Ansell shares plummet on glove glut, earnings warning
Gloves maker Ansell has warned a glut of unsold products following the coronavirus pandemic has now spread to surgical items, causing distributors to cut back on their orders.
The oversupply is also being felt in Ansell’s division making protective gear for pharmaceutical and laboratory workers, and triggered Ansell to deliberately slow production and warn of another earnings hit.
Some distributors are cutting back on orders for Ansell gloves. Michael Clayton-Jones
“This shift happened very, very quickly,” Ansell chief executive Neil Salmon said on Tuesday.
Shares in Ansell were pummelled 14 per cent in Tuesday trading, down $4.01 to $23.76. The company also flagged job cuts among its 14,000 strong workforce and the implementation of new technology systems to improve results.
It marks another turnaround for the once-darling of the market during the depths of the pandemic, when Ansell shares rose to $43.50 as demand for single-use medical gloves and surgical suits soared.
Earnings per share on the company’s “underlying” figures for the past 2023 financial year would likely land around the middle of earlier guidance of $US1.10 ($1.61) and $US1.20 a share. But in 2024, even after stripping out new investment costs, Ansell said its underlying EPS would be between US92¢ and $US1.12.
On a statutory basis, the 2024 numbers were forecast to be between US57¢ and US77¢, down on expectations of $US1.17 to $US1.18 for the 2023 financial year.
Among the changes planned for 2024 include streamlining the company’s organisational structure and cutting manufacturing employees amid slowing production while increasing automation – although Ansell refused to discuss details. It would also bring in more enterprise resource planning
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