Ansell Limited

Good day and welcome to the Ansell Limited FY26 full year results briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. For operator assistance throughout the call, please press star 0. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Natalie Orstrom, Managing Director and Chief Executive Officer, to begin the conference. Natalie, over to you.

Thank you, Operator, and welcome everybody. It's a privilege to be here today together with Fred and walk you through our fantastic strong year, financial year 26. Equally also then talking about the outlook and then having the Q&A together with you. So we'll start with looking at the performance and then, as I said, coming to the Q&A. Starting with the purpose. We have a really strong purpose. It's an emotional purpose. It's a powerful purpose. And this leading the world to a safer future, this is who we are. This is our business. This is what it's all about. And that's how we translated it. Then also to our financial year 2016. And that's how we are bridging then the strong momentum to financial year 27. But let's start with the highlights of the year. As I said, the highlights is a very strong delivery in quite dynamic market conditions. The world is pretty – a lot is happening. But as I said, it's a strong delivery, and we grew the net sales by 5.7% adjusted. in this environment. Where I'm especially proud is that our second half growth momentum, 9.2% growth, really showed that we're also growing with volumes. So good, strong momentum here. On the sales growth, we also see that the momentum is in strategic areas. And areas to call out is our clean room and scientific business grew by 10% for the full year. And also U.S. by far the largest market grew by 10%. So improving the mix, growing in the future strategic areas has really helped us deliver a strong financial year 26 and also a very strong second half where also volumes came back. So strong net sales growth, of course, translates into a strong EBIT delivery. A EBIT margin of 15%. And we grew by 90 basic points versus last year. The star is of course healthcare, and I'll come to that soon. But you also see that our G paid grew by 70 basic points. And that's again thanks to this that we are growing in the more strategic areas where we are having higher gross margins and our value addition to customers is higher. Also this financial year 26, I said it was a dynamic market And our really decisive actions when it comes to US tariffs and Middle East crisis, things that are in our own hand on sourcing actions and then also price increases help to offset the impacts of both US tariffs and Middle East crisis. So strong net sales growth, good EBIT margin, and that's then also supported by a very strong cash conversion. Cash conversion of 113%. So we have a strong balance sheet in place compared to the financial year 25 when our cash conversion was 91%. Why this really mattered was in the Middle East crisis, and I'll talk about that a bit later. When Middle East crisis started, our focus was on enabling our customers to continue to serve, continue to ensure that we have availability. And that's where the strong balance sheet and some cash conversion really supported us. And then finally, adjusted EPS at the top range of 148.6 cents. That's a growth of 18.5% compared to last year. So we're very proud of it. And that also then translates into a higher dividend. We increased the dividend by 35.7%. So the full year dividend is 68.1 cents. So strong on top line, EBIT cash conversion, EPS. And this all is thanks to our strong team that we are having globally and the strong partnerships we are having with our customers and our partners. So that's the highlight of financial year 26. Then going to industrial. Industrial continued to perform on a high level. EBIT again grew and we see that the EBIT margin grew to 9.7% going from 17.3 to now to 18% EBIT margin what we really see is that of course the net sales growth especially mechanical where you see the mechanical also grew much faster in second half 7% that supported the net sales growth supported and then the overall higher growth in the second half. Moreover, what supported the continued improvement on EBIT is, again, what I'm talking about, is moving the portfolio upwards, focusing on the strategic verticals, focusing on the strategic markets, and especially here in industrial. It was, again, U.S., the strong performance in U.S., and also the verticals. Aerospace and Defense that helped us to move the portfolio upwards. Then, going to healthcare, and I must say I'm so proud of the team to deliver this improvement in healthcare. We received a step change in the EBIT margin from 12.8 to 14.3% EBIT margin improvement over one year. Of course, What helps is again the volumes. Volumes is always helping. And here you see the exceptionally strong growth in second half. And especially the star performer is clean room again. So it shows that where we have strong positions, where we have very strong brands, we also can grow. And of course the clean room that turbocharged the growth, majority of that was from the U.S. And as I said, in healthcare, the second half growth of 12.3% really helped us. So both industrial, healthcare delivering, healthcare at the total new level. Then, the dynamic world we are living in, looking at the US tariffs. We have really offset the US tariffs by sourcing, optimization, where do we source, how are we serving the US market, and then price adjustments. We also saw then in the second half that our U.S. growth momentum continues despite the price adjustments we've done to the market and accelerated the growth in industrial and scientific, the clean room, as I've mentioned before. So this success in the U.S. tariff really has been enabled by the strong customer partnerships we are having in the U.S. I just came myself with Fred a few days ago from the U.S., and it's wonderful to see the good strong partnerships we're having with our customers. And at the same time, we are ready to respond to any further changes in the tariffs as we go forward. US tariffs, not the only thing. We also have Middle East crisis. And here I'm really proud about the team. We went really decisive. We went quickly out to the market to offset the impact of the Middle East crisis. First, as said, we focused on supply chain resilience. we wanted to ensure that we ensure availability of customers. We have no disruptions in our production and serving the supply chain. As with the US statics, we also saw that the branding price, the brand pricing power is significant with Ansell. And I'm going to talk more about our brands because this really shows that we have the power of the brands and we are really delivering added value services. So thanks to our brands, we were able to do the price adjustments and could offset one-to-one the cost of the Middle East crisis. And we will continue to be flexible with the pricing as the Middle East crisis evolves. And then finally on balance sheet strength, as I mentioned, this was important because as prices were going up and down in March, April, May, We wanted to ensure that we have a strong balance sheet that we can serve our customers no matter what. And we are the trusted partner now and in the future to our customers that they can serve then going forward. So that's US, Middle East, it's in our hands. We reacted decisively to this. And finally on sustainability. I'm really proud how we are improving on many fronts in sustainability. As a few examples, our safety, we reduced our accidents by 32% during the year. Another example is that today of the sourced energy, 58% is renewable energy. And that's, of course, a huge asset for us, that we have 58% of our energy is renewable. So that also, of course, translates then into a financial impact. that we especially during the Middle East crisis saw benefit from. Then a more customer consumer facing area is that today more than 90% of all our packaging is recyclable, reusable or compostable. So proud to be here to talk about the strong financial year 26 and what all the team and together with our customer partners we've been able to accomplish. Now I'll hand over to Fred to talk more about the financial performance in detail. Over to you, Fred.

