February 11, 2018 / 11:32 PM / 10 months ago

UPDATE 2-Australia's Ansell profit up six-fold after condom business sale

* One-off condom-unit sale sets half-year profit soaring

* Revenue, EBIT fall as company misses condom sales

* Shares jump, but give up gains and hit 2-wk low (Recasts; adds CFO quote and rubber price outlook)

By Tom Westbrook and Jonathan Barrett

SYDNEY, Feb 12 (Reuters) - Australian rubber products maker Ansell Ltd lifted its earnings guidance on Monday and recorded a six-fold rise in half-year profit to $428.2 million after booking proceeds from the sale of its flagship condoms business to a Chinese consortium.

The cashed-up company, now focused on wholesaling industrial and medical products from rubber gloves to diving suits, also said it would hunt for acquisitions.

The market struggled to digest the complicated Dec. 31 result, analysts said, as the company that was once synonymous with condom-making also reported a fall in revenue, since it missed condom sales, and booked a $9.4 million restructuring charge.

Ansell’s share price lifted about 3 percent in early trading before turning negative in the early afternoon in a slightly weak market, to touch a two-week low of A$23.76.

“The actual bottom line was potentially above expectations, but that was really just driven by one-off benefits,” said Daniel Moore, portfolio manager for Investors Mutual Ltd, Ansell’s largest shareholder.

“As people looked at it more closely, operationally, it was a little bit weaker than expected.”

Ansell Chief Financial Officer Neil Salmon told analysts on Monday that as well as restructuring, raw material prices dragged on earnings.

But he did not expect prices of one of the company’s main inputs, rubber, to rise materially this year.

“We’ve learned to be a little cautious in predicting this as we didn’t predict the spike this time last year,” he said, referring to 2017 price spikes that eroded profits at Ansell and other companies exposed to rubber prices such as tyre makers.

“On an average basis, my best view is a pretty similar second half versus first half.”

Earnings per share (EPS) for the half-year was 45.3 cents from continuing operations, up from 36.1 cents a year earlier. The company raised full-year EPS guidance to $0.96-$1.06 from $0.91-$1.01.

Ansell sold its oldest division, its condoms business, for $600 million last May to China’s Humanwell Healthcare Group Co Ltd and CITIC Capital China Partners, and had estimated a $365 million after-tax gain on the sale.

Proceeds from the sale of $359.9 million after tax, slightly lower than the estimate, lifted net profit for the six months to Dec. 31 to $428.2 million from $69.8 million a year earlier.

The former condom maker declared an interim dividend of 20.50 cents per share, up from 20.25 cents a year prior. The company reports in U.S. dollars. (Reporting by Tom Westbrook and Jonathan Barrett Additional reporting by Susan Mathew Editing by Stephen Coates)

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