Earnings call: Ansell Limited projects growth amid FY '24 financial results

Ansell Limited (ANN), a global leader in protection solutions, reported a satisfactory financial performance for fiscal year 2024. Despite the challenges of economic uncertainty and increased costs, the company delivered an adjusted earnings per share (EPS) towards the upper end of expectations at just below $0.106. Sales decreased by nearly 3% on a constant currency basis, with the industrial segment's growth compensating for lower healthcare sales. Ansell's balance sheet remains robust, and the company is optimistic about achieving organic growth and sustaining productivity benefits in the coming year, with an EPS forecast range of $1.07 to $1.27.

Key Takeaways

• Ansell Limited reported a slight decrease in sales but a satisfactory financial performance for FY '24 with an adjusted EPS just below $0.106.
• The industrial segment grew by just over 3%, while the healthcare sector saw an 8% decline in sales due to destocking and price reductions.
• Ansell completed the KBU acquisition for $640 million and expects EPS accretion in future years despite a current dilution of $0.016 to EPS.
• The company announced an EPS forecast range of $1.07 to $1.27 for FY '25, considering neutral industrial market conditions and slightly favorable healthcare demand markets.
• Ansell plans to address raw material inflation and higher freight costs through pricing actions and expects to deliver APIP savings.

Company Outlook

• Ansell anticipates organic growth driven by investments in emerging markets and new product innovations.
• The company aims to sustain productivity benefits from the APIP program and realize value from the KBU acquisition.
• Ansell maintains a strong liquidity position and is committed to value-accretive reinvestments.

Bearish Highlights

• Sales decreased by nearly 3% on a constant currency basis, with SG&A expenses increasing by just over 4%.
• The healthcare segment experienced an 8% decline in sales and lower earnings.
• Ansell faced an $8 million headwind to EBIT due to foreign exchange, resulting in a loss of $11 million from closing hedge book positions.

Bullish Highlights

• The industrial segment recorded a sales growth of just over 3% and high earnings of $129 million with a margin of 16.5%.
• The company reported strong cash flow performance with operating cash flow of just under $168 million.
• Ansell's balance sheet remains healthy, with pro forma net debt of 1.8 times EBITDA at year-end.

Misses

• Despite a satisfactory overall financial performance, Ansell missed its sales target with a 3% decrease.
• The healthcare sector's destocking and price reductions negatively impacted sales and earnings in this segment.

Q&A Highlights

• Executives discussed the impact of shipping delays due to the Red Sea blockage, stating they have not led to business losses.
• There was a conversation about the transition period for sales from Kimberly-Clark (NYSE:KMB) to Ansell, with a moderate expectation of EBIT decrease.
• Ansell addressed the potential impact of Chinese tariffs on medical gloves, indicating a limited effect on the company.

Ansell Limited remains focused on driving growth through strategic acquisitions, like the recent KBU purchase, and by leveraging its position in emerging markets. The company's emphasis on safety and sustainability initiatives, alongside the development of innovative products, positions Ansell to navigate the complexities of the global market and the healthcare sector. Despite the headwinds of raw material costs and freight rates, Ansell's proactive approach in pricing and operational efficiency aims to ensure a stable financial trajectory for FY '25.

Full transcript - None (ANSLF) Q4 2024:

Operator: Thank you for standing by, and welcome to the Ansell Limited FY '24 Full Year Results. [Operator Instructions]. I would now like to hand the conference over to Mr. Neil Salmon, Managing Director and Chief Executive Officer. Please go ahead.