Thanks, Natalie. And good morning, everyone. It's great to be speaking with you today. I'll spend the next few minutes talking through our financial performance for fiscal year 26, expanding on Natalie's earlier comments. Firstly, on sales, we were pleased with the adjusted sales growth of 5.7%, which excludes the effects of foreign exchange, and some minor product exits, as well as the benefits we received from temporary order pattern favorability in both F25 and F26. In the second half of this year, we had $15 million in extra sales of exam single-use products as customers increased purchases in response to the Middle East crisis. These sales will unwind in F27, so we have excluded them from the adjusted sales growth calculation. Pricing was a key driver of sales growth for the year, particularly in the U.S., where we successfully offset the effects of higher tariffs. We also increased prices in the final months of the year to offset higher costs resulting from the Middle East crisis. Pleasingly, as Natalie had mentioned before, we saw sales really accelerate in the second half of the year supported by improved volume trends. Our G-Paid margin improved by 70 basis points versus F25, a great effort given the significant cost headwinds we faced throughout the year. We spoke at the half-year results about margins being supported by sourcing productivity efforts and lower freight costs. We also saw benefits across the year from improved sales mix, particularly in healthcare, with accelerated sales growth in our higher margin clean room products. The net price and cost effects of U.S. tariffs and the Middle East conflict were moderately dilutive to our overall G-paid margin percentage. Moving down the P&L to SG&A, this was well controlled with growth of 2.7% on an organic basis. Higher employee costs from both wage inflation and strategic hires were partially offset by improved SG&A productivity and the KVU cost synergies we mentioned before, which are tracking in line with our business case. On FX, while exchange rates were favorable on an underlying basis, we had a loss of $13.8 million on our hedge book, which meant that the currency was a headwind to EBIT of $4.3 million this year. So when you put all this together, we achieved organic EBIT growth of 14.9% versus F25, and a 90 basis point improvement in EBIT margin, growing to 15%, which is really great to see. Below EBIT, we booked $1.4 million in significant items. This includes the APIP costs related to the upcoming European upgrades, largely offset by an initial refund of tariffs paid in the U.S. prior to the February Supreme Court ruling. The interest line was broadly the same as F25, and our effective tax rate came in as guided at 24.1%. This all contributed to adjusted earnings per share of 148.6 cents, an 18.5% increase versus last year on an organic basis, and a result we're very happy with given the external challenges we have managed over the course of the year. Included in the adjusted EPS was a non-recurring benefit of 3.3 cents, which was largely due to the timing difference throughout the year between the cost that we've seen coming in through the P&L and the timing of when prices were adjusted in relation to the U.S. tariffs and the cost inflation from the Middle East. Now let's move to the balance sheet, which is in great shape. Working capital was lower than June 2025. largely driven by a reduction in inventory in the second half, as sales accelerated, and we also made targeted reductions in safety stocks in response to the Middle East crisis. Debtors were higher largely due to the higher sales, and payables fell with purchases from outsourced finished goods suppliers lower than at the same time last year. Looking at returns, we delivered return on capital employed or ROCE, of 12.7% and return of equity of 10.6%. As we've pointed out in the half-year results, the nominal reduction in ROSI versus F25 is due to the partial inclusion of KBU capital employed in the denominator in the F25 calculation, noting that we calculate ROSI based on the average capital employed on a trailing 12-month basis. If you normalize for this KBU in the denominator, the F25 ROCE would have been 11.2%, translating to a 150 basis point improvement in F26 on a like-for-like basis. Turning next to cash flow, which was really strong in F26, the biggest increase you see in statutory EBITDA was driven by our double-digit earnings growth, helped further by a large reduction and significant items, noting that we were booking KBU transactions and integration costs last year. Net receipts were significantly higher than F25, driven by statutory earnings growth and the improvement in working capital I outlined on the previous page. With growth in net receipts outpacing EBITDA, our cash conversion came in at 113% compared to 91% in F25, as Natalie noted before. Net capex was $48.6 million, lower than F25 following the completion of construction of our Greenfield India Surgical Facility. We also took the decision to prioritize only our most strategic capital projects while we were navigating through the effects of the Middle East crisis in the latter part of the year. So with the strong growth in net receipts and a reduction in capex, we were able to deliver a substantial year-on-year increase in our operating cash flow. This gave us the ability to fund the on-market share buyback program to the tune of $118.4 million, while also reducing net interest-bearing debt by $52.3 million as well. So let me wrap up by saying a few words on our funding profile. Our net debt to EBITDA was 1.3x at the end of this year, compared to 1.6 this time 12 months ago, and we have significant liquidity with $752 million of cash and undrawn bank facilities. Furthermore, the maturities of our debt are relatively long-dated, and we have approximately two-thirds our facilities at fixed rates. So you can see that our funding position is healthy, our maturity profile is well-balanced, which gives us flexibility to continue to pursue value-accretive growth opportunities in addition to capital management initiatives. With that, I'll hand it back to Natalie to talk about our strategic priorities and our outlook for F27.

