Ansell Limited · ASX:ANN
Ansell — FY2019 Earnings Presentation
40 slides from Ansell's earnings presentation, Aug 12, 2019
Slide 1: Ansell Limited F'19 Full Year Results – June 2019
Ansell Limited F’19 Full Year Results – June 2019 Magnus Nicolin – Chief Executive Officer Zubair Javeed – Chief Financial Officer 12 August 2019
Slide 2: Disclaimer
FULL YEAR RESULTS F’19 Disclaimer The following presentation has been prepared by Ansell Limited (Ansell or the company) for information purposes only. The information contained in this presentation is a summary only and does not purport to be complete. It should be read in conjunction with Ansell’s
Slide 3: Contents
01 Business Overview Magnus Nicolin CONTENTS 02 Financial Report Zubair Javeed 03 F’20 Outlook Magnus Nicolin 04 Appendix
Slide 4: Business Overview
01 Business Overview Magnus Nicolin
Slide 5: Ansell, The Safety Company
FULL YEAR RESULTS F’19 Ansell, The Safety Company LOST TIME INJURY (LTI) ANSELL SAFETY EXPERTISE 0.8 1. Ansell safety record maintaining world class levels LTIs per 100 Employees per Annum 0.7 0.6 2. Guardian® safety solutions expanded to address complex chemical hazards, and the best protection sol
Slide 6: Global Trading Segmentation
FULL YEAR RESULTS F’19 Global Trading Segmentation Uncertain macroeconomic outlook but some key markets still in growth mode US GROWTH AND PMI COOLING EUROZONE PMI DECLINING EMERGING MARKETS Annual GDP Growth Ratel1; Markit Flash US PMI2 Annual GDP Growth Rate1; Markit Flash Euro PMI2 GDP Growth Rat
Slide 7: Sales Growth Momentum in Healthcare yet Tempered in Industrial; Transformation Costs Evident in Reported Earnings
FULL YEAR RESULTS F’19 Sales Growth Momentum in Healthcare yet Tempered in Industrial; Transformation Costs Evident in Reported Earnings STATUTORY RESULTS US Dollars Millions¹ F’18 F’19 Continuing Discontinued² Total Group Continuing Discontinued Total Group Sales 1,489.8 57.7 1,547.5 1,499.0 - 1,49
Slide 8: Financial Highlights – Strong EPS Growth and Cashflow
FULL YEAR RESULTS F’19 Financial Highlights – Strong EPS Growth and Cashflow KEY POINTS SALES Adjusted¹ EPS Adjusted² ROCE % • Delivered top-end of increased EPS $1,499.0m 111.5¢ 13.2% guidance; Strong 9.3% growth in spite of dilutive impact from increase in tax rate +0.6% Reported +9.3% Growth Up +
Slide 9: EBIT Margin Up 50bps even with High RM Costs; EPS Gains Driven by Transformation Program, Mix and Share Buyback
FULL YEAR RESULTS F’19 EBIT Margin Up 50bps even with High RM Costs; EPS Gains Driven by Transformation Program, Mix and Share Buyback Continuing Business Analysis F’182 F’192 US Dollars Millions Continuing Continuing % CHANGE CC¹ % CHANGE Sales 1,489.8 1,499.0 +0.6% +3.2% Statutory EBIT 157.8 157.3
Slide 10: Solid Progress Against Targets
FULL YEAR RESULTS F’19 Solid Progress Against Targets FINANCIAL GOALS F’19 RESULT KEY COMMENTS 1.9% organic, +3.2% Industrial Growth tempered by EMEA headwinds & NA 3-5% ORGANIC GROWTH PER overall growth (CC) slowdown; Healthcare had solid momentum ANNUM Strong Margin growth delivered ahead of guida
Slide 11: Solid HGBU Organic Growth, but Challenge in IGBU
FULL YEAR RESULTS F’19 Solid HGBU Organic Growth, but Challenge in IGBU SALES SUMMARY ORGANIC GROWTH COMMENTARY EMERGING MARKET TRENDS Organic Growth F’18 F’19 % Org • HGBU: Delivered organic growth 4.0%, $M $M Growth Full Year % strong performance in Single Use/Exam Emerging 6.0% 4.0% $309.9m $314.