Neil Salmon: Thank you. Good morning to you in Australia. Good morning to people around the world, or good all times a day to people joining from around the world and listening into our presentation of our fiscal year '24 results. And I thank you for your time and your interest in Ansell. I will begin, as usual, with our summary of our safety and sustainability highlights. If you could move to Page 5. So overall, this page summarizes a lot of progress. And it's also a reminder that the goals we've set out under these headlines are challenging. They require a lot of success to get right, and our progress will not always be in a straight line. And so I'm going to begin with a couple of examples of this. Firstly, for the first time in many years, we saw a tick up in our recordable injury rate now measured using the TRIFR metric. Two reasons for that: Firstly, these figures now include the consolidation of what was formerly Careplus, now Ansell Seremban. And even though the Ansell teams have done a fantastic job reducing the injury rate at that site to around 1/5 was a couple of years ago, it's still higher than the Ansell average. And so consolidating Seremban increases the overall Ansell average. If I take out that effect, then injuries in the last year were around the same as they were 2 years before that, but we couldn't sustain what was a record prior year. So a setback on our safety metric and vital imperatives that we get back on the improvement track there. The second challenge to highlight on this page is that reduced water withdrawals goal in the middle section, and we remain committed to reducing our withdrawal of water from fresh water sources by 35%. But to do so requires us solving for a number of constraints, the recycling water back into the production process requires us to meet product quality standards. And we also have to be mindful of the effluent treatment, whether on-site or using municipal sources. So we haven't managed to solve all of those in full yet. And so we are now giving ourselves a couple of years in addition, in order to hit that water withdrawal target and extending the target FY '27. The rest of this page, though, summarizes significant progress. Another year of reduced emissions across the network and gaining confidence from our success in Scope 1 and Scope 2 emission reduction. We have now committed to the science-based targets initiative, a full net 0 goal, including Scope 3, that -- in the last few weeks. We maintained 0 waste to landfill at the facilities that have already met that standard. And we continue to influence more broadly across our industry that standards and regulations also evolve to allow companies, not only Ansell but our peer companies to meet sustainability goals. And the most recent example of this is persuading the European Union to reduce the requirement that paper instructions for use are included with every pack of gloves sold and allowing us to move to a QR code which actually is a better means of delivering instructions for use anyway. So with that change being implemented over the next year or so, a huge quantity of paper waste will be eliminated by Ansell and by our peers as well. Finally, great to see recognition by 2 of the most respected sustainability rating agencies. The first time we have achieved a gold medal with EcoVadis, which puts us in the top 5% of all companies rated by EcoVadis. And then Morningstar Sustainalytics also ranked us as a top-rated company. If you narrow down to the more precise sector in which we're grouped within these groups, then we're in the top 2% or 3% of our peer companies rated. But we don't do this -- it's good recognition. We don't do it for the sustainability rating. We do it because these are -- many of these initiatives also have financial benefit. And increasingly, they're important to our customers and the choices they make, behind the suppliers that they want a PPE. And so these goals are also vital and make good financial sense as well. Turning now to performance overview. And I'm continuing our practice over the last few results to set out on the left here, the goals that we communicated to you in our most recent results communication, in this case, the February half year, and then my assessment of our progress against those. And I'm pleased to say, again, another summary of very good progress, delivering pretty much every goal we set out for the half year. And overall, delivering above the midpoint of the guidance range we set out originally 1 year ago. Industrial performance continues. This is a business that's been performing very solidly over a long period of time with perhaps that performance obscured by a more variable performance in our health care business. I'm particularly pleased by the EBIT and EBIT margin performance for Industrial, and Zubair will go into that in a little bit more detail later. At the beginning of the year, we said for health care that we expected some destocking. We expected it predominantly in the first half, and then we expected that to moderate into the second half. And that is indeed how it played out. So 2 aspects of good news to that. The first is that we had a much clearer view of forward trends in our industry 1 year ago. And so -- and that talks to our improved ability in planning and forecasting. I'll say a few more words on that later. But more importantly, I do believe we're now substantially at the end of this destocking wave that has held back the health care business over the last 2-plus years. And that means the demand on Ansell is now normalizing back to the ongoing end-user demand that's been in the market throughout this time. So exam single-use reporting good volume growth throughout the year. Very encouragingly, our Life Science business, products sold into clean room environments achieved double-digit growth in the second half. And we also saw reduced destocking effects in surgical. Frustratingly, this one has a slight [indiscernible] against it. We had the orders to also achieve growth in Surgical in the second half, but a sizable chunk of those orders were deferred through congestion and disruption that we've seen arising as a result of the Red Sea container shipping impacts. That business is not lost. It's deferred into FY '25. And overall, the demand picture and order picture for Surgical, also very positive in the second half. So overall, health care EBIT margins also improved. Still below where we expect them to be for this business, but I'm satisfied with that second half improvement versus the first half. Our major programs are on track. The APIP program, we upgraded our targets, as you will remember, in February, and we continue to track in line with those upgraded targets, the savings coming through as expected and the cost is in line with expectation. Also a very good year in how we funded APIP. We set a goal to fund it through inventory, strong cash flow results, but I know Zubair wants to go into that with you later and so I'll leave those highlights for him. And all of that together, as I mentioned, resulting in an EPS delivery on a comparable basis to how we set out the EPS guidance at the beginning of the year of $1.055. So that means it excludes the cost of APIP, and it also excludes, more recently, both the share dilution and the interest benefit of the equity raise in advance of the KCPPE acquisition, which closed on the 1st of July. Below that, a few more details on APIP, but I'll cover that later and some more details on the acquisition, which also I will cover later. So digging in a little further to organic growth performance on the next page. And here is that solid growth in Industrial that I talked to, overall growth in the year of 3.3%. Even with fairly neutral demand conditions for mechanical, even a little soft in some mature markets. We're recording organic growth close to that 3% level and the growth rate improved through the half. And that's coming about through success of new products, which I'll talk a little bit further about in a moment. A good path and year for chemical. Now part of that was, we indicated earlier that we'd reached an agreement with our exclusive partner in the -- are now saying in the household gloves sector. We didn't specifically call it household gloves 6 months ago. But we said we were exiting a lower commodity piece of the chemical business. In the last 12 months that we've had that business, through the exit agreement we reached with that customer, it was operating at a higher-than-normal margin as a result of this pricing benefit of $5 million. So there was a little boost in Chemical, also benefited Chemical margins from that factor. But even extracting that, I'm pleased at the demand trends I see in Chemical, and it's coming across the portfolio. We see it on our highest performance styles, both body protection and hand protection. And indeed, we're launching a number of very important products at the high end within Chemical, but we're also seeing improving demand in the more medium and general purpose product categories as well, which is also encouraging. So here are the full year stats for the Healthcare segment. But as I commented earlier, a significant difference first half, second half, which I'll cover in a moment. Overall volume growth in exam, revenue lower because of that pricing carryforward that we talked about a year ago. Surgical, a much improved second half, but we weren't able to fulfill all orders because of the Red Sea shipping disruptions. And then Life Science, significant destocking in the first half as we predicted and then significant growth in the second half. And of course, that sets us up very well for the acquisition of the KBU business. And so here's the sequential growth slide that I indicated earlier. And we don't usually show this, but I wanted to demonstrate the difference, particularly in health care in seasonal trends. So we usually see about 51% of revenue in the second half. So mechanical, a fairly typical seasonal weighting. Chemicals slightly stronger to the second half and not particularly because of that exit approach that I talked about. So that's more general demand trends improving. But here, you can see significantly improved second half for exam single-use, especially for Life Science as destocking moderates. Surgical, only a moderate improvement in the second half, and again, is because of the Red Sea disruption to that business. But now, and this is the last time I will show the trend through the pandemic period because we're drawing a line behind that phase of Ansell's history on this call. But I think important to note that industrial, throughout this 5-year period, has achieved a consistent 3-ish percent growth and through what has been quite a turbulent period of economic uncertainty. So I'm encouraged by that, but I also have higher growth ambition for this business. And I hope that we will demonstrate that going forward into F '25 and beyond. And then in health care, and these are similar trends to ones we've commented on before. Although the exam single-use business revenue is similar now to the F '19 period, the quality of the business has improved significantly. Margins are higher. We've shifted the mix more to differentiated styles, also to styles in-house produced versus outsourced. We're now at 50-50 mix which is about right for the business. And then our highest performing business unit here is the Life Science businesses. And remember, Surgical and Life Science together in the F '24 period still has 6 months of destocking muting this revenue number. And even with that achieved good growth over this time period. So I believe this is a picture of a business that, looking over this time period, has performed fairly consistently and steadily, and that's a good base to go forward into F '25 as I'll cover at the end of this presentation. So moving on to the strategies we use to drive organic growth investments. And these 3 key areas have long been a feature of our discussions externally and our focus internally. Emerging markets again outperformed the overall Ansell average, but a more mixed picture within emerging markets over the last 12 or 18 months. Another year of strong growth in Latin America. Brazil, particularly the highlights in the last 12 months, and Mexico, considering -- continuing to be a very solid performer for us. Encouraging within India to see double-digit growth continuing for our surgical portfolio. China started the year soft. Sales were lower in the first half, but improved significantly in the second half across all our business units. And that's also encouraging on the demand picture for China as we go into F '25. We continue to invest. Our #1 priority for investment is in our capability behind differentiated products, and that includes the manufacturing capacity for those. So you're fully aware of our India surgical construction, which continues on track, and we're now -- it is already active in packaging and sterilization operations, but the major ramp-up will be when we commence dipping operations, which we're targeting for fiscal year '26. And then on the right are some of the highlights of new product innovation. The top 2, both within the mechanical portfolio, 11-571 is an ultra-lightweight high-cut performance glove, and it's showing some of the strongest first year growth metrics that we've seen in many, many years at Ansell. So a real hit with our customers. It's extremely comfortable to wear as well as providing that very high-cut protection. And it's part of a family that we've launched under that ultra lightweight high-cut value proposition to customers. And then what I expect to be our most successful ever new product is the R-840 to the right here. This was designed combining HyFlex liner technology, the grip, the durability that we're famous for with Ringers impact technology but in a lighter form that opens up new markets, where in the past, you couldn't have worn traditional impact protection, because they're too bulky and they prevent you doing your work. We think we've cracked that code with a lightweight impact protection product, which is creating new market opportunities for us. And I expect significant growth on that product into F '25. Below here, a couple of products in other categories. So as I mentioned in Chemical, we're innovating both at the very end and at the general purpose end of our portfolio. And this is an example of a suit that's been designed to the very, very demanding specifications of biosafety labs worldwide, very niche market but very, very important to hit both the performance again and the comfort criteria. We now believe we have a product that is -- that the biosafety labs themselves are delighted to have, and we're rolling that out currently. And then we continue to innovate between -- in the clean room space, and this is one example of our latest innovation there. So these 3 aspects I expect to be -- continue to be the major sources of organic growth going forward. So turning now to the APIP program, and I'll be quite quick through the next couple of slides because there's not a lot different to what you have seen in previous presentations. This new organization structure went in place -- was complete by around October of last year, so early in our fiscal year. And I continue to see the benefits of this new structure come through. The performance of teams is improving. The decision-making is quicker, and we are more agile and more customer-centric in how we go to the market. Still opportunities to further improve that, and we're realizing the cost-saving benefit of the change, too. We hit all our manufacturing goals during the year, and these are the head-count reductions that we committed to and that we have delivered. If you look at our total head count number, it's actually increased year-on-year, but that is because we are now consolidating the Ansell Careplus facility for the first time. It wasn't in the prior year number. And we are investing in other sites, not the sites that have seen reductions but in other sites where we are ramping up in support of those new products that I mentioned on the previous page. So we are both achieving our productivity goals and also continuing to invest for growth where we see upside growth potential. And then the IT work continues on track. But as you know, most of the cost and benefit for that initiative is in outer years. Turning to costs of the program and these, again, as expected in the year. If I look at F '25, you'll see there are some spend still to go, but the majority of the program was complete with the exception of the IT initiative, which has a couple of years still to run. So overall, pleased with APIP status. It's on track, and I see no signs of it being distracted by our other big initiative, which is the KCPPE acquisition. So let me now turn to that and say a few words on that. Firstly, this is a recap of the messages we communicated to you back in April when we announced the acquisition. I won't cover every point because you've heard these before. It is encouraging to me that, as I've said to you, we were doubling down in our most attractive and highest growth vertical and the results that I've shared with you in the life science sector confirms that over the last 6 months. and the KCPPE business or now called KBU within Ansell, saw similar trends themselves over the last 6 months. So the business is tracking to the momentum we hoped for and expected and built into our business case, which, of course, is encouraging. I think -- what I would say, though, that now that the barriers of being competitors are removed, now that the teams are on the same team, the complementarity of the 2 portfolios is very much in evidence as our teams get together. As competitors over the years, each of us has wanted what the other one had and in some cases, struggled to replicate it. And now you put the best of both together, which is very much our mantra in this integration process. And the teams are working extremely well together and seeing all sorts of opportunities to take this new extended portfolio and service offerings to market. And also, as I talk to our leading customers in this space, they are also enthusiastic and excited at the potential that our 2 businesses together offer to them in value creation, whether our channel partners for our key end users as well. So overall, the metrics here, not changed from our acquisition thesis. But my confidence in them has certainly improved as we've gone through the steps of acquisition and integration so far. So a few words that -- on this next page. So a reminder that in this initial phase, the business is still reliant on Kimberly-Clark for many of its business processes. The business had not been carved out of Kimberly-Clark systems prior to divestment. So we're in this transition services period in which much of the order-to-cash customer fulfillment processes are still being conducted through Kimberly-Clark systems, people and processes. It was a lot of work to get that all set up for day 1. I'm delighted to be able to report to you that since 1st of July, when those transition services went live, the business has continued on its track without missing a beat. And that's -- a lot of credit goes to the Ansell team, the Kimberly-Clark team and also the KBU team who are now Ansell employers, but we're working diligently on guaranteeing the success before that July 1 cutover. So as I mentioned in this middle section, productive initial discussions with customers, lots of opportunities being talked about, the head of the KBU, Rob Hughes, now reports to me and is a member of my executive leadership team, is stewarding that business very well and also bringing his insights to Ansell as to what the full opportunity is of putting these 2 businesses together. The overall cultural fit seems very strong. And I know that's one of the hardest things to quantify and to assess and hardest things for you to see as to whether it's working or not. For the most part, we've known each other for years through moving in similar industry circles, competing against each other, yes, but also having great respect for the capabilities of the other. And so it's really good to see the teams coming together, working so well in its initial phase. And that also gives me confidence that the cultural fit will be a net positive to our progress from here. Overall, in terms of financial metrics, trading performance through the last 6 months prior to our ownership was in line with my expectations. Off to a good start, again, in line with my expectations so far in fiscal year '25. But a reminder that this is the -- it's a high-risk phase for the business as we are reliant on those transition services. And as I mentioned back in April when we announced the transaction, we are also relying on the case of professional sales force during this transition period to continue supporting the safety portfolio, not the scientific portfolio, but the more general industrial safety portfolio. And as you know, we factored in risks of this period into our projections for the business. We hope to mitigate those risks and not to see them eventuate, but I think it remains prudent for us to consider and continue with the risk adjustment and the projections we make to you, and I'll comment on that further when we get to guidance. So that's my opening summary of results to date. And now I'd like to hand over to Zubair for some more detail on the financials. Zubair?

