Ansell takes financial blow from SPT write down, but says core business is strong

By Liz White, ERJ staff

Melbourne, Australia-Glove and condom maker Ansell took a non-cash write-down of its investment in South Pacific Tyres-a joint venture with Goodyear Tyre & Rubber Co. this year which has made its results look poor.

But the Australian headquartered group said in its 2005 results statement that the underlying performance of the core business is strong and added that it would take the option this fiscal year to leave its partnership in SPT-a non-core business for the latex product group.

Ansell had warned in June 2005, after reviewing its investment in SPT, that it would write down the equity component of the investment by A$80 million to A$58 million.

Nevertheless, Ansell said, it achieved profit attributable to shareholders of US$68.8 million (before the SPT write-down), a rise of 36.5 percent on the prior year's profit. The non-cash write-down reduced the profit attributable figure to $7.9 million.

As the market knows, Ansell took an impairment charge in the form of a non-cash write-down of our SPT investment in June. This write-down does not, however, have any impact on Ansell's underlying business performance which has been strong,” said Ansell's new chairman, Peter Barnes.

Ansell will end its involvement in SPT, in the option period from August 2005 to August 2006. "It is Ansell's intention to exit this non-core business," the group said in its results statement. An A$67 million loan to SPT from Ansell will be repaid in full when Ansell exits from the partnership with Goodyear.

We had a solid year in fiscal 2005 and were pleased by improvements in the second half in some of the areas of recent weakness, ie Condoms, Professional and the European Region," commented Ansell's ceo Doug Tough.

Growth in the second half improved to 5 percent and provided a 4 percent increase for the year, he added. "Occupational continued its excellent performance of recent years. Professional, after an earnings (EBITA) decline in fiscal 2004, has seen a solid 14 percent gain this year," Tough continued.

He pointed out that the consumer business remains the most challenged, but improved in the second half. New product development and geographic expansion remain key, and as we move into Ansell's next phase, acquisition opportunities continue to be evaluated,” the ceo said.