Ansell has swung the axe in manufacturing jobs as it emerges from pandemic shadow

Ansell says it has reset for growth, cutting 1300 jobs and flagging the end is near for the pandemic inventory overhang.

Ansell managing director Neil Salmon.

Ansell has cut almost 1300 jobs around the world as the effects of the pandemic continue to shake out, with the company now aiming to reset for growth, managing director Neil Salmon said.

The glove manufacturer on Tuesday reported a net profit for the first half of $US19.4m, down 69.6 per cent, on revenue of $US784.9m, down 6 per cent.

The result was impacted by $US38.7m in one off costs, with a large proportion of that related to the large amount of staff exiting the business, with 1200 mostly Sri Lanka and Malaysia-based manufacturing staff culled.

Another 90 staff were culled from the head office operations in Europe, with no staff cuts in Australia.

Mr Salmon said the step changes in staffing were now virtually complete, while there would a be a further headcount reduction in manufacturing related to one specific product line which was being discontinued.

Mr Salmon said while the company did not have exact visibility of its customers’ inventory levels, it was confident that the post-pandemic destocking was nearing its end, and the industry was in the process of resetting for a growth phase.

The company’s industrial division posted growth in constant currency terms of 1.9 per cent, however the healthcare division’s sales revenue fell 15.1 per cent “due to continued customer destocking’’.

“Fundamentally, our markets are a good source of growth,’’ Mr Salmon said.

“Look through this destocking effect and you can see our markets should be growing ahead of GDP, one to two times GDP consistently over the time frame, and within that there are some high growth opportunities.’’

Mr Salmon said the life sciences division would be aiming for high single digit growth and there were good growth rates available in emerging markets.

“We have a strong emerging market presence, there’s still substantial opportunity’’ he said.

“But then also, we’re developing new market opportunities through innovation.

“If you look across the universe of workers getting injured in both industrial and healthcare settings, there’s lots of opportunity for us to bring new solutions to market.’’

One example of this was Ansell working in collaboration with a US battery manufacturer, which was testing gloves for their efficacy against the particular proprietary electrolyte it uses in the workplace.

Mr Salmon, who has been in the top job at Ansell for just more than two years, said it had been “almost impossible” to grow the business while the effects of the pandemic were worked through.

“But we haven’t been sitting on our hands during that time period,’’ Mr Salmon said.

“We’ve been making the changes that I think are necessary to make us fit for the future.

“It’s impossible to be definitive about when customers have reached their target inventory levels, because we don’t have full visibility.

“But all the indicators are that they are at or very close to that point now.

“And as we began the second half, we also saw those signs in the early business run rates through the first six weeks.

“Ansell is ready to win again, ready to start putting up some good numbers again.’’

The company said it expected its earnings to have a greater weighting to the second half than in previous years.

Ansell is targeting annualised pre-tax savings from its productivity investment program of $US50m in FY26, up from $US45m, with the pre-tax cost of that program to increase from $US70m-$US85m to $US85-$US90m.

Ansell will pay an interim dividend of US16.5c, unfranked, on March 14. This compares to a US20.1c dividend for the same period last year.

Citi analysts said they expected the stock to trade lower due to the earnings miss which was about 3 per cent below consensus on an earnings per share basis, and the larger than usual skew to the second half.

Ansell shares were 3.5 per cent lower at $23.28 in early trade.