The Ansell Limited (ASX: ANN) share price is rising after the company gave a trading update for FY21.
Ansell describes itself as a world leader in heath and safety production. It has 13,500 employees worldwide with customers in more than 100 countries.
FY21 trading update from Ansell
Ansell said that with an increasing number of COVID-19 cases worldwide and a greater focus on protection against transmission, Ansell continues to see elevated demand for a number of its products across its divisions.
The business is also seeing strong market share gains in its mechanical and surgical segments. Ansell also said that by successfully and safely meeting higher demand with implementing efficiencies, it has done well where others in the industry has struggled.
In addition to sizeable volume increases, the company has been able to pass through price increases to customers to offset higher costs from raw materials.
Guidance
Ansell said it’s expecting to deliver organic growth of more than 20%, with profit/earnings per share (EPS) expected to grow by 62% to 68% to a range of 81 cents to 84 cents.
FY21 EPS is now expected to be higher than its previous guidance of $1.35 to $1.45.
The company is expecting higher demand for its products for the rest of FY21. However, uncertainty remains from COVID-19 with various effects like temporary shutdowns, local confinements and ocean freight delays. Ansell isn’t expecting second half profit to be stronger than the first half.
The company expects to be able to announce revised EPS guidance when it releases its result next month.
Summary thoughts
It has been a crazy 12 months for businesses involved in the fight against COVID-19. Ansell is clearly experiencing heightened demand – EPS wouldn’t normally grow by more than 50% in a single result.
The big question is how long COVID-19 will continue to be a major factor for the world. Will everything get better as 2021 goes on? Or could there be some worrying news if the COVID-19 vaccine isn’t as useful as expected, perhaps due to a new variant.
Is it worth buying Ansell shares? I think the share price already reflects this elevated level of demand. There are other ASX growth shares seeing higher demand from a result of COVID-19 that I’d rather buy like Pushpay Holdings Ltd (ASX: PPH).