Zubair Javeed: Thanks, Neil, and hello, everyone. Since Neil's already covered some high-level aspects of our financial performance for the year. As always, I'll just add a few more details. Overall, clearly, we're satisfied with the adjusted EPS landing just under $0.106 and that excludes the effects from the equity raise we undertook to fund what we're now calling the KBU acquisition. And therefore, that EPS number that I'm using or quoting it directly now compares to that original fiscal '24 guidance range we gave in to $0.94 to $0.110. Now after a couple of tumultuous post-pandemic reporting periods, I'm pleased we can now report EPS towards the upper end of those expectations we set coming into the year. And as you just heard, sales were down just under 3% on a constant currency basis. And with that growth in the Industrial segment, offsetting the lower health care sales. And there, we had foreign exchange providing a tailwind to sales of just over $12 million. Same time, GPADE improved by 100 basis points versus fiscal '23 and very strong industrial margins more than offsetting those lower earnings from the Healthcare segment. Now it's well documented by now that our Healthcare segment was inversely -- or adversely, I should say, impacted from that customer destocking and that in turn drove us to slow our production levels down so we could reduce our own inventory. And I'll say a bit more about that when we get to the segment earnings in the next couple of slides. Moving to the SG&A line, that was up just over 4% on a constant currency basis, and that was driven, again, we signaled this in other calls, the need to normalize incentive provisions from those abnormally low levels that we concluded in fiscal '23. But outside of that incentive movement, I think we've diligently controlled employee costs, and that's even with the high inflation backdrop on overall employee costs down year-on-year, reflecting a very well-executed productivity program. Now despite the foreign exchange providing a tailwind to sales, there was an $8 million or so headwind to EBIT for the year. And underlying currency movements were favorable to earnings by about $11 million. The hedge book did the job it's designed to do by muting that gain. And overall, we registered a loss of $11 million closing our hedge book positions in fiscal '24, and that compared to a hedge book gain of $9 million in fiscal '23. And of course, the difference being the driver of the total year-on-year foreign exchange loss. Excluding $66 million of significant items largely related to the APIP program, as Neil just outlined and the acquisition transaction costs, when you wrap all that up, we ended up with a decline of earnings of just over 1.3% in constant currency terms. Bridging to net profit, interest was modestly higher because of higher global interest rates and increased leasehold expense. And our effective tax rate was higher as we didn't benefit from utilization of tax losses in our Australian entity from those hedge book gains we had last year. Now in summary, I would say that's a satisfying financial performance on this slide in fiscal '24, and I think it's a solid platform going into fiscal '25. Turning to Slide 16 now. Looking at the performance of our Industrial segment. Here, we achieved constant currency sales growth of just over 3%, and that's growth in both mechanical and chemical. Sales growth was, I'd say, largely a function of price and favorable mix and the reported sales included just over $9 million of favorable FX. I think it's also important to note here in this segment, we did benefit much better than anticipated pricing on chemical household gloves, and that was to the tune of about $5 million as we exited those products as part of APIP. Now clearly, that pricing drops straight through to the bottom line, and it's not going to repeat in fiscal '25. But that said, Industrial earnings closed at a record $129 million and the margin percentage in that segment also an all-time high at 16.5%. And that's driven by the sales growth. There's net cost favorability. There's improved plant performance and those APIP savings all contributing very well to that performance outcome. There was a small or modest foreign exchange headwind of just under $4 million from those hedge book losses. And again, those muted the underlying currency tailwinds. In terms of the health care segment, Slide 17, I've spoken about this in length in prior calls. Neil has just been through the nuances of the health care sales performance. And so I'll just reiterate that there are good signs of diminished destocking across both Surgical and Life Sciences. And we also knew this year, we had that residual sales headwind from that exam single-use price reductions we implemented in fiscal '23. Net, this translated to a constant currency decline or a sales decline of 8% and foreign exchange was a small help here, adding just under $3 million to that reported sales number. Clearly, earnings were lower due to those reduced sales. And because of our conscious decision to slow production in the first half, this meant our fixed manufacturing costs were absorbed over lower manufacturing volumes, and that led to a higher cost of goods sold. But we did see normalized volumes reverting in the second half as Neil just said, and EBIT margins improving to 12.4% on improved sales, higher production and growing APIP savings. Unlike the Industrial segment, health care foreign exchange headwind to earnings due to those hedge book losses. So in summary, while it was a challenging year for this health care business, we saw improved momentum moving into the second half. We're more confident than we've been in a long time that this will carry forward across fiscal '25. Moving to the input cost, Slide 18. Here, raw material costs, they were largely benign in fiscal '24, and that was with lower nitrile costs, offsetting higher cost of natural rubber latex. However, we did see increases in nitrile and NRL in H2, and I'd expect those costs to be higher year-over-year as we move across fiscal '25. Our conversion costs as well continue to be subject to higher inflationary pressures, and that's most notably against payroll and energy costs. But our teams, we are charging them to address employee cost inflation with offsets clearly through productivity or automation initiatives. And wrapping up on this slide, outsourced finished goods costs, they remain, again, stable and a lower percentage of our COGS mix than in years past. Turning to the CapEx summary. Again here, I'd highlight the significant spend was on that continued construction of the greenfield surgical plant we're building there in India. And I'd expect the bulk of that construction for that site to be completed in fiscal '25. And from there, I think we'd see CapEx is going to trend downwards more towards the maintenance levels we've seen in the past. And that's because our global manufacturing network should have the capacity now to meet customer demand across our medium-term plans. Slide 20. Neil just talked about this KCPPE acquisition or the KBU acquisition as we're calling it. So I'll just pick out a few highlights here in terms of the financing specifics. Completion took place on July 1, just after our year-end. Consideration was $640 million. We've previously communicated that. There was a small final purchase price adjustment based on working capital, our completion, and that will be made in the coming months. Funding was via both equity and debt, and there was a successful institutional placement and share purchase plan, and that contributed all in just over $300 million. And the balance we funded by our U.S. private placement debt funding, and we secured that in late June, monumental efforts by our internal teams, which I'm very thankful for. And we're very pleased and grateful with the excellent level of shareholder support and lender support we had for this acquisition. And I'm pleased we've been able to lock in long-term financing at very competitive rates, and that was prior to completion and having to draw down, therefore, on an acquisition bridge facility. Now when we announced the deal, we did flag the effects of the equity raise would be about $0.01 to $0.02 dilutive to earnings per share. And indeed, that was the case with actual dilution at $0.016. And I've adjusted that from our EPS number of just under $0.106, which we reported earlier. And lastly, transaction costs in fiscal '24. They were also in line with our guidance at $14 million. And when Neil comes on to guidance, you'll see we have another $10 million or so expected to be booked in fiscal '25. Now I couldn't wait to get to this slide. It is the cash flow slide. I was bullish coming into the year. And for me, this is one of the best aspects or pleasing aspects of the result given all the focus and effort our internal teams put into this. And my undying belief that cash is always king in a business. So very leasing to see this slide. We delivered operating cash flow at just under $168 million. And that's the result, by the way, only surpassed once in the last decade on a full year basis, and that was in the pandemic boosted year of fiscal '20, so an achievement we're very proud of. Cash conversion, on an adjusted basis, was a healthy 131% and that was clearly supported by significant working capital release. And we did promise that coming into the fiscal year and included just under $17 million reduction in inventory. And as Neil mentioned, that more than funded the $44 million we incurred in the APIP cash costs. And again, that was very much by design as we conceived that program. And one important point of clarification on this slide, our reported net debt at year-end, it included those funds required to settle the KBU acquisition on July 1. That's why we've included this pro forma net debt movement to account for that timing issue. And then turning on to the balance sheet. Again, I'm pleased, as always, on this balance sheet. It remains in a very healthy condition even after the acquisition. And also, that's not because of any -- and I want to be clear on this corporate parsimony or anything that we've implemented here. It's rather -- and as Neil said this, this is rather our usual careful stewardship of the business. And as Neil said, well, we can find sensible investments, we'll absolutely fund those, as you saw with the KBU deal. But adjusting for that acquisition, our pro forma net debt was at 1.8 turns of EBITDA at year-end and significantly lower than the 2.3 turns we had at the half year. And we're able to reduce leverage even quicker than my original expectation because of exceptional second half cash generation, and that's coupled with also proceeds we raised from that share purchase plan as part of the equity raise. And you'll recall those proceeds were not included in any pro forma debt calculations as we announced that acquisition. And as I mentioned on the previous slide, working capital reduced by over $100 million, and that was versus June 2023. The $68 million inventory reduction was due to those planned production slowdowns and that was further helped by increased shipments in the second half. We also had a large increase in trade payables, which were -- I mentioned this last year, they were abnormally low at the end of fiscal '23 when our plants were positioned for lower first half production. And they have, of course, reduce their purchases accordingly. ROCE, that was marginally lower than fiscal '23 on reduced earnings and it's partially offset by the significant reduction we had in capital employed from that working capital release I've just discussed. I think that brings me to the closing part of my update and therefore, a few words regarding our ongoing liquidity profile. In March, we refinanced $100 million of senior notes. And in June, obviously, we've put in this long-term financing to fund the KBU acquisition. So all in all, that leaves us in a very solid and strong financing position. And I'd say we have a very good spread of long-dated maturities now and about 62% of our interest is at fixed rate. That funding security and the headroom, it gives us, combined, with a very strong cash flow generation means we still have that ample flexibility to pursue value accretive reinvestments, both internally and externally. And as they arise, we'll exhaust all those avenues. And if that doesn't occur, we'll always consider other capital allocation options as we progress through the year. And so with that, I'll thank all my colleagues around the Ansell globe for the absolute monumental efforts in fiscal '24. And once again, a very warm welcome to my new KBU colleagues. And with that, I'll hand back to Neil to discuss the priorities he set for us in fiscal '25.