Slide 12: Transformation: Increased Annual Savings Target to $35m
FULL YEAR RESULTS F’19 Transformation: Increased Annual Savings Target to $35m OBJECTIVES ANSELL TRANSFORMATION PROGRAM P&L savings >$30m SAVINGS Additional cash ACHIEVED AND STATUS benefits > $30m TARGETED VS F’20 Target vs TARGET¹ F’18 F’19 Business Units agile $m Base Transforming and responsive
Slide 13: Healthcare GBU: Sales Momentum Continues; Q4-19 Margin Improvement After Facing Higher Raw Materials in H1-19
FULL YEAR RESULTS F’19 Healthcare GBU: Sales Momentum Continues; Q4-19 Margin Improvement After Facing Higher Raw Materials in H1-19 SUMMARY HIGHLIGHTS SALES F’18 H1: 4.4% F’18 F’19 % CHANGE CC % • Organic growth +4.0% F’18 H2: 1.7% Sales $774.3m $795.3m +2.7% +4.8% • Emerging markets grew +6.8% F’1
Slide 14: Healthcare Solid Growth Across Portfolio and Markets
FULL YEAR RESULTS F’19 Healthcare Solid Growth Across Portfolio and Markets SALES GROWTH & EXPANDED GLOBAL FOOTPRINT NEW PRODUCT SALES UP +8.6% 4.0% Overall Organic Strong Growth & Innovation Leadership • Microflex® High Chem • Microflex® High Chem Clean Sales Growth • GAMMEX® PI Hybrid™ • Microtouc
Slide 15: Industrial GBU: Transformation Drives Profitability Improvement; EU Macro Softening & Q4 NA Slowdown
FULL YEAR RESULTS F’19 Industrial GBU: Transformation Drives Profitability Improvement; EU Macro Softening & Q4 NA Slowdown SUMMARY HIGHLIGHTS F’18 F’19 % CHANGE CC % SALES F’18 H1: 4.6% • Organic sales growth marginally lower in F’19 Sales $715.5m $703.7m (1.6%) +1.5% F’18 H2: 5.7% • Continued EMEA
Slide 16: Industrial Strategy Execution Delivering Excellent Margin Growth
FULL YEAR RESULTS F’19 Industrial Strategy Execution Delivering Excellent Margin Growth EBIT MARGIN GROWTH ADVANCING INNOVATION LEADERSHIP 190bps Consolidating our total chemical Investing in new Chemical Glove solution under the Alphatec Brand Centre of Excellence in Malaysia EBIT at 14% & YoY high
Slide 17: Delivering Significant Cash Flow & Returns to Shareholders
FULL YEAR RESULTS F’19 Delivering Significant Cash Flow & Returns to Shareholders OPERATING CASH FLOW¹ ($m) & CASH CONVERSION² CASH RETURNS TO SHAREHOLDERS OCF Cash conversion Dividends Buybacks DPS 101.8% 250.0 $238.1 50.0 100.0% 46.8¢ 102.8% 45.5¢ 95.4% 95.9% 43.5¢ 44.0¢ 88.5% 45.0 79.2% YoY 200.0
Slide 18: Financial Flexibility with Significant Capacity to Invest
