Ansell’s Mexico And South Korea Facilities Come To A Halt

Ansell Limited (ASX: ANN) today achieves the major milestone in the restructuring program as it now bolts the three production facilities of the company across Mexico and South Korea.

In the market release dated 3 December 2018, Ansell Limited stated that the company is closing its three production facilities – two located in Juarez, Mexico and one in Janggye, South Korea. The closures relate to the transformation program that was first announced by the company in July 2017, targeting $30 million annual cost saving by Fiscal 2020.

Ansell’s target to achieve enhanced returns on capital through a more innovative, efficient and effective manufacturing base has driven the company’s decision to shut down its Mexican and South Korean production facilities. Moreover, the other major objectives that company aims through this transformation program includes lower cost organizational structure that is more fleet-footed to respond customer’s needs. Increasing the focus on global supply chain excellence and increasing investment to get organic growth strategy through, are the two additional factors that company ponders upon before implementing its transformational program.

Magnus Nicolin, CEO, stated that “The implementation of the manufacturing aspects of the Transformation Program will enable Ansell to deliver significant benefits such as larger scale, stronger competencies and added capacity while also achieving cost savings.”

Under this program, the company determined that its production facilities in Juarez, Mexico and Janggye, South Korea would not be able to meet minimum global performance benchmarks. This program eventually led the company’s decision to close production at these three sites. But the company has decided to consolidate its manufacturing activities into its leading facilities in Vietnam, Sri Lanka, Malaysia and Thailand and increase its investments accordingly. The activities come after the company has benchmarked all facilities against the long-term requirements for cost, quality, and process capability.

Mr. Nicolin stated “The company remains committed to be an industry leader in product innovation and manufacturing capability. As the company moves ahead to streamline its manufacturing footprints to the best performing facilities, it expects to generate greater than expected annual cost savings of $20 million”

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On Monday, the company further notified the completion of on-market buy-back for 3,719,149 shares at a consideration of $10.29 million. The buy-back is in connection with company’s plan to buy-back up to 20% of shares on issue being 28,456,000 shares as at 31 July 2018. Therefore, following the buy-back of 3,719,149 shares, Ansell’s 24,736,851 shares remain pending to be bought back by the company.

In today’s trading session, Ansell shares witnessed a bullish market sentiment as stock price jumped 3.069% to last trade at $23.510 on 3 December 2018. Its PE ratio was 5.010 x and market capitalization was $3.06 billion. However, ANN stock price has plunged 7.01% over the past one year.


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