Ansell Limited

thank you and good morning all it's a pleasure to be back in melbourne today and in a position to comment on a successful fiscal year 25 and give you a look ahead head to fiscal 26. let me start with the contents page on page three this both gives you an overview of what we will cover today the team who'll present will introduce in a moment but also your key takeaways that i hope you gain from this presentation With regards to our performance overview that I will cover, we've seen successful delivery against all the FY25 performance objectives we set out, including EPS of $1.26 at the upper end of our guidance range. I'll then give a bit more color to the drivers behind that result, including the performance of our recently acquired KBU business and our successful integration of that business. I'm joined by Deanna Johnston, who's our CIO, who successfully led the KBU integration, but she is here, in fact, to talk about the next phase of our Accelerated Productivity Investment Program, APEC, that phase being the rollout of a modern ERP system across Ansell. And then Brian Montgomery will join us. Brian is our new Chief Financial Officer, four months now with Ansell. and he'll give you more colour on the strong financial results and also talk to our on-market share buyback, which we have announced with this result. And then finally, I'll look ahead to fiscal year 26, our strategy to adapt to higher tariffs, and our EPS guidance range, which you can see we have announced in the $1.33 to $1.45 range. So let's proceed with the performance overview. And this slide shows the similar format to the one we've had over the last few reporting periods. On the left-hand side are the goals that we set out at the beginning of the year, and down the middle you can see those green checks indicate we believe we've delivered on pretty much every goal that we set out. We'll provide more details on those as we go through this presentation. But there's also a nice summary of our synergy symmetry to our financial results. 8% organic growth translated to 10% EBIT growth, adjusted EPS growth approaching 20%, and we were able to reward shareholders with a 30% increase in the dividend. And that's a satisfying set of financial outcomes to report to you today. So let's continue with the story behind these numbers. And if I begin with the industrial segment, you can go to the next page, please. So overall, a record result for industrial record sales, a record EBIT margin. And of course, that also means record profitability. And I'm very pleased with that organic growth approaching 6% and the 10% EBIT growth. Breaking it out by business units, we saw that very strong first half in mechanical. We did indicate at the time that some of that was safety stock built by distributors and end users of our top-selling R840 style, and therefore we did expect it to moderate some in the second half. I still believe 3% growth in the second half is very creditable in an environment in which many of our core industrial verticals saw stuff to demand, and an overall 7% growth for the year for mechanical is a strong result. Chemical saw more consistent first half, second half growth. And what's pleasing in chemical is that we're seeing that growth come across the full portfolio of both hand and body protection. And again, supported by some very promising success from pretty important new product launches in that space. Turning to EBIT performance, so sales clearly benefited. We saw improved manufacturing utilization and also productivity in part from the APIP savings. A reminder that first half margins were lower. We saw these trends in both industrial and healthcare from elevated air freight that was needed to support that strong growth. But margins improved in the second half as freight costs returned more to normal, and we got some price increases through in business. So let me now turn to the healthcare segment. So here, encouraging to see healthcare back to a solid performance. Industrial has been very consistent the last two years. Healthcare now showing strong growth again, as the destocking effects that have affected this segment for the last couple of years are clearly now in the rearview mirror. Almost 10% organic growth and a slightly higher level of EBIT growth meant we also improved EBIT margins in this space. The reported EBIT margin improved much more than organic because of the benefit of the consolidation of the KPU business. Again, by business unit, strong first half in exam, but some of that 9% growth was the pull forward of orders that otherwise would have been invoiced in the second half as customers began to position for the first round of tariff increases that went into effect in January. The organic growth rate improved again through the half for exam's longer use, and overall that business is well positioned to grow again into this coming fiscal year. Very strong and very satisfying results for our surgical and our cleanroom business. Surgical, again, as we said at the half, was benefited in the first half by $17 million of orders that were delayed out of the fiscal 24-time period by shipping delays related to the Red Sea disruption. And so that 14% growth in the second half is very encouraging and 20% overall for the year of great result. Cleanroom is where we've doubled down with investment. Again, very strong first half. Second half at 8%, continuing to grow above our estimates of market rates. And that's through that period of KBU integration, which we navigated successfully, but we always expected to have a somewhat lower sales outcome with customers positioning ahead of the cutover. Again, EBIT growth benefiting from the same trends as industrial, the consolidation of KVU, improved manufacturing utilization and APIP savings. First half had the headwind from higher freight and raw material costs. Second half improved as those moderated and we got some initial pricing through. So we're all pleased with both segments' performance in the year. So let's move forward now to some further detail in the drivers behind that growth. And this page summarizes the four dimensions which I hope you as shareholders will think are the long-term source of shareholder value creation. And for each of these four boxes, I'm just going to call out one specific element and others we'll talk to in other parts of the presentation. So differentiated customer solutions. And I think perhaps our differentiation is still not fully understood by the market. I've mentioned already the success we've had with new products. Here I want to highlight how important our range of service offerings is to the customer. For example, under the Ansel Guardian brand, we have the world's leading database to inform customers on what the right PPE is to use, depending on the chemicals that workers may be exposed to in that environment. The use of the Ansell Guardian chemical system increased 30% year-on-year with more than 50,000 queries recorded, either by customers directly for a limited version of the system or in partnership with our sales teams for more complex queries. And we're seeing it lead to share gain in markets in which Ansell has previously struggled to gain share. For example, in Japan, where regulations around protecting workers from chemical hazard have been tightened, As a result, we've seen a significant increase in Japanese customers coming to Ansel Guardian for advice, and that in turn has led to increased share gains and growth in Japan. Our diverse vertical and geographic presence is another core feature of Ansel. And while some of our verticals are seeing reduced demand or limited growth, we have plenty of places in which we can still grow. We've doubled down in the pharmaceuticals and biotechnology area, but I want to mention here the success of emerging markets. Emerging markets, it's a mixed picture. Some of our reliable multi-year growth markets have not grown in the year, for example, Mexico, but in other places, Brazil, China, India, we saw solid growth in the year. So again, within the broad universe of emerging markets, we can find places to grow. The right-hand side talks more to productivity, capital allocation, and here, with the success of APIT behind us, ERP will talk about But I want to highlight our increasing confidence in being able to generate returns from automation investments. We have a number of pilots running this year, particularly looking at more automated packaging solutions, where a lot of our people are employed today. With success with those pilots this year, we should see another path forward to improve productivity. Brian will cover more on our capital allocation, but I want to highlight our internal capital expenditure, which is always our priority where we have good return projects. The most important project this year is our India Surgical Greenfield Facility, which is on track to begin zipping of gloves in the second half of fiscal 26. So let's move forward now to the next page. And here I summarize the performance of the acquired Kimberley Clark PPE business, or KBU as it's known within Ansell. So firstly, the performance of that business itself was ahead of business case. Secondly, the integration is complete. And Ansell's CEO has never been able to say that before, just one year after an acquisition. And this was by far the most complex integration task that we've taken on. And with success under those two headings, I'm able to now increase our synergies target from $10 to $15 million. So let me go through a few more details under each of those headings. Sales were ahead of business case also. Strong double-digit growth in our cleanroom products, which is really what we bought this business for. You're aware that when we bought the business, we did anticipate some decline in the industrial safety products, particularly in the period in which they were still being supported by the Kimberley Clark sales team. In recent months, they have now been transitioned to the ENSL sales team, and we want to get those products back to growth as well. So the overall moderate sales growth of 1%, but double-digit growth in cleanroom, very satisfying, and overall ahead of business case. EBIT also ahead of business case on those sales, better product margin, and the early exit of transition services means we started to record SG&A synergies ahead of our original business case assumption. So the integration was the most important job we had to do, and we had to do it well this year. Customers in the cleanroom area do not forgive you if you disrupt their operations with supply chain lack of reliability. And the real test of our success is our customers. They were nervous about this. It's a complex integration. They've seen issues with other companies before, and they've reported to me that they viewed this as a seamless experience for them, and that's very satisfying to hear. As a result, all our transition service arrangements from Kimberly-Clark were exited ahead of schedule. And now we can focus on our motto that we always apply to every acquisition. Where is the opportunity to leverage the best of both of the base hands of business and the acquired business? Two highlights here. KBU's right cycle Post customer use end of life recycling service really resonates and it resonates all over the world. Today we're looking to scale that up to improve the economics of the service which is subsidized by Ansell so that we can bring it to many more customers. And then as we dug into the quality of the business that we've bought and done research on the strength of the KVU brands, we've made a decision that we need to double down on those acquired brands. And we also need to simplify the overall Ansell brand portfolio. And that means today we're announcing that some older Ansell brands, which have equity, have value in the market, but they will be superseded by the key KBU brands, Kymtek and Klingard. So we'll transition products today under an older Ansell brand to either Klingard or Kymtek. This to me is a value creating step, but accounting rules requires to record an impairment because we will not be continuing with some of those other brands that have a current fund sheet value. And then an upgrade to synergies target. So remember our net figure of 10 million was a balance of gross cost savings with some offset for some revenue risk. 12 months in, we're seeing less of that revenue risk than we had anticipated. We have secured the SG&A savings, which is the biggest piece of the gross cost synergy with the success of the integration. And the opportunity I see is an increased supply chain savings opportunities. We're still working through that, but I'm confident that we should have at least a 5 million upside to our original 10 million target. Of that 50 million, we realized 5 million in fiscal 25. We won't be all the way to 15 in the next 12 months, but we'll get close to that 15 million figure. So now if I turn to our brand portfolio, I won't cover this page in detail, But really, I think this is by far the strongest set of brands of any player in the PPE world. Each one of these represents revenues in the range of $80 to $90 to $300 million. Each of these brands are known globally. Each of these have a clear role within the Ansell portfolio, and you can see how well Klingard and Chemtech fit into this portfolio. But the most important brand on this page is the Ansel brand in the top corner here. And so what we also want to make sure is that people buying Hyflex know very clearly they're buying Ansel. As Ansel, recent research confirms, is the best-known brand in our industry. But it also highlights the strength of our service brands, Ansel Guardian, the Right Cycle Recycling, and the Apex program, which goes more to the use versus the adoption of PPE. So now let's turn to the APEC program. And this is the last time that we will present the three strands of APIP here, because the organization work stream, the manufacturing work stream are substantially complete. And we have delivered to our upgraded savings target of $50 million, which you will see in full in the next fiscal year. So from here on, we will focus on the IT stream. We've had success to date, but the big work is still to come. And I'd now like to hand over to Deanna Johnston to give you further details on this.

