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Ansell shows healthy return but looks to escape from soaring latex costs

CONDOM and rubber gloves maker Ansell is steadily abandoning natural latex as rising raw material prices continue to unsettle the company.

CONDOM and rubber gloves maker Ansell is steadily abandoning natural latex as rising raw material prices continue to unsettle the company.

Yesterday, Ansell said surging latex prices wiped about $50 million off its earnings for the year ending June 30.

Nevertheless, the Australian, US-based company's net profit rose 3 per cent to $122.7 million and it tipped its earnings per share to rise as much as 12 per cent this financial year.

The chief financial officer, Rustom Jilla, said Ansell was shifting away from products where natural rubber was the main cost driver and had cut its exposure by 4 per cent in the past year.

Morningstar analyst Nathan Zaia said Ansell hadn't rushed to fight escalating latex prices, adopting its strategy in 2008.

The chief executive, Magnus Nicolin, said the company had achieved double digit sales and profit growth after it reorganised into a global company.

Ansell's industrial division generated $US471.6 million ($465million) in sales or 39 per cent of total revenue. Mr Nicolin said the sexual wellness division was improving, especially in emerging markets, with sales growing at 18 per cent, while the new divisions and medical business were held back.

He said US leaders fighting over controlling debt was unsettling the world's biggest healthcare market.

"We suffer from the political debate, as have all other Americans, and there isn't any clear guidance in sight as to what's going to happen in North America," Mr Nicolin said.

Despite Europe suffering similar debt problems, Mr Nicolin said 60 per cent of the continent was contributing to Ansell's growth, particularly eastern Europe and Scandinavia.

Mr Nicolin said Ansell was looking at buying more companies and was assessing targets outside condom and rubber glove manufacturing.

Ansell bought US surgical safety products maker Sandel Medical Industries for $US13.5 million last month - Mr Nicolin's first acquisition.

The company will pay a 19? dividend - up 1.5? on 2010. Ansell's shares rose 54?, or 4.1 per cent, to $13.68.

AT A GLANCE

2011 2010

Sales $1.22b $1.23b (-0.6%)

Profit $122m $119m ( 3%)

EPS 92.4? 89.6? ( 3.1%)

Dividend 19? 17.5? ( 8.5%)


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