Thank you, Fred. So now, talking about the strategic priorities, and this is really important for us, How do we drive higher growth? How do we drive higher profitability? And then also, what's the capital allocation to it? When we look at our strategic priorities, our focus is really how do we increase customer centricity and accelerate profitable growth? To this, we have three levers. Two of them are growth levers, and the final one is funding the growth lever. We're starting with commercial excellence. Commercial excellence is How can we enhance the value we are driving to customers? And I will, on all these levers, also come back to you and show an example and a proof point what we delivered in financial year 26. So commercial excellence. Secondly, the growth lever, really looking at focus on our strategic markets. So which are the key markets and verticals where we have higher margins, we have higher profitability, and we see the verticals are also having organically better growth. And we are focusing on these and also the capital allocation on these. So better returns. And finally, funding the growth lever, where we talk about operational excellence, and I'll give a few examples about that. But how can we increase a return of capital employed? and at the same time ensure that we are closer to customers, we are serving our customers much better. Because we are true believers that the better we have our supply, the more intimate we are to customers, the more our demand and growth will be. Good. Then going to the commercial excellence. And it's an area where we have a lot of opportunities going forward. And a few proof points already from financial year 26. When we look at our top five, only five, the brands that we are having in the company, they account for 58% of the net sales. So we really are a brand-driven safety company where our brands do deliver value. And we also see that, of course, thanks to the pricing adjustments we have had to make in US tariffs and also in Middle East, that the brands do count. So these five brands, In total, they grew 1.2x faster than the whole company. So they are really delivering value. Secondly, the top five brands, the gross margin is 220 basic points higher than Ansel Average. So growing faster and accredited to our profitability as we go forward. And of course, as we go forward, we will focus on how can we generate more value to our customers and how can we also make the big brands bigger because that's where we get the scale benefit of our large portfolio. So it's not only about the brands. We're also having our Guardian tool, as we've spoken about in the past. And with the Guardian tool, that's our main global sales tool, where we can show the safety benefits, the safety impact our products are having in customer sites. And we see that when we use the Guardian, we have 50% higher sales on newly converted accounts. Not only Guardian, then of course innovation. Innovation is hugely important for us and will continue to be so. And now when we talk about the strategic verticals and strategic markets, it's easier also to target the focus on the innovation. And as an example, we see that in mechanical, in our gloves and products in mechanical, we had 18% of the sales last year came from new products launched only in the last five years. So innovation does matter. So commercial excellence continue to drive value for the customers. Then secondly, focus on strategic markets. And I mentioned US many times during this call and I will continue to do that in the years to come. Today US is 43% of our total net sales. It's of course the most dynamic booming market in the world if you look at the totality. And by focusing on the US and also our other, in total, top five countries, we see that we are going to be able to allocate capital and drive growth much better and being closer to customers. So in total, the U.S. grew 1.8 times faster than the whole company and so. And that's really driven by a strong brand presence and a strong end-user partnerships like I spoke about that we are having in the U.S. And of course, a prime example is Amazon, a huge end-use customer for us. We are very proud of the innovation and the very close cooperation we are having with Amazon to continuously develop new solutions, not only product solutions, but many other solutions to ensure that we have a structurally made partnership with Amazon going forward. And with this, In the last year, thanks to the good cooperation, we helped to reduce 65% of all hand injuries that Amazon had in their warehouses, in their sites. So this is a true example of where we double down on customers, we focus on the strategic markets, we focus on strategic verticals, we grow faster than the company, and