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Why the Ansell Limited share price is falling on its profit report

This morning healthcare giant Ansell Limited (ASX: AMP) reported its profit result for the six-month period ending June 30, 2017. Below is a summary of the result, with comparisons to relevant prior corresponding periods and all numbers in US dollars.

  • Earnings before interest and tax from continuing businesses of $177.8 million
  • Total sales from continuing businesses of $1,375 million
  • Earnings per share from continuing businesses of 81 cents
  • Earnings per share from discontinued operations 19 cents
  • Total dividends of 44 cents per share, 43.5 cps in prior year
  • To sell its Sexual Wellness condoms business for $600 million
  • Expects to continue share buyback from proceeds of Sexual Wellness sale

This is another typically solid result from one of the leading healthcare businesses among the S&P/ASX 200 (Index: ^AJXO) (ASX: XJO) index of leading companies.

The result though missed analysts’ expectations and the Ansell share price has fallen 3.7 per cent to $20.80 this morning as the flat growth and currency headwinds took their toll on investors’ expectations.

The group posted 6 per cent organic sales growth over the six-month period ending June 30 2017 and its medical gloves and protective wear businesses continues to enjoy market-leading status and large global addressable markets.

The company’s decision to sell its consumer-facing condoms business for $600 million mean its management team has a test ahead in redeploying the capital at a good return for both the business and shareholders. Acquisitions and share buybacks remain on the agenda as the group attempts to grow its core business-to-business protective wear operations.

Changing hands for $20.80 the stock trades on 20x FX-adjusted earnings from continuing operations with a trailing FX-adjusted dividend yield in the region of 2.7 per cent. Alongside the likes of Cochlear Limited (ASX: CSL), Ansell remains one of the better healthcare businesses on the local market.

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Motley Fool contributor Tom Richardson owns shares of Cochlear Ltd.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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