Neil Salmon: Thank you, Zubair. That was a lot of material covered and a lot of great outcomes, I believe, in the overall cash performance, especially in balance sheet position of Ansell today. So I thought it would be worth just stepping back for a moment before I get to our guidance expectations for fiscal '25 to take stock, a little bit, on what is different about our markets, our industry and Ansell today versus when we began this pandemic period. And of course, now looking back with hindsight, the period of sweeping normal demand was actually relatively short and the period of destocking was something, like, twice as long as the period in which we benefited from high levels of demand. And that destocking period has been painful for us. And yet, we have not -- we have stayed focused on the long-term strategies. We've not been diverted by chasing after what turned out to be temporary opportunities. We stayed true to our strategic priorities and our sense of what sets up Ansell for long-term success. And that I would like to illustrate a little bit further in this page. So starting with changes in markets, what's changed and what hasn't changed. So certainly, that initial period of pandemic, demand drew in additional capacity and suppliers but focused on commodity products. And yes, the players who are focused in that area are still challenged in terms of margins. And you see that very evidently in the results of those companies in that sector who are public. The second thing we saw is that customer inventory buildup, but then the lengthy stocking. That's now largely behind us. But we also see a push to the question of should critical PPE products being made in mature markets again in order to secure reliability of supply. Our assessment, then and still now, is that the economics of that are very uncertain, and we remain not convinced that, that will be long-term successful. So what have we done? Well, we've -- as I mentioned, we stayed focused on long-term growth markets. We did not chase after a temporary higher margin opportunities within more commodity products, and we continue to develop our business in its differentiation and its market relevance. For the exam single-use business, that's why I say that business is high quality today than some years ago. But it's not just exam single-use, of course. Across our portfolio, we continue to invest, sometimes in large bites, sometimes in small bites and building our capability and capacity to bring differentiated products to the market. Considering the manufacturing and sourcing dimension here, certainly, customer buying preferences have changed. Not all customers, but some. Supply chain resilience is a more critical factor. Ethical sourcing is higher in decision-making criteria than before, and we are all aware that inflation continues across all non-raw material input costs. So how has Ansell tackle that? Well, firstly, we've overhauled over our supply chain, particularly focused on exam single-use, where through the acquisition of Careplus, we brought in-house a number of key styles and moved to that 50-50 mix of in-sourced versus outsourced production. You will remember across the rest of our business already, we were 80-plus percent in-sourced. So it was only exam single-use that was the outlier before as majority outsourced and now balanced in-sourced/outsourced and that, I expect to continue. And then the second thing we've done is developed our supplier management framework. We go into full detail on that in our set of sustainability reports that will be out before the end of the month. But it's really given us much greater traction and visibility into our supply chain, not only our finished goods suppliers, but also our raw material suppliers, our packaging suppliers, our service providers on site. So the supply management framework is giving us visibility, but also increasing our influence to ensure our standards are adopted across all, the full end-to-end of our supply network. And then as Zubair mentioned, we continue to focus on offsetting those inflationary factors through productivity. And yes, APIP is a big step change this year, but we expect automation, ongoing optimization of manufacturing location. And yes, when needed, some price increase as well to be able to fully offset what we see coming in inflation over the next period of time. If I look at how the competitive dynamics have changed our industry. So yes, certainly, there are the lower-margin players, the private label manufacturers. As in every year, their capability increases. But what we also see is that key and very influential safety customers, when we can bring a solution to them for an injury, unmet injury need, they are willing to go for a high-performance and high-priced product, where it's clearly addressing an important issue in the manufacturing setting or in the health care setting. And so our ability to sell value, value in protection, but also in performance, in worker satisfaction, in productivity is in evidence once again. And customers will spend 2 or 3x more per piece for a piece of protective equipment if it can deliver those benefits that I highlighted. And so important, therefore, that we have stayed focused on R&D, stayed focused on bringing to market products only made by Ansell that you cannot get from anyone else. And as I said earlier, I'm very encouraged with some of the momentum we're now seeing as a result of that R&D investments and success in understanding what the market wants and is willing to pay for. And finally, our sustainability differentiation that I began the presentation with is beginning to be more relevant to that customer buying decision. And there are now several cases across the world where it's been the key factor in allowing us to win business, particularly in the health care segment. And then finally, getting to grips with our industry. So it will always be difficult to forecast the business that is sold through distribution because of the limited visibility that you get all the way through to end-user demand. And while some distributors have worked with us to improve that visibility, it's never going to be perfect. So we have to offset that through other methods. We have to use our own techniques to get visibility to end use consumption, not only rely on distributor reports. And so in accordance with that, we have overhauled our processes, new people in place. And what's most impressive to me and that cash flow performance that Zubair summarized is not only did we improve working capital, did we reduce inventory, but at the same time, we improved customer service. And that's the kind of dual benefit strategy that we have, frankly, struggled to deliver in the past. And it's a real testament to the capabilities in that team that we're able to do that. We're certainly not done in customer service. There is certainly significant improvements still to be had before I would consider us world-class in this space but substantial progress on where we were. And that's of benefit in cash flow performance and also benefit in organic growth performance. And that only comes through collaborative channel partnership across inventory management, forecasting and generally trying to predict the -- what's ahead in our industry. So those are the insights then that I used to talk a bit further about expectations in F '25. Firstly, a summary of our priorities. No great surprise here or anything significantly new but that top box really summarizes it. So second half was back to growth for Ansell. Now we need back to growth for a full year and across both our industrial and health care portfolio. We're on track to achieve that. We're starting the year with the momentum I would expect, that gives me confidence that goal is within our reach. Secondly, we need to sustain all the hard work under the APIP heading ensure that productivity benefit is preserved and built upon for the future. And then thirdly, and now the most important goal is to realize value from the KBU acquisition. Under each of those headings, a few more specifics. Organic growth for us needs to be driven back from the end user. It's is the end user who's really willing to differentiate in outcomes when they see an improved safety performance, as I illustrated earlier, and those successes in making our case at the end user level is what's driving new product success across our portfolio. But we can't do it without strong channel partnerships. So those are also critical. And then we continue to invest behind emerging markets, which I believe has many, many years still to go of higher-than-average growth rates for us. Productivity is the strategies that you would expect, seeing through the APIP program, seeing through our ongoing digital investments and ERP upgrades and then building out the KBU integration strategy. So against that objective, the next period of time is about taking our initial assumptions that we put in our business case that we communicated to you and now fleshing those out into very specific business plans that we're able to do collaboratively with our new KBU colleagues. Today, I see no reason why we can't deliver that $10 million net cost synergy number. Of course, we are looking for ways to perform better than that, but it's still early. Those plans are not yet fully baked. And so I would hope around the half year to be able to come back to you with more specifics on how we expect to drive synergy from the KBU announced combination. And then finally, we want our reputation to be good stewards of capital. As Zubair said, I'm very pleased at the equity and debt response to fundraising in support of this acquisition, and we know that is far from guaranteed. And we want to continue investing wisely for long-term differentiation, for value creation to all stakeholders and especially, of course, to shareholders, and that's made possible by the strong cash flow and balance sheet flexibility that Zubair highlighted. So finally, to our EPS expectations for the next 12 months. So overall, a range of $1.07 to $1.27. We're continuing with a wider range than perhaps we had some years in the past, and I'll explain the reasons for that in a moment. But before getting to that, a few comments about the assumptions we've relied on in drawing out this guidance range. So overall, if I look at demand trends across the different countries and different markets in which we participate. I would say generally, in mature markets, in industrial segments, demand is pretty neutral. PMIs, would indicate declining demand as in most major countries, they remain sub-50 for the manufacturing sector. And yet we're showing that we can still achieve growth in those same markets, partly as a result of our new product success. But also generally, we see the performance of the safety category holding up better than the overall level of industrial activity. So we're assuming broadly neutral industrial market conditions over the next 12 months and slightly favorable health care demand markets as that sector is back to more normal operating conditions now and, of course, with destocking, largely behind us. KBU performance, as I highlighted, performed just where I hoped in the 6 months prior to our ownership, has continued on that track in the first 6 weeks or so of Ansell's ownership. And so this -- we assume that it continues on that track. And yet we have also included, as I mentioned before, an assumption of some risk in transition as we move from this transition service to being fully adopted by Ansell people, processes and systems. And then while we're in this transition service period, we also incur the cost of those transition services. So today, the business is carrying a higher cost base than pre-acquisition. And of course, those costs will also fall away into F '26 when we exit this transition service phase. But overall, even with those higher transition service costs, I do expect EBIT improvement driven by sales growth, productivity benefits and the KBU is accretive to overall Ansell margins even with carrying that higher transition cost. Quite a few details in the middle column under our EPS assumptions. I won't go through each one. I will highlight what Zubair mentioned, which is we are seeing a small tick up in raw material inflation and also higher freight costs as carriers adapt to the Red Sea disruption. As you know, we generally only take pricing action where we see those trends established. And that usually means, and we've discussed this a few times before, that in that first step of raw material increase, there is a moderate margin impact to Ansell, but then we are able to get prices through and we offset that. So that may -- will happen first half, second half in our overall year ahead. But it's fully considered in the guidance range that I have articulated here. And then we expect to be on track to deliver APIP savings. We need to normalize for that pricing benefit that Zubair called out in chemical. And I hope that FX starts to move favorably for Ansell going forward, although the effect of that will continue to be muted by our hedge book position. And then CapEx, as Zubair mentioned, starting to moderate and to moderate further in F '26. As based on my base case growth assumption, I see that we have sufficient capacity across our network to support our growth for a couple of years. Of course, if growth far exceeds that, then that's a great problem to have. And we'll be ready with our plans to build capacity should that be needed, but that would definitely be in an upside scenario versus our base case assumption. So overall, why the wide range? Well, I would say today that I'm more confident in the Ansell trajectory, that we've got our arms around the business, that some of the uncertainty that we talked to you about and also couldn't forecast precisely is behind us. But at the same time, there are 2 key reasons why I think it's only prudent to maintain a wide range. The first is we're only 6 weeks into the ownership of the KBU business. And as I've highlighted, this is the key phase that we need to get right. as we come off transition services. So that's one reason why a wider range is, I think, advisable. And the second is, and you know this better than me, there continues to be significant geopolitical uncertainty around the world. And so in my view, it is only prudent to start the year with a wide range considering those factors. We will look to update you as we go through the year as we get more certainty in our earnings trajectory and also more confidence in the next stages of the KBU acquisition integration. So that concludes our prepared remarks and our slides. I would now like to welcome Zubair back and go to Q&A. So operator, please, if you could open up the Q&A session.

