Financial year (FY) 2013 was a respectable year for Ansell Limited (ASX: ANN) with sales, earnings and dividends all increasing. This result was despite the firm facing a number of headwinds throughout the year. These headwinds included:
- Negative foreign exchange impact
- Increase in manufacturing costs (labour, utilities, water)
- Increase in competitive pressures
- Decline in government spending on healthcare and defence
Despite these headwinds, Ansell's management has positioned the firm for continued growth in sales and profits – which occurred in FY 2013 but which have also positioned the company for further growth in FY 2014.
These initiatives have included:
- Merger and acquisitions
- New product development (NPD) launches
- Improved manufacturing productivity and capability
- Continued expansion into emerging markets
On the point of NPD, Ansell impressively increased its new products to market in FY 2013 at seven times the rate of FY 2010. While on the point of emerging market (EM) expansion, Ansell grew sales in these regions by 17% with EM now representing 27% of total sales in the group.
Ansell provided guidance at its AGM for growth in earnings per share between 5% and 11% for FY 2014 and stated that economic conditions remained mixed but that it was achieving moderate organic sales growth. Since the AGM, the company has completed the US$615 million acquisition of BarrierSafe Solutions. Pleasingly for shareholders, management has stated that it expects the BarrierSafe acquisition, on a normalised basis (excluding one-off transaction costs from the acquisition) to be earnings-per-share accretive in FY 2014.
Foolish takeaway
Ansell is one of a relatively small group of large, listed ASX companies that offer investors a similar mix of global growth potential and significant defensive earnings capability. It's interesting to note that other members of this "group" also hail from the healthcare sector. CSL Limited (ASX: CSL) and Sonic Healthcare Limited (ASX: BXB) being two examples.
With a market capitalisation of $2.5 billion and the ability to acquire firms such as BarrierSafe, despite its market-leading status in a number of markets, Ansell still has the ability to expand and grow. 2014 appears to be shaping up to be another good year for this impressive company.
