SYDNEY Australian rubber products maker Ansell Ltd (ANN.AX) said on Monday that rising raw material costs and foreign exchange fluctuations kept half-year profit flat, sending shares to a six-month low.
The company, which makes goods ranging from gloves to diving suits, reaffirmed its earnings target and said it had received several expressions of interest for the purchase of its profitable 120-year-old condom business.
But analysts said earnings per share were tracking at the low end of the $1 to $1.12 full-year guidance.
"It's a bit of a miss ... operationally the result is fairly flat and the only positive is that the sexual wellness is still on track to be sold," said Bill Keenan, general manager of direct equities research at broker Lonsec.
Ansell shares skidded as much as 6.2 percent on the result to touch A$20.75 ($15.90), a six-month low, before rebounding to settle around A$21.70, while the broader Australian market rose 0.48 percent.
Half-year profit was $69.8 million, the company said, compared with $69.6 million previously.
Chief Executive Magnus Nicolin said seasonal factors typically boosted second-half earnings, meaning his company could still meet expectations in spite of headwinds such as a rising rubber price and fall in the value of revenue earned in euros.
"We'll have to run extra hard to achieve a significantly stronger EPS in the second half," he said during a conference call with investors.
The stock soared in August when the company flagged the sale, run by Goldman Sachs, of its oldest division producing condoms.
"The sale process continues essentially according to plan. There's strong interest from multiple parties, both strategic and financial ... we feel confident that we're on the right track," Nicolin said.
In February the company, which runs production lines worldwide including in Mexico, told Reuters it did not expect a material impact should U.S. President Donald Trump press ahead with his idea of a 20 percent tariff on Mexican imports.
But Nicolin told investors on Monday that Ansell was "still preparing for even unlikely scenarios, including the concept of establishing production in the U.S.," as well as Russia, to take advantage of "buy local" campaigns there.
Ansell lifted its interim dividend to 20.25c, compared with 20c a year ago.
(Reporting by Tom Westbrook and Claudia Farhart; Editing by Peter Cooney and Stephen Coates)