FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August 2003 (August 14, 2003)
Commission File Number: 0-15850
ANSELL LIMITED
(Translation of registrant's name into English)
Level 3, 678 Victoria Street, Richmond, Victoria 3121, Australia
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulations S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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This Form 6-K is designated as incorporated by reference into the Form F-3
Registration Statement filed with the Securities and Exchange Commission on
November 20, 1990 with file numbers 33-37752 and 33-37752-01, the Form F-3
Registration Statement filed with the Securities and Exchange Commission on
April 30, 1991 with file number 33-40228, the Form F-3 Registration Statement
filed with the Securities and Exchange Commission on October 31, 1994 with file
numbers 33-85802 and 33-85802-1, the Form S-8 Registration Statement filed with
the Securities and Exchange Commission with file number 33-18603, and the Form
F-3 Registration Statement filed with the Securities and Exchange Commission on
July 25, 1997 with file number 333-6472.
This Form 6-K contains forward-looking statements within the meaning of the
Securities Exchange Act of 1934 as amended, and information that is based on
management's beliefs as well as assumptions made by and information currently
available to management. When used in this Form 6-K, the words "anticipate,"
"approach," "begin," believe," "continue," "expect," "forecast," "going
forward," "improved," "likely," "look forward," "opportunity," "outlook,"
"plans," "potential," "proposal," "should" and "would" and similar expressions
are intended to identify forward-looking statements. These forward-looking
statements necessarily make assumptions, some of which are inherently subject to
uncertainties and contingencies that are beyond the Company's control. Should
one or more of these uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
expected, estimated or projected. Specifically, the ability of the Company to
realize its ongoing commitment to increasing shareholder value through its
ongoing restructuring, asset dispositions, strategic review and implementation,
and cost cutting initiatives, may be affected by many factors including:
uncertainties and contingencies such as economic conditions both in the world
and in those areas where the Company has or will have substantial operations;
foreign currency exchange rates; pricing pressures on products produced by its
subsidiaries; growth prospects; positioning of its business segments; future
productions output capacity; and the success of the Company's business
strategies, including further structural and operational changes, business
dispositions, internal reorganizations, cost cutting, and consolidations.
Attention ASX Company Announcements Platform
Lodgement of Open Briefing
[ANSELL LOGO APPEARS HERE]
Ansell Limited
Level 3 678
Victoria Street
Richmond VIC 3121
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Date of Lodgement: 14-Aug-2003
Title: Open Briefing. Ansell. CEO on Results & Outlook
corporatefile.com.au
Ansell Limited today reported net profit of US$29.3 million (A$49.9
million) for the year ended June 2003 compared with a loss of US$60.5
million (A$115.8 million) in the previous year. The core Healthcare
segment booked EBITA of US$93.6 million (A$159.5 million) up 10.5
percent from US$84.7 million (A$162.3 million), achieving your
previously stated target. What were the main drivers of the growth?
CEO Harry Boon
The stand-out was the fantastic performance in the Occupational
division, which accounts for about half the business. It had a strong
improvement in the top line, but more so in the bottom line, which
validates the work we've done over the last couple of years on moving
the division into higher margin products, launching new products and
reducing costs through the transfer of manufacturing to Asia and
Mexico.
The other obvious driver was the Consumer division, which has
continued to achieve the sort of margins that are more typical of
consumer products industries and which are very attractive to us. In
fact, we'd like to grow this division in the future.
A third factor was that in 2003 we began seeing the benefit of our
hard work rationalising our head office. Our corporate offices in
Australia and Red Bank in
the US are now running at significantly lower cost levels, which we
believe are at world's best practice levels.
Clearly, a negative for us in 2003 was the Professional division,
where there were specific issues that pulled performance below its
potential.
corporatefile.com.au
Ansell announced a final unfranked dividend of A$0.11 per share. This
follows several periods in which dividends were suspended. What has
changed that enables you to make the dividend payment at the same time
a share buy-back is in progress, and are payments likely to be
continued?
CEO Harry Boon
The dividend is consistent with the balanced capital management
strategy we adopted following our recent major review of the company's
projected capital requirements.
CFO Rustom Jilla
In our review, we projected our cash flow through to the end of 2005,
allowing for expected capex and working capital requirements. From
that free cash flow we estimated what we'd need for bolt-on
acquisitions, assuming we'd also have the capacity to raise some funds
if need be. We also looked at the timing of our debt repayments. And
then we figured out a reasonable level of share buy back and a
sustainable level of dividends.