we deliver value to our end customers. So commercial excellence, focus on end use, selected strategic markets. And finally, operational excellence. This is the funding the growth lever that I was talking about earlier. So the funding the growth lever, we are looking at three building blocks. And this is three building blocks. How can we simplify and sell? And that way serve our customers faster and be more agile and also, of course, always be competitive. And these three building blocks in operational excellence are how can we simplify our product portfolio and brands? I spoke earlier about make the big brands bigger. How can we simplify our supply chain? And how can we simplify ways of working? And these are areas we're going to continue to work on and I'll continue to talk about these to you as we go forward in the months and years to come. Then look at the few examples on the next slide. We had a tip. We have delivered and delivered the 50 million reoccurring savings that are already achieved. Now with these three building blocks on operational excellence to fund the future growth with a simplified product portfolio and brands with a supply chain and ways of working. We will continue this really good work And I'll give just a few examples that we already executed now in the second half of the year. As an example, our touch and tough product. We've reduced the areas of touch points between our sites and also how we produce it and make it in a more streamlined, simplified way. And that has led to 66% reduction in lead time to our customers. Another area is high flex. doing a bit opposite, instead of simplifying to one place, HyFlex, we have instead of only producing in one place, we're now producing in three places to be closer to the customers, and that has reduced our lead times by more than 90%. So again, customer centricity is at the key of everything we do. Then another one where we talk not only about lead times, but of course also on cost competitiveness is in Kintec. in our clean room space where our goggles, we used to have four suppliers and we are moving to one supplier. And that began with a scale, reduces our lead time by more than 68%. So we'll continue to work on this to ensure that we are able to serve and able to be closer customers. And as I said, in this dynamic world, it's really about supply and availability as supply creates demand. So on the strategic priorities, really to sum up, we have three levers. Two are growth, commercial excellence, selected markets and verticals that we're focused on, and then the funding, the growth lever, operational excellence. And we'll continue to talk about this. We'll continue to bring you up to speed and bring you examples of how we are advancing so that you can see the impact that we are driving through the strategic priorities. And of course, there's a capital allocation element to it as well. So with a strong financial year 26, I think it's a good segue to go to the outlook. So outlook adjusted EPS for the year financial year 27 is in the range of 158 to 170 cents. And this outlook really, the assumptions behind it is As we are seeing that our sales, the sales momentum will continue both from a volume and value point of view, the strong momentum we had in second half. Secondly, our strategic priorities where we're focusing on the more higher value added products, the faster growing verticals and markets will also support the sales growth going forward. On the negative side, of course, we can't ignore the very dynamic macroeconomic market we have around us, the macroeconomic uncertainty. So that's always a downside that we will have to navigate as we go forward. Assumptions then on earnings is that the commercial excellence will continue to drive profitable sales growth. And as I said also, how do we focus on moving the portfolio upwards towards higher gross margin product? Operational excellence will enhance productivity, and as Fred will bring more examples as we go forward. And then in addition, we assume a nine million FX benefit versus financial year 25. Then capital allocation, as Fred was saying, we came down in financial year 26, and we are continuing on this level, this much lower level in financial year 27. We are continuing to invest in growth. However, what we have now layered in is a strategic capital allocation in the areas that matter to drive growth in the selected markets, the selected verticals, and also in the innovation related to this. And then we'll continue to do the existing share buy program. So very excited of financial year 26 and at the same time we have to be realistic. We live in a very dynamic world and we'll continue to tackle it as we go forward. With that, I hand over to Q&A. Thank you.

