Rubber products maker Ansell will restructure its business, relocating the local management of its condom division offshore, closing a US military glove operation and a Malaysian medical plant, and cutting 300 jobs worldwide.
The moves will result in a pre-tax, $US125 million ($133m) one-off charge, comprising $US24.3m in cash and the remainder in write-offs. However, the company expects to generate $US21m-$US22m in annual savings in the 2016 financial year, when the full effect of the program will be realised.
Chief executive Magnus Nicolin said Ansell’s global structure and strategic focus, now in place for four years, had delivered “excellent” results, with sales increasing 55 per cent and earnings before interest and tax up 60 per cent, while delivering strong returns to shareholders.
“(These) changes mark the beginning of the next phase of our growth journey,” Mr Nicolin said. As a result, Ansell would improve manufacturing productivity, invest in efficient back-office processes and realise additional synergy benefits from recent acquisitions.
The condom or “sexual wellness” division is located in Sydney. A handful of executives are to be relocated to Brussels, closer to the group’s key markets.
In January, Ansell completed the $US615m purchase of US-based BarrierSafe Solutions International, a provider of single-use gloves and protective footwear, from Odyssey Investment Partners and others.
Mr Nicolin said yesterday that BSSI would be integrated into a revised global business unit, complementing the industrial, medical and sexual wellness global units.
Special markets, he said, would cease to be a business unit, with its products transferred to the single-use division.
Ansell would also rebrand some products and discontinue about 30 brands.
Mr Nicolin said the success of a program to strengthen the company’s core brands had enabled the group to expand its market presence without the need for the continued support of older, non-core brands.
This would result in a $US69.3m, non-cash write-off.
The closure of the Malaysian medical manufacturing site, the exit from the US glove-making manufacturing business and the plan to sack 300 workers would result in a cash cost of $US23.9m.
But the company expected benefits including lower production costs, improved productivity, reductions in inventory levels and better returns on capital employed.
Originally published as Ansell’s condom crew to pull out