Operator: [Operator Instructions] Your first question comes from David Low with JPMorgan (NYSE:JPM).

David Low: Good result. Very nice to see. We haven't had good results for a few years with Ansell, so that's very pleasing. Just if we could start off with the synergies from the Kimberly-Clark acquisition. Just trying to understand exactly how you expect that to play out in the first year. I mean I recognize there was commentary and guidance given that there would be the impact of the transition. But just if you could sort of clarify that a little as to what we should be -- what you're expecting and what the range of outcomes there is, please?

Neil Salmon: Sure. And thank you for the products that you opened with, David, it's also nice to hear that from you. So yes, happy for the last 12 months. So yes, it's important to understand this. So synergy delivery won't begin until F '26. And the main reason for that is until we have achieved the next milestone in navigating the transition services, the KBU business is operating stand-alone within Ansell. And our focus very much is on ensuring no disruption to our customers, because these are customers for whom the supply of safety equipment is absolutely critical to their manufacturing process. Any disruption can be hugely disruptive and expensive for those customers. So we're moving cautiously through this space. And our focus is taking the business and porting it over from Kimberly-Clark systems processes to Ansell systems and processes. And that will take probably the better part of this fiscal year. We have 12 months agreed with Kimberly-Clark. If we can get there a little bit sooner, we will try, but not -- we will not take any risk in doing that. We want to make sure that at the point we cut over, we continue with no customer disruption as we achieved already on July 1. So -- but we did indicate there are some of the negative synergy that's included in that net $10 million would potentially come through this 12 months and especially, there's that risk that the safety business is today now supported by Kimberly-Clark professional sales team that hasn't come with the acquisition. From what I see at this point, they continue to support the business and we see no loss of momentum, so that's great news at this point. But clearly, it is in a higher risk than you would like phase where the sales team is supporting the business that didn't come with the business. So that's a negative synergy we've allowed for. It's included in our model. It's included in our guidance here, also the expectations we've set in April. And then if some of it does come through, then we need the cost synergy to come through which is largely an economy-of-scale benefit as we go into F '26 to offset that. And that's what gets us to the net cost synergy number, the $10 million that is articulated and that we stand behind in our acquisition guidance. So I hope that unpacks that a little bit better, David. Zubair, would you add anything to help explain it? Or did I cover the key points?