If you wish to ask a question, please press star followed by one on your telephone and wait for an A to be announced. That is star one if you wish to ask a question. and your first question, Consul-Liner Dan Hearn from MST. Your line is open.

Good morning. Thanks very much. Look, if we sort of look at sales outside of the US and sort of adjust that a little bit, it looks like you've done low single digit ex-US. So I was just hoping you could talk about your experience in markets that may have seen some competitor product directed away from the US into those other countries and what the experience has been.

Thanks, Dan. US, as we mentioned so many times on this call, has been the highlight of the second half and the whole financial year. And I would say that also comes back not only our focus on the products and our customer relationships there, but it's also the underlying economy. And we also see a strong growth in clean room in other markets and in Europe in our selected focus areas. And when I talk about this top five, countries, the ones that really move the needle, the rest of the countries are in Europe. But at the same time, we know that the industrial or macroeconomic situation in Europe and the rest of the world is not as booming as it is in the US. So that's why the US really stands out. The good news about that is, of course, that we continue to see a strong macroeconomic momentum in the US, and we're well-positioned. to be there and benefit from our scale of 43% of our net sales in the U.S. already today. Fred, anything you want to add?

No, I think you summed it up really well. The only thing I would add to that is that there is competition is clearly intensified through the Middle East crisis. However, our strong brands have really come through loud and clear, and our differentiation of those stronger brands have come through loud and clear. in this pricing power, and not only that, but also in the volume growth we're seeing in the second half.

Thanks very much. Perhaps a question for Fred. We're still getting to the bottom of it, but it looks like in the accounts there's a $25 million impairment that is associated with the Indian plant. Can you give us any details on that and any predictions between underlying earnings? And of course, I'm only asking because the impairments were excluded from underlying earnings in 25, just to understand if that's been a consistent treatment.

Good question, Dan. So we did have selected lines that we impaired as we look to optimize our supply chain and optimize the supply in our network to drive our costs down, especially with the Middle East crisis, you know, having a better cost position is really, really important here. And so we did take a non-cash right off of some selected manufacturing lines and and the Indian plant had one as well.

But just the treatment of that, I mean, you pulled impairments out from last year, but they appear to be included this year. Is that correct?

No, so the impairment, so I talked about the 3.3 cents of one-time non-recurring EPS in F26. Those non-cash impairments were sitting in that 3.3 cents of EPS.

Oh, understood. Okay, that's great. Thank you very much.

Yep. Your next question comes from the line of Sal Hutchison from Baron Joey. The line is open.

Good morning. Thanks for taking my question. I was wondering about the second half growth within the cleaner and gloves segment and that 17% growth. I wondered if you could talk to how much of that was a volume versus price. And then as a follow-up, clearly there's been some tiny changes favourable timing as it relates to price increases at the back end of fiscal 26. As we look into FY27, do you still get favourable pricing coming through relative to what's happening in the Middle East or will you temper some of that pricing based on what's happened to say input costs in the last month or so? Thank you.

Thank you. I can start and then hand over to Fred. Thanks for the question. I would start with the Middle East pricing question. What we promised to the customers, and we speak about this a lot, is that the cost inflation we saw in Middle East crisis, we passed on to customers, but when cost inflation is coming down, we're also going to adjust our prices. So we are going to be very flexible here and just reflect the cost inflation that we are having. Then your question about the clean room growth. And as you said, it was very strong in second half. And that kind of very strong growth, you don't only get by pricing and value. There's volume as well. And this total financial year growth of 10%, majority of that came from the U.S. Fred, do you want to ask?

You just expand on the Middle East pricing. So we did... start to price into the market in that May-June timeframe. So you will see the impacts as we move into F27 of that full-year effect of pricing in the Middle East. And on the clean room, Natalie is exactly right. There are strong volumes being seen. And I think this speaks volumes to the KBU acquisition we had done over almost two years ago now, where we're seeing the power of that brand, the power of the Ansel brand together, really unlocking a lot of opportunities in the marketplace.

I'm sorry, can I just follow up with that 10% planer? Are you willing to split out what was volume versus price?

Yeah, we won't talk to exact numbers, but I can tell you that there were strong volumes, probably to the tune of almost half of that being sales. volume impacts.

Great. Thanks very much. That's all I have.

Your next question comes from David Bailey from Morgan Stanley. Your line is open.

Yeah, thanks. Good morning. I'm sort of interested in the top five accounting for 58% of revenues. Just strategically, how you think about growing that going forward? Obviously, the gross margin benefit associated with that, but In terms of thinking about growing those brands further, what's the strategy here and do you think that will continue to grow over the coming years?

Thank you. Very good question and that ties to the strategic priorities. With the top five being 58% of our net sales and as we continue in what I said the operational excellence to simplify our product portfolio and brand portfolio, That means that we are focusing on these big brands and making them bigger because then we are just much more efficient and we also make our life much easier to our customers when we have certain big brands that matter and support our customers. Now I talk about the distributor customers as they go and represent us forward. Also the innovation investments will be into these big brands. So again, focus on scale, make the big brands bigger and also enhance the value they are delivering to the customer. So, yes, we will see that they're going to drive growth faster than the rest of the company. And that is the key of being very strict on strategic priorities and capital allocation to really drive the growth, profitable growth momentum. And as I promised, I'm going to come back to these kind of examples every time we meet.

Yes, understood. Just in terms of the guidance, I mean, it looks relatively clean. There's a $9 million of FX benefit coming through. Is there anything else to sort of call out in relation to the guidance range of $158 to $170 in terms of movements within particular lines to think about?

No. No, it's just execution.

Understood. Thank you.

Thank you. Your next question comes from the line of David Phillips and Nathan from Goldman Sachs. Your line is open. Thanks.

Hi, Nellie. Hi, Fred. Thanks for the presentation. I just wanted to touch on your guidance. If we sort of think about the FX movements and also the share buyback in 2027, I think my numbers would suggest the NPAD grows about mid-single digits at the midpoint, that is. If I then think about the composition between sales and margin, also considering that I guess the FY26 period had a sort of a one-off benefit that you're calling that's timing related. So if you think about the FY27 split between sales and margin, like could you give us a sense then what's happening? You sort of expect margins to stay flat, does it grow? That'll be pretty helpful to think about your sales performance.

