Rubber gloves to condoms give Ansell edge in emerging markets

ERJ staff report (TP)

London − Ansell, the world’s largest maker of protective clothing, is seeking to boost expansion and best the competition by tapping middle-class growth in emerging markets with sales of high-tech gloves and upmarket condoms, reported Natasha Doff for Bloomberg.

“We’re focusing on emerging markets because working hands have moved from developed to developing markets and clearly we need to be where working hands are,” Chief Executive Officer Magnus Nicolin said. “We have the opportunity to grow rapidly for many years before we hit any kind of ceiling.”

Founded more than a century ago as a rubber company, Ansell has been investing in innovation and expanding its international presence. The Richmond, Australia-based company introduced 48 products in the fiscal year ending 30 June, up fourfold on previous years, while emerging market sales increased 17 percent to represent more than one-quarter of total sales.

New products released by the company in recent years include hand protection that’s resistant to fire and electric shocks, sweat-proof rubber gloves and a line of condoms made of lightweight polyisoprene instead of latex. Such products allow the company to tap into rising demand for high-quality products from middle-class consumers in emerging markets.

Ansell posted pretax profit of A$156.7m (€109.1m) in the fiscal year through June, an 8 percent increase from the previous year. Analysts predict 2014 profit of A$190.3m (€132.5m), implying a 21 percent increase, according to the average of 11 analysts’ estimates collected by Bloomberg.

“Ansell’s profits are growing at a high and rising rate and they’re relatively cheap,” said Timothy Stanish, an analyst at Eva Dimensions in New York. “They are profitable so investing more is a good thing for them to do and will compound the wealth they create for investors.”

“Middle-class people in emerging markets are all of a sudden expecting to get good quality medical care, which includes surgical procedures,” CEO Nicolin said. “Countries like Russia and Brazil are also introducing western European-style legislation for industrial hand protection.”

After gaining a foothold in Brazil, Russia, India and China, Ansell is now turning its attention to Africa and southeast Asia. The company has made eight acquisitions over the past two years and currently has at least $250m (€185m) available for new purchases, Nicolin said.

Since Nicolin took over as CEO in February 2010, the company’s share price has increased about 90 percent to A$19.63 (€13.67) for a market value of about A$2.6bn (€1.8bn). That compares with an 18 percent rise for the Australian benchmark S&P/ASX 200 Index.

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Full story from Bloomberg