Zubair Javeed: No, I think that was covered well, Neil. Thank you.

David Low: I guess I would like to know how much of a range you're allowing for. But my second question, if you feel like, was really on the Red Sea freight issues. And just if you could give us a little bit more detail as to why that's such an issue for the surgical range? And how much of global gloves -- surgical gloves business is affected by that, please?

Neil Salmon: Yes. So we’re not giving an exact number of Quantum (NASDAQ:QMCO). The surgical business generally has higher weighted shipments to the second half. And also, it operates on a direct – a large part of the business, particularly in EMEA, operates on a direct-ship model, meaning the revenue recognition happens at the time that the product leaves the factory gate or leaves the nearest port to the factory. So for the rest of the business, we can buffer delayed shipments through our in-country warehouse. But for the surgical business, we can’t because if it doesn’t get on the boat, then it isn't a sale. And so that's why it's a more immediate impact to our surgical business. We did see somewhat increased back orders across the business in the second half, but for that reason, most acute in Surgical. So what’s happening, so because the Red Sea is no longer available to container ships worldwide, as you know, they’re all traveling around the southern tip of South Africa. That means product is spending longer in the water. So first of all, that ties up inventory. Second of all, because ships are longer at sea, there’s less vessel availability. And then I think everyone has moved to a risk-off approach across the world in terms of trying to bring product in before the holiday season, before any number of other factors. So that means everyone has also put increased demands on container shipping. All of that has resulted in port congestion. And so it’s just been a real battle to get space on ships and container availability a little bit, but that’s actually less of an issue. So it’s more ports are congested, boats are waiting to come through ports or they’re skipping ports, and then also, the cost has increased. Now the good news is, I think our team is doing a great job of managing this as we began this year. We don’t see it becoming a more acute problem. If anything, we’re starting to work away the delay effect. I do – my assumption is that this issue continues throughout the year. Of course, it would be great news if there was a resolution and shipping could pass through the Red Sea again, but I’m not lying on that in the guidance that I’ve indicated to you. So from here, we expect to recover back on those delays. At this point in time, I don’t believe that it’s led to any business losses. But of course, our sales teams are staying very close to that, and we’re trying to improve the reliability of which delayed shipments do get to our customers. So important question, and hopefully, I gave you some directional color on that, David.

Operator: Your next question comes from Vanessa Thomson with Jefferies.

Vanessa Thomson: I just wanted to ask about the in-sourcing plans you might have for Kimberly-Clark. I understand they're fully outsourced. And I think you said that you were circa 80% in-sourced for the majority of your products.

Neil Salmon: Yes. Well, thank you for the question, Vanessa. Good to hear your voice. This is part of that now development of the overall go-forward plan for the business. That is one of the top issues that the teams are working through. So we have made a fairly -- in the synergy number that we communicated to you, we've made a fairly modest assumption of in-sourcing or should I say more accurately, of cost benefit from in-sourcing. As you know, generally, in the exam single-use space where we in-source, it's not to obtain a huge cost advantage, because we can also -- if there are general styles that are available to others, then we can buy them very competitively as well. But it has other benefits in terms of supply chain resilience. And then, of course, any new products that we launch benefiting from Kimberly-Clark technology or Ansell technology, we would want to launch only at an Ansell facility so that they are only available from us. I think there's probably more opportunity in the clothing range, where we are, today, investing in building up already our ability to make, particularly the general-purpose body protection styles. We historically have made those products in China. We're now building capability in Sri Lanka, which is highly competitive. And so we're still looking to understand that better. Kimberly-Clark has a good network of the material substrates and also the converters, but we see opportunity in improving on that cost picture as we bring -- we can bring the Kimberly-Clark and the Ansell body protection portfolios together. But this is all for later communication, Vanessa, so I'm just -- at this point, all I can say is what we're working on as we have not yet set specific goals in that area.

Vanessa Thomson: I just had another question then on organic growth expectations. You've long talked to the 3% to 5% organic growth expectation. I just -- with the Kimberly-Clark acquisition and the emphasis on life sciences, which is more like a 7% to 8% organic growth rate, can we think about the 3 -- well, is at the high end of the 3% to 5%? Or could we expect something beyond that?

Neil Salmon: Yes. I’m not at the point of changing our long-term organic growth guidance yet. But yes, you’re right that it’s not all of the $270 million that we acquired that is in the higher growth segment. It’s around 2/3 of it. But yes, that is accretive to market growth rates. And so it moves us up within that 3% to 5% range. The other key drivers that ultimately could allow us to improve on our growth expectations is that new product performance and gaining great traction there. But I want to see more evidence of that coming through and sustaining in the market before I commit to those goals. So today, I’m still happy in the 3% to 5% range. And yes, the Kimberly-Clark acquisition moves us up in that range. Is it the limit of my ambition for this business? No, it’s not. But I want to get a little bit further down the track here before we revisit that gross target.

Operator: Your next question comes from Dan Hurren with MST Marquee.

Dan Hurren: Look, I understand your comments that the destocking is now behind you. But we've seen very mixed commentary from distributors in the market about the pricing environments for medical gloves. So could you just talk about your experience for health care pricing as kind of sales settle into the new cadence?

Neil Salmon: Yes. So a reminder that we're in the -- what you're probably referring to medical gloves is really a sector we don't participate in. We did have some back, if I -- if you remember that, then to...

Dan Hurren: Commentaries have been about surgical as well. We've seen there's commentaries about surgical as well.

Neil Salmon: Okay. So yes, in medical exam, product pricing remains depressed. And the producers are seeking to move up pricing as we speak and in response to those raw material trends that I highlighted, and we'll see the stickiness of that in the market. Surgical, I don't see major changes in pricing. So generally stable across our markets. We find that we are able to continue to communicate the value case for the Ansell synthetic portfolio. And we're increasing our ability to really demonstrate across a hospital system, and we have some great case studies in the U.K. We have similar successes in France. We're taking a similar approach to the U.S. as well by simplifying. So certainly, health care systems are under pressure from a cost point of view. That's very evident. And yet we can demonstrate that by moving to the Ansell portfolio, by simplifying the range, by removing latex from all operating room environments, that there's, overall, a value case from adopting the Ansell portfolio. And then together then also, increasingly, sustainability and especially surgical compliance as a critical decision factor behind health care purchasing decisions. So we feel that those offsets -- and surgical has never been a sort of very price-sensitive product category in the way that exam medical always has been, and I don't see that changing at this point. So it's good that you raised it, Dan, and I hope that gives you clarity on how I see things in surgical.

Dan Hurren: Right. So I guess, across the health care segment, ASP will not be a further headwind into the '25 is what you're saying?

Neil Salmon: Correct. Yes. Yes.

Dan Hurren: Great. And just another question for Zubair, and apologies, you might have explained this on the call. I'm having trouble reconciling Slide 11, which talks about the pretax P&L costs. And then just reconciling to 27, where you talk about one-off costs for $45 million in '25. Could you just help us understand the cross over there?

Zubair Javeed: Yes. So the Slide 11 is the APIP program. So the fiscal '24 number, obviously, you can see the 53 -- just under $54 million. We have some residual costs to go on that APIP program that we announced before we did the KBU acquisition. And that's that $20 million in fiscal '25. And then on top of that number is integration costs that we anticipate for the KBU acquisition, as Neil said, it's a while before we get synergies there. And as we incur those integration costs, that's going to be classed as a significant item. And then we also have some residual, I think we called out $10 million of transaction costs as we were doing the KBU deal. That's also in that $45 million. So effectively, we had significant items, in fiscal '24, of $53.5 million, and we're going to have the same significant items in fiscal '25, but with this addition of the KBU-specific items. Hopefully, that clears that out, Dan.

Dan Hurren: Right. So it's the $45 million plus the $10 million from the ERP the right adjustment to make for 2025?

Zubair Javeed: Well, it’s the $20 million plus the KBU, I would say, $25 million.

Operator: Your next question comes from Gretel Janu with E&P.

Gretel Janu: So just want to start on guidance. So what exactly are you assuming for Kimberly-Clark versus the base business in FY '25 guidance range?