CEO Harry Boon
So we don't see this dividend as a one-time event. We've recognised
that a share buy-back is of more interest to some investors and a cash
dividend, even though it's unfranked, is of more interest to others.
We've tried to balance our shareholders' interests in a way that's
affordable and sustainable. And in a way that's best for Ansell.
corporatefile.com.au
Ansell's strong Healthcare result was marred by the Professional
division, where EBITA was down 34.7 percent to US$31.6 million,
reflecting interruptions to your supply of surgeons' gloves and weak
examination glove prices. EBITA margin fell to 11.9 percent from 17.0
percent. What's the outlook for Professional margins?
CEO Harry Boon
First it's important to understand the factors behind last year's
professional result before we make any predictions about the future.
Clearly, the first and major issue was the short-fall in supply of
surgeons' gloves, primarily powder-free, caused by start-up problems
at our Shah Alam plant in Malaysia. That was made worse by the
two-month FDA detention late last calendar year.
The second issue was the large air freight costs we incurred in trying
to quickly re-supply the US market once the detention was over. We
believe it was crucial to re-supply the market quickly. The air
freight has ended, so the cost could be considered a one-time event.
It certainly won't affect the bottom line in FY 2004.
The third issue was the reduction in selling prices of exam gloves,
particularly in the US. Prices have stabilised in the second half, but
at the lower levels. Looking forward, the situation is unlikely to get
any worse, but it's not necessarily going to get better either.
Looking forward of course there remains a question about how our
customer base has been affected by the supply issues. Available market
data suggests we've lost 4 percentage points of market share in the US
powder-free surgical glove market, and we're now launching a major
effort to regain that share.
corporatefile.com.au
The third wave of Operation Full Potential (OFP), which is about to
start, calls for entry into the US alternate care market. Given last
year's supply interruptions, does this remain a realistic near-term
goal?
CEO Harry Boon
Over the year, the three waves of OFP we originally outlined have been
shuffled a bit to take advantage of opportunities or respond to
business developments. Our focus now is in two main areas. Firstly,
converting the analysis and measurement work we've done into action.
That's initiatives like growing powder-free surgeons' gloves around
the world and implementing a more targeted sales and marketing
strategy in the US.
Secondly, and in parallel with that, we're moving in sequence to the
rest of the OFP list, which includes alternate care growth and growing
our condom sales in the US. I do want to make the point that supply
issues are unrelated to alternate care, which is almost overwhelmingly
a market for examination type gloves. As we've turned all our
resources back to regaining our surgeons' glove market share, we'll
probably delay putting resources into alternate care projects while we
rebuild.
corporatefile.com.au
The Occupational division reported EBITA of US$36.9 million (A$62.9
million) in 2003, up from US$19.3 million (A$37.0 million) on revenue
growth of 9.6 percent to US$366.5 million (A$624.9 million). EBITA
margin improved to 10.1 percent from 5.8 percent. To what extent did
the margin improvement reflect the contribution of the HyFlex products
and what scope is there for on-going improvement?
CEO Harry Boon
Some of the margin improvement is certainly attributable to the
worldwide growth of the HyFlex product line, where sales were up 48
percent to US$53 million. That's a striking increase given we're now
in the fourth year of this product's life.
It's come on the back of the launch of new HyFlex variants and the
growing acceptance of these ergonomic gloves. As volume has grown
we've also benefited from lower production costs in Mexico and Asia.
Beyond that, the margin improvement reflects our manufacturing
rationalisation, for example the closure of the Troy plant in the US
and the substitution of Asian product. And we can't ignore the
benefits to the business from the strengthening euro.
Occupational is also benefiting from our strategy of diversifying our
sales channels. The business was historically heavily dependent on the
automotive and metal manufacturing sectors, and over the last two or
three years we've made a conscious effort to diversify across new
industry verticals. Food handling and processing have been primary
targets for us, and we're doing more in that area. In a year when the
world economy and the world manufacturing sector were flat, that
strategy has clearly started to pay off.
corporatefile.com.au
What's the progress in the roll-out of your Occupational Value
Proposition (OVP) hand injury solution concept?
CEO Harry Boon
OVP is what we call a "game changing" strategy and to change the rules
of the game we need to kick down quite a few doors of resistance.
