Tariff Risks Loom as Ansell Raises EPS Outlook and Plans $200M Buyback

Robust Growth and Margin Expansion

Ansell Limited has delivered a standout FY25 performance, posting record sales of US$2 billion, marking a 7.7% organic constant currency increase over the prior year. Both the Industrial and Healthcare segments contributed to this growth, with the Industrial segment achieving a 5.6% organic sales rise and Healthcare rebounding strongly with 9.4% growth following destocking challenges.

Underlying profitability also improved significantly, with EBIT margins expanding to 14.1%, driven by higher manufacturing utilisation and cost savings from the Accelerated Productivity Investment Program (APIP). The company reported adjusted earnings per share (EPS) of 126.1 US cents, near the top of its upgraded guidance range.

KBU Acquisition Integration Ahead of Plan

The integration of the Kimtech Business Unit (KBU), acquired mid-FY24, was completed ahead of schedule, with limited sales disruption during the transition. KBU sales reached US$274 million in FY25, with organic EBIT growth of 10.7%, outperforming initial business case expectations. As a result, Ansell has increased its FY27 annualised net pre-tax cost synergies target from US$10 million to US$15 million, reflecting enhanced supply chain efficiencies and successful brand consolidation.

Strategic Investments and Digital Transformation

Ansell’s APIP continues to deliver, with US$47 million in savings realised in FY25 and a target of US$50 million for FY26. The program’s focus is shifting towards commercial ERP system upgrades, set to commence in FY26, aiming to unify manufacturing and customer-facing operations under a single cloud-based platform. This digital transformation is expected to enhance productivity, customer experience, and decision-making capabilities.

Capital expenditure in FY25 totalled US$69.3 million, including US$25.8 million invested in the new greenfield India Surgical facility, which is scheduled to begin production in FY26. The company plans to maintain capex between US$60 million and US$70 million in FY26, with increased emphasis on automation and sustainability projects.

Financial Strength and Capital Management

Ansell’s balance sheet remains strong, with net debt to EBITDA at 1.6x, ahead of the target leverage range of 1.5x to 2.5x. The company holds US$738 million in cash and undrawn facilities, providing ample liquidity for growth investments and capital returns. Reflecting confidence in its outlook, Ansell plans an on-market share buyback of up to US$200 million in FY26.

FY26 Outlook and Tariff Mitigation

Looking ahead, Ansell has raised its adjusted EPS guidance for FY26 to a range of US133 to US145 cents, supported by solid healthcare demand and pricing actions to fully offset the impact of higher US tariffs, estimated at around US$80 million annually. The company is actively reducing its sourcing exposure to China and shifting production to alternative locations such as Malaysia and Sri Lanka to mitigate tariff risks.

Ansell also remains committed to sustainability, achieving a 9% reduction in scope 1 and 2 emissions and securing validation of its scope 3 targets from the Science Based Targets initiative. The company continues to scale up its RightCycle recycling program and expand its portfolio of low-carbon solutions.