Neil Salmon: So we're not giving an exact Kimberly-Clark number. Directionally, as we indicated at the time of the acquisition, we expect EBIT in the first 12 months to be moderately lower than the prior period, prior to our ownership. And it's not any underlying business performance trend, which, as I said earlier, is very positive, but it's because I've -- we've allowed for 2 things. We've allowed for that increase in costs in the transition period. And we've allowed for some risk of some revenue loss in the transition of sales from the KC professional team to the Ansell sales team. The transition costs will certainly happen. That's in the business now, and it will continue for the length of time that we are under those transition services and a good assumption -- the assumption behind this guidance is that, that's a 12-month time period. So if we are able to shorten that time period, that would be a benefit versus our guidance assumption. That sales risk has not eventuated yet. As I said, starting off the year, I see continued good support by the KC professional team to maintain that business. But this is also early. And so now I do expect that the risk of a loss of focus or customer confusion will moderately increase over the next few months. Of course, we have many strategies in place to mitigate that. And certainly, the objective I'm setting for our teams is I don't want to see any of that revenue leakage, but it's still a number that I've assumed in the guidance range that I've set out here. So hopefully, that gives you, Gretel, at least answer to your question, even if I haven't given you a precise answer.

Gretel Janu: Yes. So you are assuming a positive EPS contribution. I'm assuming it will get to EPS line. So I guess I'm just trying to work out, like, if we annualize the very strong second half performance that you delivered, we get above the top end of the guidance range, and that's excluding any Kimberly-Clark contribution. So I'm just trying to reconcile that what's kind of happening from a base business perspective and whether kind of some of the headwinds you are talking about with raw materials might actually lead to some headwinds at that EPS level in FY '25 for the base business.

Neil Salmon: So I'll hand over to Zubair to list -- for a little more on EPS assumptions. But on KCPPE, when you take account of all of those, it's a very modest -- it's almost immaterial at the EPS line in the next 12 months, which still -- I still believe you'll see very strong EPS accretion in future years because of the assumptions that I've already articulated. But as in this transition year, those effects will mean very limited EPS, very limited EPS addition coming from the KBU business. So -- but -- and that's exactly as expected. No change to the assumptions that we were making as we communicated in April. Even slightly ahead then, but immaterial in the scale of things that you're talking about. So -- but Zubair, do you want to develop a few other points of factors that will influence our EPS outcomes over the next 12 months?

Zubair Javeed: Yes, indeed, I would say you can -- also is -- it's logical to take the second half and then just annualize it, but then you miss some nuances like we mentioned there are some pricing nuance there that we took on the APIP program linked to those household gloves. So you would have to normalize for elements like that. The APIP savings don't just annualize because, again, we're largely through that program, but they don't just annualize how you would look at that, Gretel, in earnings. And then the final point I would say is as we overperform, which you would expect in this business with the momentum that's going, we do end up having to rebuild some incentive provisions. Again, that mutes the overall effect. And all of that is what -- if it wash all of that up, it's within our guidance range that Neil has just communicated.

Neil Salmon: And just to add one more. So second half profit delivery is always higher than first half.

Zubair Javeed: Right.

Neil Salmon: And so that's another factor that would -- you should not ever take the second half and double it without also considering that seasonal factor, too.

Gretel Janu: Yes. So I understand that. It's just the second half was definitely a better run rate relative to the soft first half performance. Just 1 final question. Just around the raw material headwind. Are you able to quantify what you expect that would be in FY '25?

Neil Salmon: It’s a low millions figure. I mean, a single-digit million figure. But there’s still some uncertainty to it. And factoring into that also some impact of increased freight rates. So generally, our contract rates are holding. But in order to address the shipping congestion, we are placing more freight spot rates, and spot rates are elevated in the industry. It’s the right thing to do to keep customers supplied and to meet that additional demand I talked about, and it comes at a temporarily higher cost. So – and as I said to you before, we will seek to take a longer-term view of all of those over the next 12 to 18 months. And then we’re certainly keeping customers informed of these trends. And as ever, I believe we retain the ability to take – it’s not going to be a major price increase needed to offset that. And I think the market will bear a moderate price increase, assuming that we expect we decide that those trends are going to be – going to continue into the second half and beyond. But we won’t see any pricing benefit in the first half from those factors.

Operator: Your next question comes Laura Francesca Rose Sutcliffe with UBS.

Laura Sutcliffe: Just a couple of questions on some comments you made towards the end of your presentation. I think when you were talking about Slide 25, you referenced some changes in customer buying preferences. Could you just go into those in a bit more detail?

Neil Salmon: Yes. So -- I mean these are not sort of wholesale about-face changes. They're continuation of things that we -- that have been in place for some time. But I think some of the commentary, when it goes to, is this space commoditizing, is there less differentiation between Ansell and other players, and so I highlight it to demonstrate, no, that's not the case. There remain very, very important unmet safety challenges that are very expensive and also deleterious to the healthcare outcomes of workers in both in industrial and health care setting. So for example, if you're working in a logistics setting, you're regularly suffered to back-of-hand crush or impact injuries. And in the past, you couldn't wear an impact glove because it kept you safe and you couldn't do your job. So by being able to combine lightweight impact with a super durable long-lasting liner, we've now agreed with world-leading logistics providers, that this product, which is much more expensive than the general purpose product they were previously wearing is worth it because, one, it's a super hard-wearing durable product, so that helps with affordability, but also it achieves injury outcome. In chemical settings, still today, many workers around the world are exposed to trace elements of chemical that are permeating through the protective equipment that they're wearing. And so this is a space that Ansell really owns. And we invested significantly behind analyzing those workplace environments, studying the performance of chemicals. Because it's not visibly apparent. You can't tell if trace amounts are permeating through a barrier there. You can only measure it in lab conditions. And we're now launching, to the market, a series of much broader performance and protection and body protection products. And the customers, particularly those who are aware, most acutely aware of this issue are just waiting for us. These are very difficult products to manufacture. They're very high performance. So it's taken us some time to get them right. And now as we launch them, we've got customers waiting for these. And generally, it's replacing 3 or 4 layers of gloves that customers have had to use in the past, and now they can get it in 1 multilayer but single product solution from Ansell. So -- and then in the health care setting, it's about that value-based procurement approach that I described, where we can help customers simplify the range of products they're using. Ansell configurations generally take less space. They use less packaging material. So that achieves space utilization benefits in the OR, which is -- which are -- those are always key benefits. And then if a workplace is able to completely eliminate latex and the allergy risk that comes from latex that also improves worker retention, worker productivity and other savings flow. So -- and this is all under -- these savings are identified under our Guardian set of safety audit solutions. And we continue to invest behind that capability. I haven't perhaps talked about it as much with you over the last couple of years because we've had some other things to talk about. But behind the scenes, we've continued to build out that capability. And Kimberly-Clark brings 2 additional very important service capabilities. One is they have a very well-developed training method for how you adopt and use PPE, so how you achieve great compliance in -- particularly in highly regulated environments like clean room manufacturing. And then they have the world's only well-established recycling program, PPE recycling program. And that, again, it just adds another problem that we have a solution to beyond give me a competitive glove. And that's what creates that end user differentiation. So in my view, there's plenty of space for us to continue to differentiate to in good margins because we're solving customer problems that no one else has solutions to. Thank you for giving me that question. As you can hear, I'm quite passionate about us developing that at Ansell.

Laura Sutcliffe: All right. And then just a second one, please. You talked a little bit earlier about your inability, I suppose, to delay any impact of deferred orders in surgical.

Neil Salmon: Yes.

Laura Sutcliffe: What about other segments? Or if it hasn't happened, should we be expecting the same to happen in your other segments later in the year?

Neil Salmon: As things stand now, no. So as I said, we’ve really sought to increase our shipping capacity. We’ve developed alternative routes. We’re using airfreight more extensively, and that was a cost factor that was in the second half and that will continue, fully reflected in our guidance. Also opening up overland routes and then shipping from different to port combinations versus the ones we would typically use. And then finally, paying spot where needed to also. So all those strategies together means, yes, the cumulative effect was building off of delays in shipment, was building through the – particularly in the last 3 months of the last fiscal year. As we begin this year, we’re starting to work away that backorder situation. I think it will take us some months before we work it away fully. But no, as things stand today, I don’t expect that to become a more acute risk or sales issue over the next 6 to 12 months. But clearly, it’s an uncertain situation and things could still change externally that will affect our ability to deliver on that.

Operator: Your next question comes from Andrew Paine with CLSA.

Andrew Paine: Just in the release, you mentioned macroeconomic weakness as a consideration for FY '25. Be good if you can just work through what you're seeing there as the key headwind and particularly which segments you anticipate those to weigh?