Yeah, thanks, Dave. I'll start and then hand over to Dave. Not Dave, Fred. Sorry, Dave. Yeah, of course, the healthy growth and the momentum we've had in second half of this year supports it. At the same time, we have to be realistic. I think that it's a very uncertain dynamic world around us. But with our focus on the strategic markets, the strategic verticals, where we see underlying faster growth and where we also see that our brands are having a stronger power. By focusing on that, we will see a continued growth momentum. Then, of course, that translates into continued margin enhancement. And like I said on that assumption slide, it's really the commercial excellence of how do we make the big brands bigger, how do we translate the value we're driving to the customers and talk about that, and then the operational efficiencies that we're going to get in, in our focus on the funding the growth lever, on simplifying the portfolio, supply chain simplifications and ways of working.

And maybe I can add, you know, on the SG&A line, we're continuing to look at productivity initiatives within that line. We grew 2.7% year on year in F26. We're looking to even be around that same level in F27 because we know that it's really going to be important to leverage the scale that we're seeing on the top line, both in SG&A. And then we also have on the GPAY line a lot of productivity initiatives both in the supply chain and also in the commercial networks that are going to help drive that GPAY percentage faster up.

Yeah, okay. Now, thank you. That's useful. And then on the healthcare segment, I would say the exam and single use sort of part of the portfolio did really well in that second half period, even if you exclude the stocking that you called out. Could you give us a sense of what's been driving that? Is it largely just price increases or is there any volume dynamics or market share implications you should be considering as well, please?

Yeah, thanks. That's a really good question. I have myself been intimately involved in the customer meetings when we did the Middle East price adjustments. And I would say what really resonates with our customers, our distributor and end users, is that in this time of global disturbances, when you are a strong player, you have a strong balance sheet, and you say, we are here to focus, to serve you, and we are here to ensure availability. That goes a long way. And I would say that's behind the faster volume growth in XM and single use. We had the financial strength to buy the raw materials even when they were higher cost and ensure that our customers all the time had their products. So, again, supply equals demand.

Great. Thanks, Daniel. Can I just follow up on a point on that? Do you feel... the share gains that you've made in that part of the business is sustainable in 2027?

I would say it's too early to say. Too early to say. And we're very focused on looking at the point of sales data. How are they moving both in industrial and healthcare to see how we are doing. And at times of crisis, customers tend to lean to the ones who can deliver security, like we did with availability. But I think it's too early to tell what is the stickiness and then also what is the next crisis around the corner.

Okay. Thank you.

Thank you.

Your next question comes from Laura Sutcliffe from Citi. Your line is open.

Hello. Thank you for taking my questions. Could you talk a little bit about the significance of your biggest customers? I know you probably can't give us a lot of detail about the Amazon contracts specifically, but maybe if you could just talk in general about those big contracts. And you talked about your biggest brands, but how much overlap is there between your biggest customers and your biggest brands?

Yeah. Amazon is a huge customer for us. And where we are focused, I actually just came out of Amazon working meeting last weekend in the U.S. Where we are focused on is not just selling a product, selling an innovation. We're really looking at how can we systematically, in a partnership, tie ourselves together for the long term. And it's not only about the SED, just moving the product forward. It's about much bigger solutions that we are looking to ensure that Amazon can drive their safety culture and their needs going forward. So as you said, I can't tell too much about it, but maybe in the future I can also continue to give examples about the Amazon partnership, which is fantastic. As I said, it's not only product-based. It's not only innovation-based. It's really about looking at the total go-to-market, looking at the total solutions, how we can partner together. make that inter-structural setup that we have together. When you ask about the brands, they only buy one brand from us.

Very helpful, thank you. And then second question, I'm sorry if this is mentioned earlier and I missed it, but did you have to buy in much product over the course of the year just gone to smooth the effect of raw material cost availability, inventory bouncing around?

You mean in the Middle East crisis?

Just in general, but yes, I suppose I was thinking about it being rooted in the Middle East, yeah.

Yeah, as it's been such a dynamic world, our operations team have done a fantastic job actually being daily in meetings with our biggest suppliers to ensure that we get the right quality product, not only that we get the right raw materials, but we get the right quality product and also that Financially, we have the balance sheet strength to get it. But, Fred, do you want to build?

Over the last few years, we've really invested behind a much stronger supply chain. And part of that is the partnerships that we've built with our vendors, particularly on the MBR side, which is obviously the most volatile right now in terms of not only cost but supply. And that partnership has really given us the opportunity to make sure that we can supply the markets. with no disruptions, and it's worked out brilliantly at this point.