FULL YEAR RESULTS F’19 Financial Flexibility with Significant Capacity to Invest CAPACITY UP TO TARGET LEVERAGE RATIO DIVIDENDS TARGET NET DEBT 1.5 – 2.0X EBITDA PROGRESSIVE DIVIDEND POLICY TO CONTINUE Current balance sheet strength provides substantial Track record of dividend growth maintained
Slide 19: A Responsible and Responsive Strategy
FULL YEAR RESULTS F’19 A Responsible and Responsive Strategy The next Annual CSR and Sustainability report will be issued by November 2019 19
Slide 20: Financial Report
02 Financial Report Zubair Javeed
Slide 21: Profit & Loss Summary
FULL YEAR RESULTS F’19 Profit & Loss Summary F’18 F’19 Discontinued Transformation PROFIT & LOSS Total Group SW Results & Continuing & major non Adjusted Total Group Transformation Adjusted US$m Gain on Sale cash items Sales 1,547.5 57.7 1,489.8 - 1,489.8 1,499.0 - 1,499.0 GPADE 545.4 27.7 517.7 - 5
Slide 22: Non Recurring Items Recorded in F'18 vs F'19
FULL YEAR RESULTS F’19 Non Recurring Items Recorded in F’18 vs F’19 F’18 F’19 Growth Brands Continue Strong Performance +9% YoY US$m Sales EBIT PA EPS Notes Sales EBIT PA EPS Total Group 1,547.5 557.0 484.3 336.8¢ 1,499.0 157.3 111.7 82.6¢ Sale Completed Sept Less - Gain on Sale of Sexual Wellness (
Slide 23: Profit & Loss Summary – Adjusted Comparison
FULL YEAR RESULTS F’19 Profit & Loss Summary – Adjusted Comparison PROFIT & LOSS GrowthF’19 F’18 Brands Continue Strong Performance Notes F’19 +9% YoY US$m Adjusted Adjusted CC % CC revenue growth includes organic growth of 1.9% plus benefit of Digitcare & Ringers acquisitions. Sales 1,489.8 1,499.0
Slide 24: Ansell Strong Cash Generation While Accelerating Buyback
FULL YEAR RESULTS F’19 Ansell Strong Cash Generation While Accelerating Buyback 260 210 9.6 Includes $5m for conversion 160 (31.4) (5.3) (43.5) (80.2) of Performance Share Rights 110 241.0 (12.1) 213.9 (25.0) 133.3 (60.2) 60 F’19 FY (181.1) 10 ($m) -40 -90 (178.4) -140 -190 9.8 EBITDA* Working Trans
Slide 25: Raw Material Cost Impact
FULL YEAR RESULTS F’19 Raw Material Cost Impact HIGH F’19 H1 RAW MATERIAL COSTS ABATED BUT STILL LINGERED INTO F’19 H2 • The composition of Raw Material categories has significantly evolved over time. The largest Raw Material category is Fibres & Engineered Yarns at 33%. Nitrile & Natural Rubber acc
Slide 26: Balance Sheet Strength – Improving ROCE
FULL YEAR RESULTS F’19 Balance Sheet Strength – Improving ROCE BALANCE SHEET ($M) F’18 F’19 KEY POINTS Fixed Assets 230.4 229.8 • Strong Balance Sheet to provide flexibility for future growth Intangibles 1,028.4 1,082.6 • Working Capital higher vs June F’18 from: Other Assets/Liabilities (81.8) (93.
