Ansell (ANSLF, Financial)(ANSLY, Financial) is an Australian company that focuses on rubber gloves, condoms and full-body Haz-Mat suits. The company started off life as Dunlop Tire of Australia. Ansell has been growing revenues a long time, and the stock yields 2.67%.
The company has 147 million shares, the stock trades for $21.42 Australian ($16.42), and the market cap is $3.17 billion Australian. The dividend is 43.5 cents, and the dividend yield is 2.67%. Earnings per share for the last 12 months are $1.069, and the stock trades at a price-earnings (P/E) ratio of 15.2. Management has given guidance of $1 to $1.20 in fiscal 2017 earnings per share.
Sales were $1.564 billion for the last 12 months. More than 58% of revenues are health- and food-related and 42% industrial (chemical, mining, etc.); 41.6% are industrial, 25.2% medical, 14% sexual awareness (condoms), and 19.2% single use which is disposable gloves. Sales were down in the first half by 0.6% due to currencies and the divestment of a division. Ebit margins are high at 13.8%. Sales were $1.2 billion in 2011 so you can see that the company has grown quite a bit.
The balance sheet shows $251 million in cash and $224 million in receivables. This is to $241 million in payables and $670 million in debt. This is before a recent transaction. This is a pretty strong balance sheet.
Ansell makes condoms under the brand name Skyn, medical gloves under the name Sensoprene, gloves for handling chemicals under the name Ergoform and full-body Haz-Mat suits. Awhile back, I looked at Ansell but passed because I thought weak commodity prices would hurt its industrial division. It seems that commodity prices did not hurt sales.
CEO Magnus Nicolin recently stated that Ansell would shift production to the U.S. if President Donald Trump instituted traded barriers. Nicolin doesn’t feel that they will pass in their present form.
Nicolin is trying to sell off the condom business. Sales of sexual health products grew 4.3% in the first six months, driven by 9% growth in emerging markets, led by China and Brazil. The business also has sexual lubricants. The stock took off last August when a sale, led by Goldman Sachs, did not go through. Amazon (AMZN, Financial) recently picked up some of Ansell’s sexual awareness products.
In January, Ansell made a nice bolt-on acquisition with U.K.-based Nitritex. Nitritex specializes in medical garments and facemasks. This is a perfect fit with Ansell. The acquisition was made for $94.2 million. Here is a link to a catalog that describes its products in greater detail. With all of the news about infections in hospitals, this should be a growing industry. According to this report, Ansell is No. 1 in surgical gloves.
The Motley Fool in Australia seems to think that Ansell is not a buy. It mentions that the company has too much debt, its markets are mature, and its products are easily replicated. Free cash flow for the first six months is $54 million. On a $2.4 billion market cap, that’s not too bad.
I’d buy Ansell at the right price. Their products, rubber gloves, Haz-Mat suits and medical supplies have nice tailwinds with the aging demographics. I’m not sure if I’d buy at this price. Maybe hope that it comes down some and then hope that the condom division gets sold off. Getting paid a 2.67% dividend is nice for the wait.
Disclosure: We do not own shares.
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