Maybe I can add in what you said about the operational excellence, where I also said that we are going to simplify the supply chain. That, of course, means it's not only like we are doing with the brand. Let's make the big brands bigger. Also, how can we in the supply chain ensure that we partner with the big ones and we make the partnerships bigger? so that when we have these disruptions, global disruptions, that we are there and we have the joint muscles to breeze through it. Thank you very much.

Your next question comes from Craig Wong Pan from RBC. The line is open.

Thank you. Just wanted to ask about the industrial margin. So the full year, there was improvement year on year. But if we look kind of from first half to second half, there wasn't much expansion like we've traditionally seen. And I guess if you look for the second half, 26 on second half, 25, it did decline. I just wanted to understand if you could explain what happened there and how we should think about that margin going forward if there is typically going to be kind of the usual seasonality or not.

Yeah, so great question. On the industrial margins, you're right. We did have a dip in the second half. But if you looked at the full year, we did see the margins improve year on year. So there is a little bit of seasonality and timing within those margins first half to second. But to really answer the question going into F27, we will be sustaining the full year margins that we saw in F26 going forward and looking to expand them as well.

Okay. Next question just on the portfolio. So Natalie, you talked about making the big brands bigger and you kind of alluded to simplifying the portfolio. So if there are product lines shrunk or kind of exited from, I guess my question is, does that lead to kind of impairments around the brands there or kind of manufacturing lines or equipment?

Yeah, that's a good question. When we are talking about the operational excellence and the simplification we are doing, we're still working on the details. And I would say we're now focused on various – we really quickly deliver value to the business. But, of course, we need to work out the details.

Okay. And then my last question, just on the ERP investments, have you – come to any estimate around the size or quantum of that?

Yeah, we have not come to the dollar amount of what the savings would be. We want to make sure that we can implement across the globe, and that's when you'll start to unlock the savings benefit when the full systems are in place globally. And so that will be in about two years from now, and that's when we'll have a better estimate of what that savings unlock will be.

On one ERP, I can also add that our priority has been to be flexible on the Middle East cost inflation and the pricing needs, and that's been our number one priority. We wanted to do that well, and therefore one ERP has been delayed.

Okay, thank you.

Your next question comes from the line of Andrew Payne from CLFA. Your line is open.

Yeah, morning. Thanks for taking my questions and congrats on the result. Just on the liquidity, you've obviously highlighted the liquidity available here. Just good to know what your median term outlook is. Just really wanting to get an understanding around the mix of priorities around liquidity internal investments, M&A, and capital management that you called out, and also just to get an understanding of where your net debt to adjusted EBITDA target is over the long term.

Yeah, so let me answer that. A couple of things. One is on the latter part of your question, we are still targeting 1.5 to 2.5 net debt to EBITDA as our target range. We're slightly below that at this point, but that gives us a tremendous amount of agility especially in these tough times with Middle East crisis, we do have the agility to really react. And more importantly, it also gives us the ability to look for the highest growing, highest returning type initiatives that we can put capital against. In terms of that liquidity, obviously, we're always looking at M&A opportunities, but they come as often as they come. We're constantly looking at those opportunities, but there's nothing at this point that we would like to disclose at this time.

And on M&A, I would just add that a healthy company needs to deliver sustainable organic top-line growth. So full focus on the strategic priorities, full focus on delivering the organic top-line growth. Only then do we deserve to do the next M&A. So focus priority organic growth at the moment.

Okay, that's great. Thanks. And then just coming back, I know you mentioned the foreign exchange benefit of 9 million FY27, but you're also just talking about the expected reduction in hedge losses there. Can you just run us through what that is and how to look at that?

Yep. So as you mentioned, we had $13.8 million of hedge losses in F26 We expect $9 million of that to unwind into F27. And we expect that the currencies, which, you know, we're bouncing around, if you remember, in the first half, they typically stabilized in the second half. We expect that stabilization to continue from a translation standpoint.

Okay, that's great. That's all I have. Thanks.

Your next question comes from Vanessa Thompson from Jefferies. Your line is open.

Good morning. Thank you for taking my questions. I wanted to ask you, you mentioned just then that you were aiming to keep flexible pricing given the Middle East disruptions. I just wondered what that meant and is price neutrality the goal or, thank you, just a bit more kindly.

Yeah, so as we had said before, we were looking to offset any kind of tariff and, in this case, Middle East increased cost through pricing, and we've accomplished that at this point. There was a timing difference between the actual cost increases and the timing of when we brought the pricing into the marketplace, and it was a net benefit to us, and that was built into that non-recurring 3.3 cents of EPS. So we basically, at the end of the day, covered outside of that timing difference, the cost with price.

Thank you. Also, there was discussion of organic top-line growth being the primary focus for now. In the past, that's been flagged as 3% to 5% organic growth. Is that still what we should be thinking?

I think we have to come back to that. That's what is our financial target as we go forward. But as I said, we have the financial strategic priorities to look at the commercial excellence and then selected markets that we know are structurally growing faster and also the selected verticals that we know are structurally growing faster. But down the line, we owe you as we look at the financial targets.

