Ansell share price in focus as FY22 profit tumbles 36%

The company's earnings per share came in within guidance.

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Key points

  • The Ansell share price could be in for a big day after the company released its earnings for financial year 2022
  • The company posted 4% less revenue and a 36% fall in operating profit
  • Its full-year dividend also fell to 55.45 US cents 

The Ansell Limited (ASX: ANN) share price is in focus after the company released its full-year earnings this morning.

Stock in the personal protection and safety solutions provider last traded at $25.14.

Ansell share price on watch as profit drops

Here are the key takeaways from Ansell's financial year 2022 earnings:

  • Sales revenue came to US$1.95 billion ­– 3.7% lower than that of the prior comparable period (pcp)
  • Earnings before interest and tax (EBIT) fell 32.1% to US$228.1 million
  • Statutory earnings per share (EPS) came to 125.2 US cents – 32.1% lower and 0.2 US cents above the low end of its guidance – while adjusted EPS came to 138.6 US cents, a 27.9% fall
  • Operating profit fell 35.7% to US$158.7 million
  • Operating cash flow lifted 131.7% to US$114 million
  • Declared 31.2 US cent final dividend, bringing its full-year payout to 55.45 US cents  

The company's falling sales were mainly a result of lower demand for COVID-19-related personal protective equipment (PPE).

Its healthcare global business unit saw US$1.19 billion of revenue, while its industrial global business unit brought in US$763 million.

Its EBIT's slump was most pronounced in the first half and came as the company sold high-cost inventory at lower prices amid adverse plant performance and higher freight costs.

Finally, it recognised US$17 million of one-off expenses from its decision to stop its Russian commercial and manufacturing operations.

What else happened in FY22?

There was plenty happening in Ansell's corner in financial year 2022.

It welcomed a new CEO and managing director in September. Neil Salmon stepped up to the top job following Magnus Nicolin's retirement.

Of course, investors will likely remember the 14% crash experienced by the Ansell share price when the company slashed its guidance in January.

The stock also slumped 1% on the release of the company's half-year earnings.

What did management say?

Salmon commented on Ansell's full-year results, saying:

I am pleased to report that Ansell delivered second half results in line with revised expectations communicated at the half year … Overall, financial year 2022 was a challenging year for the business.

Although I am not satisfied with our overall financial performance in financial year 2022, we nevertheless achieved significant accomplishments against many of our strategic priorities during the year thanks to our hard-working and dedicated Ansell employees and I believe these will be important contributors to our future success.

What's next?

The company expects to post EPS of between 115 US cents and 135 US cents in financial year 2023.

It notes the external environment remains supportive for continued demand for its products. That's expected to drive volume growth in its businesses. Meanwhile, its sales are expected to decline as prices normalise for exam and single-use items.

The company plans to offset expected headwinds from higher raw material, energy, and salary costs with price increases and cost savings.

Ansell share price snapshot

The Ansell share price has had a rough trot as of late.

It has slipped 23% since the start of 2022. It has also fallen 38% since this time last year.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has dumped 7% year to date and 6% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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