We've found that in most manufacturing companies with multiple plants,
the plant managers are responsible for the costs of running their
factory, including the cost of safety equipment like gloves. However,
the responsibility for healthcare insurance and healthcare costs,
which come from things like hand injuries, generally lies in the head
office. So our challenge is to get the headquarters and the operating
divisions together, because what we offer them is a reduction in the
total cost of hand injuries whether it's gloves or insurance or
healthcare or injury.
When we launched the concept, we thought it would take on average 12
months to get OVP up and running at a target company because of these
hurdles. In fact, it's looking more like 12 to 18 months. We're still
very close to having a few major sign-ups with pilot trials underway
at selected plants of some customers. The work we've done has
validated the integrity of the concept, so it's a matter of driving it
through the target organisations and then getting the structures in
place, which all takes time. We're still confident that over time this
will be the game changer for this division.
corporatefile.com.au
The Consumer division reported EBITA of US$25.1 million (A$42.8
million), up from US$17.0 million (A$32.6 million) on revenue growth
of 6.8 percent to US$126.7 million (A$216.1 million). EBITA margin
increased to 19.8 percent from 14.3 percent. Can you sustain this
momentum given Ansell's number three position in a competitive condom
market?
CEO Harry Boon
It's very hard for us to know whether we're number three or equal
number two in the world condom market. The other number two contender
is Trojan, which is present only in North America, while we're present
worldwide and it's hard to aggregate. We believe we're well positioned
in the market and that there are many opportunities for us.
The most important driver of the Consumer division's earnings was
business generated by the government-funded global tenders for condoms
in the fight against HIV/AIDS. Since we commissioned our low cost
condom production facilities in Thailand and India, we've been able to
participate in these bids at attractive margins.
The branded condom business remains strong around the world, and it's
all about market share and building consumer loyalty. There's plenty
of activity in brand re-launches, new positioning in the UK, a
re-launch in Australia, and we've got a total repackaging exercise in
the US to come later this year. This is a strong consumer business
that brings commensurate margins.
In household gloves, we have a global alliance with a leading consumer
products company, which has a clear number one position in many
countries. It's a joint effort - we develop and produce the gloves,
our partner markets them and we collaborate on R&D. We're well into
the second decade of this alliance and it's going from strength to
strength. It's a low cost and effective way for us to be a player in
the world household glove market without major marketing investment.
corporatefile.com.au
Latex prices have remained relatively high. How will this affect
Ansell going forward?
CEO Harry Boon
We have a strategic sourcing group in Asia that manages our global
latex purchasing and forward contracts. They've done a good job over
the last year in moderating the impact of price movements. Going
forward, we're confident our business plans, and the earnings guidance
we've given the market, fully factor in the cost of latex at around
current levels.
corporatefile.com.au
Gearing fell to 22.1 percent at the end of June 2003 from 41.7 percent
previously. Given your continuing operations generated free cash flow,
net of capex, tax, dividends and the buy-back, of US$85.4 million (A$x
million) in 2003, up from US$10.2 million (A$x million), do you regard
the business as under geared? How will you reinvest this free cash
flow going forward?
CFO Rustom Jilla
Clearly our gearing level is conservative. It's important we maintain
our financial flexibility. We expect to continue to generate cash, and
hopefully strengthen our credit ratings given some of the initiatives
we've taken in restructuring the
business. Then we'll be positioned to take on more debt if a strategic
opportunity arises.
Generating a lot of cash is a good problem to have. It gives us the
capacity to look at growth opportunities through acquisitions that fit
our strategy. But the money's not burning a hole in our pocket,
because we're returning cash to shareholders while we continue to fund
our business needs.
corporatefile.com.au
What's the outlook for Healthcare earnings in the current year ending
June 2004?
CEO Harry Boon
The result we've just announced meets the commitment we gave the
market for year one of our program to achieve in 2005 a 50 percent
uplift in our US dollar EBITA compared with the 2001 level. We remain
confident we'll achieve the 2005 goal.
corporatefile.com.au
Thank you Harry and Rustom.
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For previous Open Briefings by Ansell, visit www.corporatefile.com.au
For more information about Ansell, visit www.ansell.com
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANSELL LIMITED
(Registrant)
By: /s/ DAVID M. GRAHAM
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Name: DAVID M. GRAHAM
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Title: GROUP TREASURER
Date: August 14, 2003