Slide 27: Capex Spend: >50% on Growth & Profitability Improvements
FULL YEAR RESULTS F’19 Capex Spend: >50% on Growth & Profitability Improvements CAPEX BY CATEGORY Operations Capex by GBU KEY POINTS In US Dollars Millions In US Dollars Millions 60.0 Measured investments in strategic capabilities; $48.9 Completed Vietnam facility expansion 50.0 3.4 $45.4 $43.5 Ex
Slide 28: F'20 Outlook
03 F’20 Outlook Magnus Nicolin
Slide 29: F'20 EPS Guidance
FULL YEAR RESULTS F’19 F’20 EPS Guidance EPS RATIONALE F’20 GUIDANCE – EPS¹¢ EPS in US¢ Est YoY Although external market conditions continue to deteriorate and CAGR prolonged uncertainty around trade exacerbates the drag on economic 9% - 18.5% performance, the business environment remains supporti
Slide 30: Takeaways
FULL YEAR RESULTS F’19 Takeaways ANSELL SHAREHOLDER VALUE CREATION MODEL WHAT TO EXPECT FROM ANSELL Accelerating organic growth in IGBU a top priority Continued margin expansion driven by commercial and operational excellence Transformation completing with solid financial performance and enhan
Slide 31: Upcoming Event – Biennial Capital Markets Day
FULL YEAR RESULTS F’19 Upcoming Event – Biennial Capital Markets Day CAPITAL MARKETS DAY Capital Markets Day - March 2020 Sydney London March 16th March 18th Americas* March 20th * Exact location for Americas will be announced at a later date 31
Slide 32: Appendix
Ansell HyFlex: GAMMEX AlphaTec’ MICR@®FLEX’
Slide 33: Ansell Group Performance Summary–Continuing Operations
FULL YEAR RESULTS F’19 Ansell Group Performance Summary–Continuing Operations Adjusted¹ Profit Adjusted Operating Sales Adjusted¹ EBIT Adjusted¹ EPS Adjusted¹ ROCE Attributable Cash Flow² Reported 0.6% Improved by Reported 2.9% Reported 9.3% Improved Improved CC 3.2% +50bps CC 4.7% CC 11.3% by +30bp
Slide 34: FX – Revenue & EBIT Impact of FX Movements
FULL YEAR RESULTS F’19 FX – Revenue & EBIT Impact of FX Movements Change in average rates of major revenue and cost currencies Currency Impact from Continuing Operations Comment Adjusted Revenue EBIT F’19 vs F’18 $(37.5)m $(11.6)m The US$ was stronger against most revenue and cost currencies. Net fo
Slide 35: Ansell Fact Sheet
FULL YEAR RESULTS F’19 Ansell Fact Sheet KEY FIGURES • Booked Tax Losses at 30 June, 2019 $30m; Unbooked Tax Losses at 30 June, 2019 $8.3m (Tax Effected) • Unbooked Capital Losses at 30 June, 2019 $60.2m • Average Borrowing Cost at 30 June, 2019 3.3% • F’19 H1 Interim Dividend US20.75¢ a share; F’19
Slide 36: Constant Currency
FULL YEAR RESULTS F’19 Constant Currency CONSTANT CURRENCY RESTATED PRIOR PERIOD (US$m) The presentation of constant currency information is designed to facilitate Prior Period Sales IGBU HGBU HO Total comparability of reported earnings by restating the prior period’s results at Reported Sales 715
Slide 37: Segment History – Indicative Segments Of Continuing Businesses
FULL YEAR RESULTS F’19 Segment History – Indicative Segments Of Continuing Businesses F’13 F’14 F’15 F’16 F’17 F’18 F’19 GBU US$m US$m US$m US$m US$m US$m US Sales 650.2 716.5 668.5 654.8 655.9 715.5 703.7 Industrial EBIT 89.1 90.5 89.0 82.8 79.8 86.9 98.7 % Margin 13.7% 12.6% 13.3% 12.6% 12.2% 12.1
Slide 38: F'20 Impact of New Lease Accounting Standard
FULL YEAR RESULTS F’19 F’20 Impact of New Lease Accounting Standard NEW LEASE ACCOUNTING RULES ESTIMATED IMPACT OF AASB 16 ON F’20 • Ansell will adopt the new lease accounting standard IFRS 16/AASB ROU Asset onto Balance Sheet at 1 July 19 44 - 47 Lease Liability onto Balance Sheet at 1 July 19 46 -
Slide 39: Glossary
FULL YEAR RESULTS F’19 Glossary APAC – Asia Pacific FX – Foreign Exchange NRL – Natural Rubber Latex ANZ – Australia and New Zealand GBU – Global Business Unit OEI – Outside Equity Interest AUD – Australian Dollar GBP – Great British Pound OLAC – Other Latin America and Caribbean CAGR – Compound Ann
Slide 40: Ansell
Ansell HyFlex GammMex Alphalec* mMiCR@FLEX