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Ansell lifts as Durex hits supply hurdle

DUREX condoms are set to become scarce on the shelves after a disagreement between the brand's owner and its Indian partner cut up to 60 per cent of supply, analysts say.

DUREX condoms are set to become scarce on the shelves after a disagreement between the brand's owner and its Indian partner cut up to 60 per cent of supply, analysts say.

Rival Ansell is set to benefit from the feud, with sharemarket analysts tipping its earnings will rise by millions of dollars.

Durex is facing the condom shortages after India's TTK Lig, which produces 50-60 per cent of the company's condoms, ceased supply in May.

The halt is believed to be about a disagreement over Indian distribution rights between TTK Lig and Durex's owner, England-based Reckitt Benckiser.

But a Durex spokeswoman said a disruption to Australian condom supplies was unlikely. Nevertheless, Citigroup analyst Alex Smith said Ansell was well-placed to pick up Durex's lost sales, potentially gaining an extra $4 million in operating earnings in the first half of 2012.

"Industry sources suggest that the Indian supply disruption is beginning to result in supply shortages of Durex condoms at the retailer level," Dr Smith said in a client note.

"Ansell's Surat Thani plant [in Thailand] will likely have spare capacity from August and Ansell may choose to contract manufacture for Durex if terms are sufficiently scarce."

Ansell shares climbed 9?, or 0.7 per cent, to $13.79 yesterday.

Last month, a judge at the High Court in London refused to grant an emergency injunction to force TTK Lig to resume supplying the contraceptives, ruling the matter should be decided in an Indian court.

In his ruling, Justice George Mann said TTK Lig "has the claimants for the time being over a barrel and it knows it".

Reckitt had already run out of some Durex stocks, he said.

A Durex spokeswoman said yesterday that Durex had several factories across the world and most of Australia's condoms came from Thailand.

"Parts of the product range, which were being manufactured in India, are currently in the process of being moved to alternative facilities," the spokeswoman said.

"As such, a disruption to supply or stock availability on retailers' shelves is unlikely at this stage."


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