Thank you, Neil. By way of further introduction, I've now been with Ansel over five years. And during that time, my role has evolved significantly. In addition to leading our global IT function, my responsibilities have expanded to include overseeing Ansel's broader portfolio of change initiatives. Most recently, this included leading the integration of KVU into our business ahead of schedule. There's three factors that really resulted in the success of that integration. First, we developed a tightly interconnected dependency plan, carefully mapped how all the complex parts fit together. Second, we really maintained a constant steering and rapid issue escalation, catching potential problems early and addressing them quickly. Lastly, and most importantly, we followed strict cutover readiness criteria, ensuring all of our stakeholders were aligned and confident in our preparedness. These criteria were defined in advance, measurable, and never compromised. We plan to apply those same principles to our upcoming digital transformation work stream within APIP. Before diving into that, let's just quickly review what we've accomplished in this space, though, over the past six years. In 2019, ANSA was operating 16 different ERP systems, a legacy from our many acquisitions. This created significant inefficiencies across our systems and processes. We made a strategic decision to consolidate all of our manufacturing plants onto a single cloud-based ERP platform. Over the last six years, we've been executing this transformation plant by plant. As of today, our nine largest facilities have successfully migrated, including our Thailand plant, which just went live earlier this month without an issue. The confidence we've gained from these transformations and from our successful KVU integration has positioned us to take the next challenge, which is migrating our customer-facing entities onto that same ERP platform. From here on, this becomes the core focus of APIP. These migrations are going to take place over the next three years, beginning with North America later this fiscal year. Once complete, ANSA will operate on a unified ERP system, unlocking benefits across cost efficiencies, process optimizations, and customer experience. Our customers will see an improved service and stronger partnerships, and we'll be better equipped to deliver value in areas like pricing, inventory management, and integration of future acquisitions. We're genuinely excited about the potential of this initiative. We're working really closely with our customers to ensure a seamless transition and look forward to sharing updates with you guys on our progress in the years ahead. With that, I'll hand it back to you, Neil.

