic EBIT $36.6m $40.9m +11.7% +11.8% sales in North Ame
Slide 15: Single Use GBU – Emerging Markets Expansion
F’17 H1 Single Use GBU – Emerging Markets Expansion For personal use only SUMMARY HIGHLIGHTS F’16 H1 F’17 H1 % CC* % SALES Sales $149.3m $144.6m -3.1% -2.5% • CC sales down 2.5% on pricing and some losses in lower end brands and private label EBIT $31.2m $30.0m -3.8% -2.0% • Emerging markets sales g
Slide 16: Medical GBU – Strong Growth In Surgical, Operations Recovering
F’17 H1 Medical GBU – Strong Growth In Surgical, Operations Recovering For personal use only SUMMARY HIGHLIGHTS F’16 H1 F’17 H1 % CC* % SALES Sales $196.3m $193.5m -1.4% -1.6% • CC sales 2% lower on lower North America exam sales EBIT $22.1m $22.3m 0.9% -1.5% • Total Surgical up 4% with synthetic su
Slide 17: Sexual Wellness GBU – Strong Profit Growth
F’17 H1 Sexual Wellness GBU – Strong Profit Growth For personal use only SUMMARY HIGHLIGHTS F’16 H1 F’17 H1 % CC* % SALES Sales $109.3 $111.8m +2.3% +4.3% • Organic growth of 4.3% in spite of challenges in India (demonetization) and a slow tender market EBIT $14.2m $19.7m +38.7% +46.3% • Strong emer
Slide 18: 3. Financial Report
For personal use only 3. Financial Report Neil Salmon 18
Slide 19: Profit & Loss Summary
F’17 H1 Profit & Loss Summary For personal use only F’17 H1 PROFIT & LOSS (US$M) F’16 H1 F’17 H1 CC % Foreign exchange effects reduced sales by $4.2m, Sales 784.8 775.8 -0.6% Divested Onguard business sales $13.1M in F’16 H1 GPADE 279.2 290.3 +4.2% GPADE margin up 1.8% to 37.4% SG&A (179.9) (185.7)
Slide 20: Fundamentals Driving Growth in Mixed Environment
F’17 H1 Fundamentals Driving Growth in Mixed Environment For personal use only Primary driver of organic growth a strong performance by growth brands in Industrial and a return to growth by Medical surgical, partially offset by weaker Medical exam sales. Reported sales declined on negative currency
Slide 21: Raw Material Price Inflation Starting To Be Felt
F’17 H1 Raw Material Price Inflation Starting To Be Felt For personal use only F’17 COGS COMPONENTS AND MIX F’17 H1 COGS COMPONENTS ($450.8M) F’17 H1 RAW MATERIAL MIX Energy 100% Depreciation Fibres & 5% 3% 90% Engineered Yarns Factory Overhead 80% Packaging 6% Raw 70% Materials Chemicals 60% (In-ho
Slide 22: Balance Sheet Further Strengthened
F’17 H1 Balance Sheet Further Strengthened For personal use only BALANCE SHEET ($M) F’16 H1 F’16 F’17 H1 Fixed Assets 226.7 245.0 244.9 Intangibles 1,092.7 1,077.3 1,058.7 Other Assets/Liabilities (79.3) (105.5) (81.1) Working Capital 357.5 341.9 339.5 Net Operating Assets 1,597.6 1,558.7 1,562.0 Ne
Slide 23: Consistent Solid Cash Flow Generation
F'17 H1 Consistent Solid Cash Flow Generation For personal use only F'17 H1 140.0 ($M) 120.0 100.0 (10.6) 0.0 80.0 (15.9) 60.0 127.0 (29.5) 100.5 (10.8) 40.0 20.0 (16.6) 43.6 4.8 0.0 (32.7) 10.9 (4.8) -20.0 -40.0 F'16 H1 140.0 ($M) 3.2 120.0 100.0 (1.3) 80.0 (19.6) 60.0 117.3 (28.0) (11.1) 99.6 40.0
Slide 24: 4. F'17 Outlook
For personal use only 4. F’17 Outlook Magnus Nicolin 24
Slide 25: H2 Outlook: F'17 EPS Guidance Range Maintained
F’17 H2 OUTLOOK F’17 EPS Guidance Range Maintained (US$1.00 to US$1.12)1 For personal use only KEY DRIVERS / ASSUMPTIONS SEASONALITY • Typically favours H2 Sales and EBIT Margin ORGANIC GROWTH • Expect continued organic growth rate improvement on new products and return to growth for Medical • Raw m
Slide 26: Appendix
For personal use only Appendix 26
Slide 27: Regional Performance
F’17 H1 APPENDIX 1 Regional Performance For personal use only F’17 H1 v F’16 H1 > +5% 0% to 5% < 0% SALES US$775.8m -1.1% Segment EBIT US$112.9m 8.0% MED IND SU SW Total MED IND SU SW Total NA NA LAC LAC EMEA EMEA APAC APAC TOTAL TOTAL • APAC performance commendable, driven by SW (China/ANZ) and Ind
Slide 28: FX – Revenue & EBIT Impact of FX movements
F’17 H1 APPENDIX 2 FX – Revenue & EBIT Impact of FX movements For personal use only Change in average rates of major revenue and cost currencies Currency Impact Comment Revenue EBIT F’17 H1 vs Revenue lower on strengthening US$ vs major revenue currencies partially ~ ($4.2m) ~ ($1.0m) F’16 H1 offset
Slide 29: Business Sustainability Assisted By Well Diversified Portfolio
F’17 H1 APPENDIX 3 Business Sustainability Assisted By Well Diversified Portfolio For personal use only ANSELL’S DIVERSE END MARKETS BALANCE ECONOMIC CYCLES • Ansell’s portfolio is generally well balanced • Though some verticals are more correlated, other drivers including regulation, compliance, sh
Slide 30: Previous Free Cash Flow Format
F’17 H1 APPENDIX 4 Previous Free Cash Flow Format For personal use only $m F'17H1 F'16H1 F'15H1 EBIT 104.6 99.3 118.3 Depreciation/Amortisation 22.4 18.0 17.3 EBITDA 127.0 117.3 135.6 Movement in Working Capital ex FX (10.6) 3.2 (4.1) Capex net of disposals (29.5) (28.0) (38.8) Interest (10.8) (11.1
Slide 31: Segment History
F’17 H1 APPENDIX 5 Segment History For personal use only F’10 F’11 F’12 F’13 F’14 F’15 F’16 F’16H1 F’17H1 GBU US$m US$m US$m US$m US$m US$m US$m US$m US$m Sales 650.2 716.5 668.5 654.8 329.9 325.9 Industrial EBIT For F’10-F’12, 89.8 93.6 92.7 89.0 36.6 40.9 % Margin Single Use & Industrial are 13.8%
Slide 32: Ansell Fact Sheet
F’17 H1 APPENDIX 6 Ansell Fact Sheet For personal use only KEY FIGURES • Booked Tax Losses at 31 December, 2016 $39.6m • Unbooked Tax Losses at 31 December, 2016 $14.3m (Tax Effected) (Aust. $0.0m) • Average Borrowing Cost at 31 December, 2016 3.31% • F’16 Interim Dividend US20¢ a share: F’16 Final
Slide 33: Constant Currency
F’17 H1 APPENDIX 7 Constant Currency For personal use only Constant Currency The presentation of constant currency information is designed to facilitate comparability of reported earnings by restating the prior period’s results at the exchange rates applied in determining the results for the current
Slide 34: For personal use only
For personal use only 34