Okay, thank you. And then my last question was just around, you mentioned that Hyflux now is being manufactured in three locations to improve speed to market. Are there other products that that's under consideration for? And would that ever lead to ongoing production within the US? Thank you.

Thank you. When there's so much happening in the world all the time, We have to be very agile and from a customer centricity point of view think how do we serve our customers the best and I've spoken a lot about this ensuring availability at the right time and reducing lead times. So yes, we are looking at different options and also how to ensure for the US market that we are TAA compliant. Today we have two factories. that are DAA compliant, but what are the other needs as we go forward? So, yes, we are always looking at different solutions. Thank you. That's all I have.

Your next question comes from David Lowe from UBS. Your line is open.

Thank you. Thanks for taking my questions. Could we just come back to the price issue? There's been a lot of price movement with tariffs and then the Middle East. Can I get you to break down roughly what the split is between price and volume for the business in 26 and what the likely benefit is as we move into 27, please?

Yeah, so David, good question. So as I mentioned in F26, the sales growth of the 5.7%, you can look at as predominantly pricing. If you remember in the first half, we had much lower volumes. We did see that turn around very nicely in the second half. But when you combine the two halves together, we're slightly down in volume for the year. But the key message here is the second half. That acceleration of volume growth was seen, and it was really important for us to see that as we move into F27 as well. So it's predominantly pricing with volumes being slightly down.

And as we think about FY27, how much price benefits? given where your starting point is and what the plans are is likely to come through in 27, assuming input prices don't move from here.

Yep. So we believe there'll be a healthy mix both of volume and pricing as we move into F27. We won't obviously tell a specific number, but we do believe the volume growth will continue. Obviously with this, the markets, the way they're reacting and the dynamic and volatile markets we're in, that could change. on the volume side, but we do see a path to a healthy mix.

And I would add also with the strategic priorities, when we're looking at the attractive verticals, the key markets, we will also see that all volume is not good volume. And that's a key of commercial excellence. And where do we allocate our focus? And it might be that from a commercial excellence, there's business that is not so attractive and that's part also of the simplifying the portfolio and the brands. So again, moving with the portfolio, moving, working on the portfolio roles as we go forward.

Great, thank you. And look, my other question, it's not been lost on anyone that data centres are a huge level or area of investment in the US and even back in Australia, but how much exposure does Ansel have to that dynamic?

We do have exposure to data centers in the U.S. and globally. However, once they are built, you don't need a lot of PPE in the factories or in the centers. But while you build them, there's massive investments going into a lot of different areas in the supply chain. So, yes, this is something where we are really focused on what are the hazards, what are the safety hazards, and how can we serve it the best. going forward, not only in the US, but globally.

All right.

Thank you very much.

Thank you.

As a reminder, if you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. And your next question comes in line at Christine Tring from Macquarie Capital. Your line is open.

Good morning. Thanks for taking my question. Just changing tact a little bit on raw materials. You know, we saw that inflation up about 100% earlier this calendar year, and the oil price is just continuing to bounce around. It's still pretty high. How are you seeing kind of raw materials trending now, and what are you assuming into the FY27 outlook, please?

Hi, Christine. Good question. So let me step back and kind of talk a little bit about what we saw in the second half. So if you remember in the first half, we saw our biggest commodities, the most volatile on the latex side, they actually were coming down in the first half. Then we started the second half, and we started to see them increase. And then in around the April, May, June timeframe, they started to accelerate with the Middle East crisis. They've now come down a little bit over that next period of time. And we've seen a stabilization at this point. So we believe as we move into F27, those costs will have stabilized. And those are the ones that are mostly tied to the oil types of products. Now, the caveat to that is that obviously Middle East crisis is dynamic and these things can turn on a dime. So we're going to be prepared and we're monitoring this almost daily. As these commodity costs shift, we're prepared to do the appropriate pricing actions in the marketplace to offset those costs dollar for dollar, as we've been doing all along, not only with tariffs two years ago and into this year, but also on the commodity cost side on Middle East.

Perfect. Thank you.

There are no further questions at this time, so I'd like to hand back.

Thank you. Thank you, everybody, and thank you for the good questions. Just as a summary, we had a strong financial year 26. We are really proud of what the team delivered and in this dynamic market environment with the U.S. tariffs, Middle East crisis, and at the same time being able to grow the top line and the profitability and the strong cash conversion in the year. Now with the strategic priorities being started to be outlined, it will make it much easier for us to focus on where it really matters, focus on innovation, focus on our talents, focus capital investments in these areas to continue to deliver some performance. And that, of course, first translate then into our guidance for financial year 26, sorry, financial year 27, with the outlook of delivering 158 to 170 cents EPS as we go forward.

This is a team effort.

And I really want to thank all of our team internally and all our strong customers. I mean, it's heavy lifting in this kind of changing world and a lot of customer intimacy here and also all our supply partners. Thank you.