Thank you, Deanna. So a few words on our sustainability progress before I then hand over to Brian for more details on our financial results. And two aspects of this I would highlight. Firstly, our net zero emissions goal has now been extended to include our scope three emissions, with our net zero target including scope three remaining at the FY45 date. And I'm pleased to say that the science-based targets initiative has validated our targets as well grounded and meeting their criteria for science-based targets. On the left-hand side of the page, I'd highlight our progress in reducing injuries. You may remember that in fiscal year 24, that was one year, we seldom see this, but one year in which we did see an increase in injuries, and so important to get back on track. I'm satisfied with a 16% reduction and the overall level of total recordable injury frequency rates, but I also think there's further progress that we can make. And so we're very focused on the leading indicators and the proactive risk reduction steps that we can take to get to the lowest possible injury occurrence in our company. And then finally, it continues to be very satisfying to see the recognition we gain from authorities around the world consistently rating Ansell as a leading company in our delivery of sustainability objectives. So now let me hand over to Brian Montgomery to go through our financial performance. Brian.

Thanks, Neil, and good morning, everyone. Great to be here speaking with you today. I've been at Ansel now for a few months, and I'm really impressed with the quality of the company we've got here. I'm looking forward to working with Neil and the team to drive the business forward in the coming years. Neil's provided a few comments on the full year result already, but let me get into it in a little bit more detail. Overall, we were pleased with EPS coming in at 126.1 cents on an adjusted basis, which excludes significant items. As Neil mentioned, this was in the upper end of our upgraded guidance range that we provided alongside our half-year results in February. Starting at the top, sales were up 7.7% on an organic basis, which excludes the effects of foreign exchange, the acquisition of KBU, and the exit of our chemical household gloves business in fiscal 24. This is the best rate of organic growth we have delivered in over a decade, excluding fiscal year 21, which was distorted by pandemic-related pricing and demand. G-Pay margin improved by 280 basis points versus fiscal year 24, helped by improved manufacturing utilization, growing APIP savings, and the mixed benefits from KBU. We did experience some margin headwinds from higher freight costs and raw material costs, which we spoke about in the half-year results. However, we saw improvements in both items in the second half, with the use of air freight reducing and key raw material prices softening moderately. Second half margins also benefited from pricing put in place in January to offset increases we saw in raw material costs in the first half. So overall, a solid result on GPA margins, but with opportunities for further improvement as we move into fiscal year 26. Turning to SG&A, this was up 12.2% on an organic basis. The main driver was increased accruals to fund higher incentive outcomes versus fiscal year 24, as well as annual merit increases, partially offset by higher APIV savings across the year. Foreign exchange is a headwind to EBIT by about $1.5 million. Underlying currency changes were unfavorable to EBIT by $11.5 million, but our hedge book did its job and neutralized the majority of this negative movement. We did see an FX swing in the last quarter, with the U.S. dollar depreciating against key revenue currencies, including the euro. This sets us up for an underlying FX tailwind in fiscal year 26, though this will be blunted in the short term by the expected losses on our hedge book. but a positive development for earnings in the longer term, all else being equal. So all this translated to organic EBIT increase of 10.4% versus fiscal year 24, as well as a 200 basis point improvement in our EBIT margin, which now is at 14.1%. Moving further down the P&L, we booked $98 million in significant items in fiscal year 25. This is higher than the guidance we gave at the first half, due to the decision that Neil outlined to leverage the market-leading KBU brands across other parts of our product portfolio. And this required us to book a non-cash charge of $41 million against the value of these retired brands, which had all come to Ansel as part of earlier acquisitions. Bridging down to net profit, interest was also higher due to the incremental borrowings required to fund the KBU acquisition, and our effective tax rate came in as guided at 23.5%. So on the whole, a solid 25 result in some challenging market conditions, and we look forward to carrying this momentum forward into fiscal year 26. So now on to the balance sheet, which I'm pleased to say is in a very healthy condition. Working capital is higher than fiscal year 24, most notably in inventory. There are four key drivers there, including incremental inventory from the KVU acquisition, natural investment in stock to support higher sales, increased safety stock levels in the U.S. to get ahead of higher tariff rates, and then the translation effect of a weaker U.S. dollar at year-end, which also inflated stock levels in the second half. Looking at inventory returns more operationally, these were higher than fiscal year 24, helped by a mixed benefit from KVU products where manufacturing is outsourced. But pleasingly, inventory health also improved over the course of the year, with lower customer back orders and improved in-stock percentages. This has supported revenue growth in fiscal year 25 and continues to help support growth here in fiscal year 26. Receivables and payables both inflated in the second half as we rolled off transition services with Kimberly-Clark and those order-to-cash processes transferred to Ansel. Both receivables and payables were not included in the KVU transaction perimeter. Operationally, debtor and creditor days were relatively stable throughout the year. Finally, it was great to see a step up in return on capital employed. This improvement was the fact of our earnings growth, which included strong initial returns from the KVU business. It's not often that an acquisition of the creative diversity in year one, but that's what we've been able to achieve with KVU. So next, turning to the cash flow. While both sales and earnings were significantly higher than fiscal year 24, net receipts and operating cash flow were both lower. It's important to remember that in fiscal 24, we benefited from a significant one-off working capital release of over $100 million when production was slowed to reduce inventory, which drove an abnormally high cash flow result. Working capital increased in fiscal year 25 as sales picked up and we built inventory where we needed it. For example, in the U.S., towards the end of the year. It's this significant year-on-year swing which explains the year-on-year reduction in operating cash flow. Cash conversion, which we define as the percentage of net receipts to EBITDA, excluding significant items, was 91% for the year. This decreased somewhat from the 104% that we showed at the half year, mainly due to the second half inventory moves and those TSA exits that I talked about earlier. We have $45 million in one-off cash costs associated with APIP and the KBU transaction integration that were included both in EBITDA and net receipts. The majority of the significant items of the P&L were non-cash, including the $41 million non-cash charge against retired brands I mentioned earlier, and incentive accruals, which were significantly higher than fiscal year 24. These make up a large piece of the $115 million other balancing items you see between EBITDA, working capital movements, and net receipts. Net capex was $68 million in the year, which includes the continued construction of our new surgical plant in India. And, of course, the large increase in net interest-bearing debt was due to the payment for the KVU acquisition made in the start of the year. Turning to the next slide, just a couple of words on our funding profile. If we adjust for the timing of payment for the KVU acquisition at the start of the year, net interest-bearing debt reduced by $29 million in the year. Net debt to EBITDA at the start of the year was 1.6x, down from 1.8x at the beginning of the financial year. Maturities are in debt are relatively long-dated, with approximately a third of our facilities at floating rates. So there is scope for some improved interest outcomes if rates decrease throughout fiscal year 26. So, all in all, we're in good shape with a healthy balance sheet and well-balanced maturity profile, meaning we can continue to underwrite value accretive internal and inorganic investments as and when we see them. We could also turn to further capital management to ensure our balance sheet remains efficient. And to this end, we will be resuming our on-market share buyback program here in fiscal year 26, aiming to make up to $200 million of repurchases. Finally, I want to take the chance to say a few words about the opportunities I see for improved financial performance over time. I'm a few months in my tenure here, and what has struck me is really the strength of the IT in our business, clearly our material science and manufacturing technology, our services offerings, and, of course, our market-leading brands. I see good opportunities to leverage these strengths to accelerate revenue growth through the work we're doing to optimize our brand positioning, which includes greater use of the acquired KBU brands, and through stepped-up product and service innovation. There's also potential to drive better revenue management and pricing practices to ensure the value of our products is reflected in the prices paid by our customers. Looking at margins, our team has done a great job in the past couple of years of driving improvement, particularly in the industrial segment. But I see a lot of potential for further gains through a continuous focus on driving variable production costs down, by deploying lean tools and automation in our plants, by improving our sourcing capabilities, and through more efficient distribution. The upgrades we are doing to our ERP systems will be a key enabler, and there are also opportunities to be smarter around our use of shared services. On cash flow, we want to build on the improvements that we've made in our supply chain planning over the past few years to turn inventory faster and look to tighten up our receivable and payable terms where we can. These improvements will further enhance our ability to invest for continued growth and return capital to shareholders. I want to say a few quick words about how we're thinking about this. You know, first, we know that the best returns are from internal investments. And we've invested significantly in manufacturing capacity over the last few years, which enables us to meet the growing demand for our most differentiated products. Now we're turning our focus to productivity investments, specifically opportunities to introduce greater automation to key manufacturing processes. Secondly, M&A is a key part of our strategy, and we're continuing to look for acquisitions that will enhance our differentiation and growth potential, building on the success that we've had with KBU. And finally, if we're sitting on excess capital, we won't hesitate to return it to shareholders via our on-market buyback program, which we're now receiving. So with that, I'll hand it back over to Neil to talk through our outlook for fiscal year 26.

