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The Ansell Limited (ASX: ANN) The stock price is down around 10% at the time of writing. This is despite the glove making company showing huge increase in dividend with FY21 payout.
What is the size of the FY21 dividend?
In US dollars, Ansell announced that it was increasing its annual dividend per share from 50 cents to 76.8 cents. In percentage terms, this means Ansell is increasing its annual dividend by 53.6% to shareholders.
The final dividend payment is 43.6 cents per share, which was not far from the full dividend payment for fiscal 2020.
Ansell said the annual payout represents a 40% dividend payout ratio.
Why is the Ansell share price falling?
Buyers and sellers of Ansell shares today should be asked why they traded at the prices they did for the real reason.
But Ansell included some comments on its FY22 outlook as well as its FY21 results (which showed a significant increase in profits).
The company explained that it has a diverse portfolio with products supplying a variety of customers in different countries. Ansell expects continued demand for in-house manufactured mechanical, surgical, life science and single-use gloves. However, management has warned that a drop in demand is expected in areas that have benefited the most from demand for COVID-19, such as chemical body protection and undifferentiated examination / single-use gloves.
Ansell believes pricing should feature throughout FY 22, both positively and negatively.
The company believes that from a supply perspective, recent capacity investments should support sustained demand. However, Ansell admitted that the increase in COVID-19 cases in Southeast Asia in recent months could disrupt supply as a number of Ansell factories and suppliers in the region have suffered damage. short-term closures or reduced operations. This could impact sales in the first half of FY22.
Increased costs may also be a factor – higher transportation costs and shipping delays are expected to persist throughout fiscal year 22.
Including accounting changes related to software depreciation and larger software investments, Ansell expects fiscal year 22 earnings per share (EPS) to be between 175 and 195 cents. This compares to FY21 EPS of 192.2 cents (an increase of 59.9%).
Ansell share price is still up in 2021
Despite today’s setback, the Ansell share price is up 3.6%. Ansell’s dividend increased as the company made much higher profits during the year. This was reported in the FY21 result. Sales increased 25.6%, profit before interest and taxes (EBIT) increased 56% and net profit increased 57.5% to US $ 246.7 million.