The Ansell Limited (ASX: ANN) share price is down around 10% at the time of writing. That's despite the glove-making business revealing an enormous increase to its dividend with its FY21 payout.
How big is the FY21 dividend?
In US dollar terms, Ansell announced that it was increasing its annual dividend per share from 50 cents to 76.8 cents. In percentage terms, this means that Ansell is increasing its annual dividend by 53.6% for shareholders.
The final dividend payment is 43.6 cents per share, which was not far off the entire FY20 dividend payment.
Ansell said that the annual payout represents a dividend payout ratio of 40%.
Why is the Ansell share price falling?
You'd have to ask the buyers and sellers of Ansell shares today why they transacted at the prices they did for the true reason.
But Ansell did include some comments about its FY22 outlook along with its FY21 result (which showed a sizeable rise in profit).
The company explained that it has a diversified portfolio with products supplying a variety of customers in different countries. Ansell expects continued demand for mechanical, surgical, life sciences and internally manufactured single use gloves. However, management warned that lower demand is expected in areas which have benefited the most from COVID-19 demand, such as chemical body protection and undifferentiated exam/single use gloves.
Ansell believes that pricing is expected to feature throughout FY22, positively and negatively.
The company believes that from a supply perspective, recent capacity investments should support sustained demand. However, Ansell admitted that increased COVID-19 cases in South East Asia in the recent months may disrupt supply because a number of Ansell's factories and suppliers in the region have had short-term closures or reduced operations. It may impact sales during the first half of FY22.
Increased costs may also be a factor – higher freight costs and shipping delays are expected to persist throughout FY22.
Including accounting changes relating to software amortisation, and larger investments in software, Ansell is expecting FY22 earnings per share (EPS) to be between 175 cents to 195 cents. That compares to FY21 EPS of 192.2 cents (which was an increase of 59.9%).
The Ansell share price is still up in 2021
Despite the setback today, the Ansell share price is up 3.6%. The Ansell dividend was driven higher because the company did make much higher profit over the financial year. This was reported in the FY21 result. Sales grew 25.6%, earnings before interest and tax (EBIT) went up 56% and net profit rose 57.5% to US$246.7 million.