Thank you, Brian. Well, clearly, when talking about fiscal 26, I have to begin with the impact of tariffs. So this page highlights across the top the four reasons that I think will give you confidence that we are in a position to offset tariff cost increases without a negative value outcome. Firstly, remember that PPE products in general are essential. Customers do not have the option whether or not to use them. They are required and often required for regulatory reasons in the workplace. The specific Ansell PPE solutions are differentiated. In addition to protection, they provide comfort, they generally are more durable than competitive offerings, and often they protect against multiple risks in a single product. So that means workers, and they keep workers and production processes safe, and it also means customers buy Ansell products because of that broader value proposition, which through Guardian we can demonstrate creates value in use. The second point to make is the entire glove manufacturing industry and clothing manufacturing industry is in a very similar position. In the end, the way tariffs are currently, there isn't a big advantage in any particular manufacturing country. But I would say that the economics of onshore production in mature markets, for example, the US, remain challenged. And we don't think what has happened to date shifts that materially. The third point to make is that Ansell, more than anyone else in our industry, has a diverse manufacturing and sourcing network. And in a time when it's very difficult to be confident about any particular future scenario, the only way to be prepared is to have options. And our 14 manufacturing facilities in nine countries supported by a well-developed supplier network means Ansell has more options than any other participant in our industry to navigate whatever the future throws at us. And finally, I feel in my 12 years at Ansell that I've been here several times, saying to you, we have the pricing power to be able to offset a source of cost inflation, whatever that may be. And at different times, it's been different things. But each time we have shown that we can offset a step change to cost inflation through well-managed price increases and clear communication to our customers. So what are we doing? What have we done so far? What are our plans? Well, in summary, our pricing plans are to offset those higher tariffs in full. We have already begun on this journey. Based on the initial tariff rates, China an additional 30% and the rest of the world at 10%, we communicated in the fourth quarter to customers that we would need to take the first set of price increase. Those went through in the June and July timeframe, and generally we've seen good market acceptance of those. And now in the more recent weeks with the final, maybe final is the wrong word, with the next indication of what tariff rates to the US will be, we need to go to the market again with further increases. We have communicated those to customers. We're in the process of implementing them and they will come into effect for the most part during the first half of fiscal year 26. And I believe that we will see a similar outcome to the price increases already achieved. Meanwhile, we continue to work to mitigate the higher costs. We have many steps in place to reduce our exposure to China sourcing. And even though there's less of a cost benefit now to that than previously some had assumed, our customers still want to be sure that their supply chains do not contain a high level of sole source risk to China. And back to that resilience, we can offer more options than others. And then we're also looking for cost mitigation across our supply chain. So taking all these steps together and the fundamentals of our industry situation, I believe we will be able to navigate tariffs successfully in the US and in other markets. So with that secured as an assumption, let me go now to the other assumptions that make up our earnings guidance for the year. So a range of $1.33 to $1.45, as you've seen already. And of course, that requires continued good earnings growth versus the $1.26 that we've just reported. We anticipate continued sales growth. Yes, some industrial verticals will see subdued demand, but in other spots, we see the opportunity for growth in industrial, and we expect overall solid healthcare demand. So we anticipate general volume growth across the business, and then tariff-related pricing will clearly also contribute to sales growth. Adjusted EPS, so those sales will support EPS. And as Brian has outlined, we have an ongoing productivity programme. Even with APEC coming to an end, there are other initiatives that we have underway that should improve manufacturing and supply chain productivity, and we'll see a further step up in KPU synergy delivery. Finally, we remain very focused on cash flow. We remain committed to strong cash conversion, and you've heard our continued balanced approach to capital allocation. So now let me conclude, returning to those four dimensions across the bottom here that I believe shareholders should see as long-term sources of value creation. And across the top are the enablers or the pillars of building those dimensions. Let me just highlight a few key priorities for the next 12 months. so firstly under leading positions in growing markets clearly as vertical conditions change as some markets show opportunities and others less we need to be adaptable and we need to be effective in pivoting our focus to those favored verticals the increase we put on really understanding our end users helps us be more agile and quicker in doing that and the broad portfolio we have means we can present well-rounded solutions into verticals such as defense or energy where there are meaningful growth opportunities We continue to round out our comprehensive product portfolio. We've had success with new to industry product launches, and there are more that will launch in the next 12 months that we think will provide very important solutions to customers that aren't available to them today. I talked about our service solutions, and it's particularly exciting how the development of technology really enables us to envisage a new future for our services, which are much even more powerful than they are today, and also much more responsive, enabling us to reach more customers with this very important advice on what the right PPE is to use. And we plan to scale up our right cycle recycling program, working on the economics and making it available to customers who are asking for it today. We continue to invest behind that resilient supply chain. I continue to believe our sustainability leadership is important also for share growth. So we're expanding our portfolio of low-carbon solutions, and that's resonating very well with customers. But also let's remember that our investment in renewable energy is also a smart cost move, and we see lower energy costs coming from those renewable investments. Further investments in fiscal 26 will continue to have energy cost benefit. And finally, all this is made possible by cash flow. So our capex mix will continue broadly about the same dollar levels, but shifting from gross investments to productivity investments, with automation being a key component. And as you've heard, we're resuming the on-market buyback. So I hope that gives you a good overview of our results in the last 12 months, a good sense of our priorities for the next 12 months, and now we'd be very happy to take your questions.