Neil Salmon: Yes, certainly. So -- and I will admit that with the market volatility of the last week or 2, we thought, okay, well, let's check in again to make sure that the stock market isn't seeing something that we haven't seen in terms of demand profile. And all those checks came back to say yes, industrial demand conditions, they're not very exciting. They're pretty neutral or somewhat negative in, like, most -- across most of the European Union, new CPMIs sub-50. In the U.S., depending on which survey you review, PMIs have been sub-50 for a long time, for well over a year. But importantly, we're not seeing those trends change. So the pattern that was established, at least through the second half of last year, I expect to continue. Best view I have is that it will continue over the next 6 months. No indication that there's been a softening of that trend line, but also little indication yet that growth rates in our markets are starting to pick up again. Those comments are very much industrial mature markets comments. In emerging markets. I'm encouraged, as I said earlier, that China, after a soft first half to our fiscal year, improved into the second half. Our team is doing some good work to get that, but a very important market for us back on a growth footing and generally across the world of emerging markets. I don't see -- also, I don't see any new areas of concern or risk. And then health care also is a pretty steady end-use demand situation. So the health care sector, leaving aside the destocking effects that are on us but not to do with consumption of our products in the market. The health care sector has struggled from a lack of workers and general falling behind on procedures. I think that's much more stable now as well. In many markets, we see systems have been better able to start fully and to operate at the level of procedures required to keep up with their demand. So -- and again, I expect that to continue. So health care, moderately favorable to demand. Industrial, considering all of those factors, largely neutral to demand. And yet, our ability to grow is then dependent on our ability to execute on those strategies that I've articulated and which we think support the organic growth rates that I've indicated are achievable through FY '25.

Andrew Paine: Okay. That makes sense. And then just one on the Chinese potential increase of tariffs in the U.S. from -- for Chinese gloves. I know it's still a while away, but it'd be good to get your thoughts here.

Neil Salmon: Yes. So that’s very specifically, at this point, on medical gloves, both medical exam and medical surgical. So medical exam is a large source of exports to the U.S. and Chinese producers have taken a significant share from Malaysian producers. And so as that tariff comes into place, as you said, it’s some ways away, we may see a shift back of share to Malaysian producers or the Chinese producers themselves have strategies to move their production outside of China so that they would – by the time the tariffs come in, they themselves will have alternative routes to market. So my best guess is, in fact, there isn’t too much impact on medical exams applying into the U.S., even if there may be some shift in the countries it’s produced from. And to say again, that’s a market that we have a tiny participation in. So it’s going to have a very, very limited effect on us. We don’t source any surgical gloves from China. All our surgical gloves are made in-house, in Malaysia, Sri Lanka and soon, India. There’s a little bit of sourcing from China by some of our competitors. But I think that if that becomes an issue, that there are alternative sources as well. So overall, as long as the tariffs remain as announced and focused on medical gloves from China, I don’t think they’re going to have a material impact on Ansell and probably also less impact overall on market dynamics than you might anticipate. Yes.

Operator: Your next question comes from Saul Hadassin with Barrenjoey Capital.

Saul Hadassin: Neil and Zubair, just a quick one for me. Zubair, just on inventory. I noticed a nice reduction in that inventory balance at the end of FY '24. Excluding the impact of KCPPE, can you talk to where you think that inventory could get to for the organic Ansell business into '25?

Zubair Javeed: Yes. Thanks for the question, Saul. So just some historical context here. Clearly, in fiscal ‘19, we returned an inventory around about 2.7 turns. And that slowed, of course, considerably through the pandemic years, fiscal 2023. Turns improved, as you see, in fiscal ‘24. But we also had, in the pre-COVID times, when you compare back to that where we were turning at that faster turn of 2.7, we had repeated issues achieving target customer service levels. And as Neil said, we’re not quite there at world-class levels yet, but we’ve managed to reduce inventory as well as achieve those target customer service levels. Now we’ve done that not just by chance. We’ve dedicated significant resources over the past couple of years. In fact, Neil charged me with leading part of this function, which I have done and I’m delighted to see the results. The team has done a phenomenal job. Now we still continue to try and match production demand, optimize inventory and improve customer service levels. So we’ve not – that was a long way of not committing to a further inventory reduction, but just keep it stable at these levels, preserve the customer service gains. And then we will make a further judgment call as we mature again through this year, if we can commit to another couple of points of turn in that inventory. But there’s no compelling reason now to free up that cash and risk customer service levels, quite frankly, and that’s how we operate. So hopefully, all that gives you a bit of color as you model in your own cash flows.

Operator: Your next question comes from David Bailey with Macquarie.

David Bailey: Just on '25 guidance. Again, it's a big range. You're tracking towards the top end. You mentioned that KCPPE acquisition is probably immaterial from an EPS perspective. So at the high and low end, just to be clear, is there much delta in KC? Or is the majority of the delta from that $107 million to $127 million, really top line related?

Neil Salmon: Yes, there is. It's both. The range linked to KC is less than the range for the overall Ansell but proportional. It's very hard at this point, given, I think I was pretty clear on where we are, what still needs to happen. And so -- and we're only 6 weeks into ownership of the business. So it's -- the range does reflect that, of course, given where I am, where we are, there's some uncertainty about our ability to pass through those next milestones with no disruption at all. I'm confident that even if there is an F '25 short term effects, that will -- that it will not, in any way, risk our overall value delivery from the business case because we factored that in from the beginning. So -- but yes, I mean, it could be to the upside, as I highlighted, if we get through those steps without seeing those risks of entry point that I've been talking about or we could see somewhat higher eventuation of those risks. And then also the timing of transition services go in the full year of being able to come off them earlier is another factor that creates range around the guidance. But yes, you're right, the majority of the guidance range is in consideration of the rest of the Ansell business. And so those factors have been taken account of. Yes.

David Bailey: And then the top line organic growth for the business, ex KC or including KC, top end and low end?

Neil Salmon: We’re not giving that exact number. So sorry not to be more helpful to you on that, yes.

Operator: Your next question comes from Mathieu Chevrier with Citi.

Mathieu Chevrier: Just one on corporate costs. What should we expect in F '25 roughly?

Zubair Javeed: Yes, the corporate costs, because we've now got stability, Mathieu, in a lot of the business, you're going to see that fairly consistent with our F '24 number. And just as a reminder, there are some residual costs where we pay for insurance. There are some incentives, et cetera, in there. So with outside conditions fairly benign in that regard, we're not massively invested in the corporate cost line.

Mathieu Chevrier: And then on the CapEx, is $60 million to $70 million now a sort of sustainable level of CapEx, you believe, going forward?

Zubair Javeed: Yes. As I said in my prepared remarks, I think we'll trend -- we get through the India construction phase, give Neil a little bit more for his internal investment aspirations. We can't hold them too tight on there. And then we should be in and around the $60 million mark, maybe a little bit lower than that, but it is certainly much lower than the consensus has at the moment, which I think is in the $90 million range. So if you're doing your models, I would be in the $50 million to $60 million range beyond the India construction phase, which happens to be close to our depreciation level. So we'll maintain plant and machinery adequately in that range.

Mathieu Chevrier: Got it. And then just finally on your EBIT guidance. I mean, excluding the impact of the cost savings program and KC, are you expecting the business to grow organically?

Zubair Javeed: Yes, we are. And as Neil said, there’s a range of outcomes per business unit. But for sure, we are feeling, with this destocking phase largely behind us, and I’m using the word largely intentionally there, because we can’t be certain, we will be back in organic mode. And again, that’s subject to the macroeconomic backdrop, which we all read about and the stock market vicissitudes that has us scrutinizing data, we expect organic growth.

Operator: There are no further questions at this time. I'll now hand back to Mr. Salmon for closing remarks.

Neil Salmon: Well, thank you, everyone, for your time, for your interest in Ansell. And thank you to the Ansell team. It’s great to hear you recognize the progress that we’ve made over the last 12 months. It hasn’t been a benign or easy operating environment. And so the improved momentum in the business, the greater confidence that I hope you hear both from myself and from Zubair is all a testament to the hard work of Ansell colleagues and now also our KBU colleagues for creating a great platform, which I believe means Ansell will move forward from here and begin a new era of growth for the company. I’m excited to report on that to you over the coming few months and years. And look forward to continued discussions with you in this forum. Thank you for your time, and that brings an end to this presentation.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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