Is now the right time to add Ansell to your portfolio?

At its Annual General Meeting yesterday, health device manufacturer and condom maker Ansell (ASX: ANN) said it is achieving moderate sales growth in the first quarter of FY 2014, but at a rate slightly lower than anticipated.

The company also maintained guidance that it expects to see earnings growth in the high single digits to low teens for the current financial year. In FY 2013 company earnings grew 11%.

On the external outlook, the group said subdued prices for commodities required to manufacture its products were a positive, alongside an expected renewal in growth in its North and Latin American markets.  On the downside labour and utility cost inflation in SE Asia was expected to continue, while the European economy remained sluggish.

Last year the group completed four acquisitions and launched 48 new products. Future acquisitions remain part of its growth strategy and the company bought Korean glove maker Midas for $US41.1 million in September this year.

Earnings per share are also expected to be up in the region of 5-11% for FY 2014. In FY 2013 they were up 5% while the total dividend payout was up 7%. The company trades on a current dividend yield of just under 2% on today’s prices. The stock has been down more than 3% as investors react to the news of lower than anticipated growth in the first quarter.

Foolish takeaway

Ansell’s truly global footprint means it can help diversify an investor’s portfolio away from the general health of the Australian economy. In fact it now reports and operates in US dollars and less than 6% of global sales come from Australia. Health and wellbeing spending remains in an upward trend globally and the company should continue to see moderate growth. The recent price drop may provide long-term investors a good entry point to a quality company.

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Motley Fool contributor Tom Richardson does not own shares in any of the companies mentioned in this article.

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