questions. The first question today comes from Vanessa Thompson from Jefferies. Please go ahead.

Good morning, team. Thanks for taking my questions. Yeah, great result. I just wanted to ask with the US tariffs and your insourcing strategy, I guess the outsourcing KBU strategy does give you some extra flexibility at this time. Does that change your attitude to sourcing in the near term? Thank you.

I don't think it changes us structurally and that I don't think we expect a meaningful shift in the percentage of insourced outsourced. But it does all come back to those options, as I was describing. In fact, the Kimberly-Clark business, when we acquired it, as is true for pretty much everyone else in the industry, had some greater dependency on China for some aspects of China. its sourcing and we've quickly been able to come up with alternatives there, which is a combination of leveraging our own outsource network and then also looking at Sri Lanka, for example, as a location in which we can make in-house products that previously Kimberley Park only had the option to outsource. So it's the options that we provide to an already strong KBU sourcing network that give us more dimensions to move. But to answer the question specifically, I don't expect a step change in the outsourcing overall mix for the company.

We've seen commentary about pull forward of purchasing. effectively, I guess, into the fourth quarter of FY25. I wondered how you've seen purchasing into the start of FY26. Thank you.

Yes, so I need to caveat my comments by saying we don't have perfect visibility on this. We do track much more carefully now the distributor sell-out data and match that to our sell-in data to watch for changes in distributor inventory levels. And, of course, we're also tracking order patterns as we begin this fiscal year. So, overall, we don't see any signs of that, Vanessa. We haven't seen any material pre-buy in the fourth quarter of the last fiscal year. And also, as we progress through this year, we're not seeing any meaningful change in order intake that would suggest there was a pre-buy. So, it's a little early for me to draw a definitive conclusion on this, but so far, so good. So, no, I don't The information I had today was just that wasn't a big factor. It wasn't a material factor in our fourth quarter result.

Okay. Thank you.

Thank you. The next question comes from David Lowe from J.D. Morgan. Please go ahead.

Hi, David.

Morning. Thank you for taking this. Morning. Can I start with tariffs, of course? I mean, I see for the price increases that have gone through, I'm just wondering how much or how much you worry about a volume impact. I also observed that both divisions saw their growth slow to 3% in the second half. I know there's a lot of moving parts there, but I'm just kind of worried whether you see any of a link between the price increases and what's happening with sales.

Yeah, well, clearly, it's that equation that is at the heart of our success. And we've taken a price strategy, which we don't believe will have a major volume risk effect. And we'll be agile as we work that through. So we have flexibility within the overall commitment I've made to you to adjust if there are specific customer situations that we need to respond to. And we've taken account of that in the targets that we've set here. So So, yeah, I think the volume effects that we're seeing are not so much related to the price that we've taken, but we are seeing already some second or third order consequences of higher tariffs. So, for example, Mexico, which for many, many years has been one of our highest growing countries, activity in Mexico has slowed significantly because of the increased barriers of trade between Mexico and the U.S., And then in some sectors in the U.S., we're seeing promising order opportunity. And in other sectors, for example, automotive, similarly automotive in Europe, we're seeing weaker growth opportunity. So those are the volume effects we're seeing, not related directly to our price increases, more related to industries around us adjusting to the realities of the new trade world order.

All right. Thank you for that. And then I noticed, again, that EBIT margins have a strong uplift there, and KBU is obviously part of that. But what is the potential margins that you see out of this business? I mean, we've seen a fair bit of movement in EBIT margins across both divisions over the years. What do you think the sensible sort of medium-term targets are?

Yeah, so I think we need to do some more work on resetting our medium-term targets. We currently have work underway looking further ahead again, and we'll look to update you on those as we reach conclusion. Billy, industrial right now is in fact trading quite a bit ahead of what I'd said two or three years ago was my target margin for that business. But there's nothing in that margin performance that I would say is unusual or temporary in nature. It's really coming about through consistent delivery of those priorities we've outlined to you for a while. And encouragingly, and you've challenged us on this in the past, David, we've been able to retain the margin improvements that we're making internally. by overall ensuring that we price our products to value rather than to any particular cost equation. And that price to value is the theme of the revenue management that Brian was talking about, which we want to become more sophisticated in. So I don't have a new mid-year target for industrial for you, but I do expect continued margin improvements in that business as we've got a long way to go with those strategies that I've outlined. Healthcare is still trading below its historic margin level. I'm pleased that we saw some improvement in the last 12 months, but we've got longer to go to really get the healthcare business back to an acceptable level of margin. Again, I expect margins to improve in the next 12 months. But really key to healthcare are those productivity and automation investments. So the success in those pilot lines that will materially reduce the labor required, particularly in the packaging processes, for example, of our surgical portfolio, then we should see a step up in healthcare cubic margins, as well as the other strategies that are consistent between industrial and healthcare. So let's stop short of directly answering your question, David, but that gives you a directional sense, I hope.

Yeah, thanks, Neil. I appreciate you guys have delivered on the target so fast. Well done. Thanks very much.

Thank you. The next question comes from Dan Hurrell from MST Marquis. Please go ahead.

Good morning. Thanks very much. Again, sorry to carry on with the tariff question, but it's sort of the topic of the day. The market is really trying to understand the risk of downgrading, either within your own portfolio or downgrading to cheaper brands. As you sort of go through the second wave of price negotiations with customers, can you just characterise how you're seeing that play out? Is there a tendency for customers to go for cheaper prices in your range or to alternate providers?

I think the first comment to make with regards to that is, pretty much the whole industry is moving up. And you've seen our customers also who are managing both brands within their portfolio, our distributor customers, I mean, and also managing their own private label portfolios, also saying that they expect to offset the impact of tariffs with higher price increases. So this is a classic question of tied lifting all boats and so the relative price difference may not move that much in fact between the Ansell premium position and other lower price but perhaps also lower value products. The second point I would make is the one I was making on the call which is that Guardian value cell methodology allows us to really demonstrate to customers that even if the Ansell price point per glove is higher the overall cost in use is often lower And when your products last two or three times as cheaper alternatives, that's not a very difficult case to make. But the third statement is indeed, we do have options within our portfolio. We have mid-tier products that are still very good, but don't quite offer the full value of our premium products. And we've always, this is not different to our strategy over many years, we're always flexible with customers if for different reasons they need to have some flexibility within the portfolio. And to say again, all of those factors have been considered as we try to give you our best view of our outcome from our strategies over the next 12 months.

Okay. Thanks. I'll leave it to you. Thank you. Thank you. The next question comes from Craig Wong Pan from RBC. Please go ahead.

Morning. Just wanted to touch on the margins in the divisions again. We saw good uplift in those second half margins. So just wanted to understand if there were any kind of one-off benefits or seasonal benefits in those second half margins to understand how sustainable that level is?

Yeah, so maybe I can bring in Brian to comment on this. So we have pulled out the main factors there, but I think worth reiterating some of those. So, Brian?

Yeah, that's a very good question. So as we shift from the first half to the second half, a couple dynamics helped us out. One was in the first half, we were responding to demand that were, in some cases, backordered and needed to be accelerated. We responded to that with higher air freight. which a rate base is obviously much higher than what you'd see on the ocean. So as we shifted to the second half, that got back to more normal patterns. That's one of the reasons why we think that's a sustainable position to be in over time. The other side of it is that we did see some higher raw material costs in the first half of the year. And either we priced for those as we got in the second half of the year, or some of those abated a bit as expected in the second half as well. So some of the adjustments we made from the first half to the second half, again, we believe are sustainable as we look forward. Over time, the other thing that we see as benefit is those productivity investments coming online. And we're very focused now on moving our capital from just capacity and growth, which has been more our focus, to more of this productivity piece, and that should be added to it as we go over time, helping to offset the increased inflation we see in things like wages throughout our supply chain.

And just to add one comment. So while the second half margin result was fairly clean for the reasons that Brian described, remember there's always some seasonality in our EBIT margin. So generally the second half dynamics lead to a higher margin in the second half. So you can't take the second half margin and roll it forward. You need to take the full year adjusted for some of the first half factors that Brian described. And that creates that potential for for year-on-year growth as opposed to necessarily growing on the second half rates into next year.

Thanks, and just to follow up on that seasonal part, are you able to like specify how much that kind of benefit normally is in the second half versus the first half?

Sorry, I missed the second half benefit of what? Can you repeat the question?

You kind of talked about the seasonal benefit there that you get. Can you kind of quantify how much that is?

I don't remember offhand, so I think we disclosed the half-on-half mix fairly consistently over time, but it's generally a couple of hundred basis points difference between first-half margins and second-half margins, sometimes more, sometimes less, depending on specific patterns within the year. Yes.

Okay, thanks. And then just the second question, on the ERP upgrade, thanks for sort of giving a bit of details around that. Could you put any numbers around the kind of benefits that we might see? And just to clarify with the timing there that, you know, kind of it seems like the benefits might flow through more towards sort of that kind of FY28, that kind of back end of that period. Would that be correct there?

Yeah, so I'm going to duck your question, but then bring in Deanna to provide some colour to those benefits. So internally, we have a business case right now. Frankly, I think there's more opportunity than the numbers that have been presented to me internally, and Brian also is challenging this. So our goal is to work on that further in the next 12 months, but we also want to see the results of the first go-live. So rather than give you a number, Craig, let me bring in Diana, who will say where we see the opportunity and what should lead to those benefits. And then we expect to give you a more specific answer 12 months from now. Diana.

Hi. The majority of the benefits that we've modeled and hope to achieve, and again, to Neil's point, we'll track those through after the first go-live, but they center around there's some, obviously, SG&A and labor efficiencies that we expect to get over time, but there's also a set of pricing optimization tools that we're delivering alongside the core ERP system. And so we do see benefits in that area and then in our overall inventory management and logistics efficiencies and things around those areas that could also deliver. So that's where we see a majority of the benefits. We hope to continue to monitor that closely as we cut over. But, you know, I think the organization's been sort of stifled with, you know, the legacy type of systems that we've, you know, been sort of saddled with for years. And I think that the employee, you know, engagement will also increase, which also has an immeasurable value, so.

Thank you, Dan.

Okay, thank you. Thank you. The next question comes from Sol Hadassin from Baron Joey. Please go ahead.

Thanks. Good morning, Neil. Good morning, Brian. Can you hear me?

We can hear you.

Yes, go ahead. Yeah, first question for me. Neil, just on tariff, obviously a lot of questions around potential impact of volume and demand. Is a way to think about the price increases that you effectively need to put through, you talked to total cost around $80 million on an annualised basis. If we take that cost and just divide it simply by your US revenues, you get to about 7%. Is that the magnitude of price increases that you will effectively be looking to put through? Or does it vary by product? Could it be more than that? Could it be less than that?

I mean, yes. I mean, the average, that's good math. There's some variation that we've decided to take within getting to that overall goal. It's not, there isn't, we don't actually see a big variation now by product because the drivers of that cost increase are fairly consistent. Each product is largely tariffed at the same rate and there's not a big variation in sourcing anymore in tariff rates as the picture that it is today. But that being said, we of course take accounts of market situations. And so we have adopted some flex within our plans in order to improve that overall equation we've been discussing of price achievements and volume retention. But yeah, you're still broadly right in your math as to the average increase needed to offset the cost.

That's very clear, Neil. And second question from me. Related to the slide where you talk about the ERP system upgrades, and I'm interested in your comments around, we talked to the manufacturing systems being extended to customer-facing entities. I know in the past, the difficulty with answer has been seeing forward orders from customers and then balancing inventory and hence the implications for cash flow. As you look through to now, 27 and particularly 28, I'm keen to get a sense of to what extent across the whole business you will have you know, line of sight on forward orders, both in healthcare and industrial, to the extent that you'll be managing this business far more effectively from a working capital position once we get the systems implemented, assuming they are implemented on time and that they are effective. Thank you.

Yeah, so the ERP itself will not actually create further connections into our distributed systems, which is where that information sits. And yes, this is one of the first issues that I tackled with on becoming CEO. And we couldn't wait for one ERP to get that insight that, as you rightly say, is so critical to our business. So in parallel, and another project that Diana successfully led was to put in place an end-to-end demand and supply planning system. And not only is it a system, but it's also a very structured process with customers where we do collaborative forecasting. uh only only a few customers are willing to give us full transparency on the levels of inventory that they hold but you can triangulate over time based on various trends that you see to give you a reasonably good view of distributor inventory levels so so that's already in place and further improving it is not so much a systems issue as that customer collaboration issue but also improving our ability to gather data. It's a classic big data problem, getting insights from multiple areas and then extract transform and load is the jargon to get that data then clean so that you can really use it for decision-making purposes. And the overall data lake and BI strategy that Diana has adopted has also been effective there. But Diana, would you add anything to that question around that customer visibility question?

Sorry, I need to unmute. Yes, I'd say to complement what you said, Neil, it's really about the ecosystem of, like you said, our global planning systems, our BI tools, and the ERP. And we focused today on giving you guys an update on the ERP piece, but really what makes it all work together to that benefit level is the collaborative forecasting process with our customers, with the global planning system, and with the improvements that that we've made with a global data lake where we pull all this information together and have that visibility and those analytics. And so we're in a much better position than we were four years ago, you know, but it's still subject to getting, you know, some of those insights from our customers. But, you know, I'd say four years ago we didn't have the visibility we had on point-of-sale trends and being able to use those to kind of articulate future direction and forecasting. So, agreed.

Yeah. Thanks. Good question.

Thanks, guys. Thank you. The next question comes from Andrew Payne from CLSA. Please go ahead.

Yeah, morning. Thanks for taking my questions. Just looking at your net debt to EBITDA, you've got 1.6 times and, you know, strong performance versus your target at two times. But just looking at your FY26 target at 1.5 to 2.5, Just wondering, is that the upper end of the indication of M&A capacity that you have baked into that target, whereas the other capital allocation priorities may be putting you towards more of the middle or the lower end of that range?

So let me hand over to Brian to comment on that. We think about the 1.5 to 2.5 range as really being our target leverage. I think as demonstrated with the KVU acquisition, we were able to raise debt as well as equity to stay within that range and then, of course, bring that back down as we go forward over time. And as we look to be below that range, 1.5, you know, we have the opportunity to resume our on-market buyback, as we discussed today. So I think we think about that really as kind of our target leverage that we'll work within to be most effective in that range. Does that answer your question?

Yeah, yeah, probably just to tack on to that, I guess, in terms of M&A, what type of opportunities or gaps are you seeing that you could kind of pull the trigger on at some stage?

Right. I would say that this is something you have to be in the markets all the time and looking at the opportunities as they come. But I would say as well that we've got a strong strategic lens that we apply to all of our acquisitions. And things that you saw in KVU, such as exposure to faster growing in markets, exposure to deeper profit pools, are things that we think about as being in that strategic lens for us as we go forward. And then we apply, of course, the financial criteria to that, you know, driving strong returns on capital over time with those acquisitions as we've been able to demonstrate. with kvu um and so as we're as we're evaluating those that's kind of the frame in which we put within it you know i think uh the other side of this is being opportunistic and and being able to uh you know respond if and when those situations arrive and i think Staying within our target leverage allows us that flexibility to be able to respond as and when those opportunities occur. And I think it is a key part of our strategy, as discussed, that we have a strong platform for M&A. I think we have demonstrated strength in terms of integrating that M&A successfully. And so this is one that we're excited to continue to pursue. Neil, anything to add?

No, I think a good summary. It's always, I mean, the availability is the other question, and it's always hard to predict that. It's generally subject to decision-making by other companies or financial sponsors. And so we just don't know, to Brian's point, we don't know when attractive targets will become available. We don't know if pricing will be reasonable, but will we be ready to act should both those conditions be met?

Yeah.

That's great. Thanks. I might just throw one else in. Just backing out the 8-bit savings, just looking at your 8-bit margins. So if I take that out, you know, the benefit you got year over year, it's about 13.1% 8-bit margin, if I'm correct. So about half of the 200 basis point 8-bit margin up within 25. So, you know, you're obviously doing a great job there pulling through those 8-bit savings. But just looking forward, you know, that 100 basis points, kind of underlying xa tip is that what we're you know still expecting you know as a growth target in terms of even margin uplift in the near or medium term i think the other big factor to notice so we went from a below target incentive outcome

last year and also the last two or three years, in fact. And now with the results we've reported to you today, I hope you would expect that indeed our incentive plans have delivered above target outcomes. So the incentive costs in F25, we gave the number quite a bit on s24 but also but also above so if you assume the future at a target rate then um we had more expense in f25 than an ongoing target assumption for incentive outcomes would would deliver for you about you know halfway in between uh those two year numbers that we've given you a directional sensor so that's perhaps the other factor to consider as you look at that yeah okay that's great thanks for taking that questions no problem

Thank you. The next question comes from David Bailey from Morgan Stanley. Please go ahead.

Yeah, thanks. Good morning. Just one from me. Just in terms of guidance, just on the sales piece, I suppose I'm just wondering what you're assuming top end and bottom there from a revenue and sales perspective and whether it's more response to pricing changes to offset the tariff impacts or if there's macro considerations factored in there as well. So just kind of what you're picturing in top and bottom end would be great.

Yeah, so we don't guide with quantification to top-line growth. We remain directional in our comments. I think we've covered the tariff pricing piece already sufficiently. As I consider macro trends, so first of all, let's be clear, it's only the U.S., that is directly affected by the tariff consequences. And then we do see some second order consequences, Mexico the most prominent, where there's a reduction in activity because of lower exports to the West. But really, I'd say Mexico is the only country that we see that meaningfully at this stage. So commenting more on macro. So I think in I mean, many of the leading indicators of activity actually improved through the fourth quarter if you look at If you look at forward indicators of orders, industrial production activity, and from most of the half, they were indicating declines, and now they're indicating neutral or positive. So if that's sustained, then that's actually quite a positive macro environment to be in. But you've heard our comments are a little more cautious than that because it's hard to predict exactly what the economic consequences will be of changes in trade policy. But I think stepping back from macro, And that point of focus on verticals is key. There are major parts of the world economy that are attracting significant investments. And I talked about energy and defense. And our portfolio is readily suited and unique in many aspects in being able to provide a portfolio solution to both those in the production of defense or energy, but also the supply chains behind them that need to ramp up quickly in support of that. And then similarly in the US, so some sectors will be affected by tariff rates, but other sectors may be stimulated. And of course, that's the overall strategy here. And so we're looking to be in the right spots in the US to grow. And then, as I said, also emerging markets, we still see offering plenty of opportunities. So less, perhaps, about the general macro and more about our ability to pick the spots in which we can grow. And that's a key focus for us as a team to repeat some of my comments from the presentation.

Thanks for the follow-up. I mean, what would be the biggest swing factor there? I'm guessing the EPS range is going to be a function of the top line. So if you're stripping out some of those factors, what's going to be the one thing that's going to move you most substantially, top end to bottom end?

Well, certainly always the broader economic environment is one. The extent to which we've given you our central target for price versus volume outcomes and tariffs, clearly there's some range, potential range of outcomes there. And then overall delivery of cost savings always is a piece there. So we're assuming no disruption from our ERP go-live. We've got a pretty good track record there that gives me confidence in that statement. But any sensible CEO, CFO would always allow a little bit of contingency there just in case. So I think those are some of the other factors. But, yes, the principal ones are related to those top-line drivers that we've discussed here and in answering your question.

Thank you. Thank you. At this time, we're showing no further questions. I'll hand the conference back to Neil for any closing remarks.

Well, thank you all for your continued interest in Ansell, and thank you especially to the Ansell team. It's a year of very strong delivery. I believe these results were made at Ansell. Not a lot of external factors supported our delivery, and we had to get it done ourselves. And I'm very proud of our ability to execute consistently against ambitious goals that we set as an organisation, and clearly that puts us in great stead for the future. And we look forward to commenting on our F26 success as we go through the year. Bye for now.