Car industry fallout ‘already here’, says condom maker Ansell

No protection: automotive manufacturing pain is laready being felt in the wider economy.The demise of car making in Australia is already causing pain in the wider economy, as Ansell chief executive Magnus Nicolin says the automotive manufacturers and their suppliers have begun to cut back on purchases of the protective equipment it supplies.
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Australia was one of the weaker markets that dragged back Ansell’s underlying revenue growth to just 1 per cent in the December half.

Mr Nicolin said the looming exits of Ford, General Motors and Toyota in 2016 and 2017, and a slowdown in the mining sector, mean that ”Australia is taking a bit of a beating”.

”Even though the [automotive] shutdowns are not going to happen until 2016, 2017, volumes have not been impressive,” he said. ”The manufacturing sector in Australia has been relatively weak over the last six to nine months. That’s obviously having an indirect impact on us.”

Australia accounts for 6 per cent of Ansell’s sales, which were boosted by acquisitions to rise 9 per cent to $US703.6 million ($777.2 million) in the six months to December 31. Ansell shrugged off patchiness in the global economy to report a 14.9 per cent rise in interim net profit to $US65.6 million, just missing consensus of $US67.4 million. Earnings before interest and tax rose 20 per cent to $US82.7 million.

UBS analyst Andrew Goodsall described the result as ”soft” and underlying growth as ”uninspiring”. But he said improved trading towards the end of the half and the contribution from January 2 of US disposable glove maker BarrierSafe International, which Ansell acquired for $US615 million in November, meant the company should meet its full-year guidance. Ansell’s share price fell 5.1 per cent to $18.31 on Monday, off a 12-month high of $22.08 in September 2013.

Surgical sales within the medical division were a strong performer. Sales of synthetic gloves in the segment rose 23 per cent to $US29 million, off the back of a new range that Ansell first started developing three years ago.

The sexual wellness unit, which sells condoms, was the weakest division. Mr Nicolin blamed a change of distributors for some of the 5 per cent fall in sales of branded condoms, to $83 million, as new customers delayed purchases until old distributors had destocked.

Ansell declared an unfranked dividend of US17¢ a share, to be paid on March 25. The dividend is 1¢ higher than the previous corresponding period, when it was paid in Australian dollars at 16¢.

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What Coke needs now is more spritz

Illustration: John Spooner.After 12 years at the helm of Coca-Cola Amatil, Terry Davis will deliver his swansong on Tuesday with hundreds of millions of dollars expected to be written off his beleaguered SPC Ardmona acquisition.
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It comes days after he managed to stitch together a $22 million deal with the Victorian government to keep SPC Ardmona from sinking.

Davis would have hoped for a more upbeat profit result, given it will be his last, but the market had changed and he ran out of time.

Instead of leaving the write-downs to his successor, Alison Watkins, who joins next month, Davis will do it himself. Between $400 million and $500 million could be written off SPC and other underperforming businesses. Davis bought SPC for $650 million, along with some other services businesses.

The write-downs, a weaker dollar and some big private label contract wins from Woolworths and Coles will give SPC a standing start when Watkins takes the reins.

But on Tuesday Davis will be left to report a set of 2013 results that are lower than last year’s. In a trading update last year he warned that earnings could be between 5 and 7 per cent lower than last year’s.

While some of the slump in earnings can be blamed on SPC, some is due to structural changes that need to be dealt with.

To put it into perspective, the latest Nielsen results reveal that CCA’s soft-drink category, water and sports/energy drinks were all down during a very warm summer. According to a report by Deutsche Bank, CCA underperformed in the soft-drinks category in the December quarter in volume and value. In water, Water CCA declined 1.8 per cent in the face of strong category growth, which was up almost 9 per cent, due to private label share gains. The group’s sports/energy sales dived 5.3 per cent. “We remain cautious that the persistent volume weakness is structural,” Deutsche says.

For investors, the results will be a side issue as they wait to see how Watkins can grow the business, and the executives who report to her.

One executive expected to depart sooner rather than later is Warwick White, the head of the group’s Australasian business, who has spent more than 28 years in the global Coca-Cola system and who got pipped by Watkins for the top job. This column speculated last week that he is a contender for the top job at Treasury Wine Estates.

Watkins is well regarded and highly credentialled but growing CCA will be challenging, as Davis knows, having generated double-digit growth for eight of his 12 full-year profit reports. The longer he was there, the harder it got.

CCA is now back in beer, albeit in a small way. How that will pan out is anybody’s guess given the beer industry is becoming more competitive as the big two players, Lion and Carlton & United Breweries, continue to dominate, the supermarkets have the power to negotiate down on prices and there has been a surge in craft beer operators.

CCA’s Australian business – which is the lion’s share of the operation – is mature and is in desperate need of a new product to breathe new life into a set of products facing savage competition from Pepsi, which has been selling products at up to 50 per cent lower in the supermarkets, and, as health becomes an issue among Australian consumers, sugary drinks will be swapped for healthier drinks.

What CCA is desperate for is a new product from The Coca-Cola Company (TCCC), which can lift its growth. Unfortunately for CCA, this has been a long time coming, with Coke Zero the last successful product released in 2007.

CCA is an anchor bottler for TCCC, which holds 30 per cent of CCA’s shares. This means there is a tension within the relationship, where TCCC wants volume to be the endgame, while CCA is more focused on profit margins.

For now CCA’s growth market is Indonesia, but it is still early days and it will require some heavy spending in capital expenditure to develop the market.

There is always the risk of its relationship with TCCC turning sour. There has long been speculation there is ”constructively discontent” and that TCCC would like to acquire the Indonesian Coca-Cola licence and business back from CCA or find a partner such as Mexican bottler Coca-Cola FEMSA. The speculation intensified in December when TCCC sold 51 per cent of its Philippines bottler to FEMSA.

Whatever the speculation, CCA has done a good job in Indonesia, generating earnings before interest and tax of $102 million for 2012, up 16.8 per cent and growing volume more than 10 per cent.

If its earnings in Indonesia are worse than its trading update suggested, it could put renewed pressure on its relationship with TCCC.

But that is where Watkins can weave her magic.

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Australian Jana Pittman ready to contest the bobsled with Astrid Radjenovic

Jana Pittman is happy, because this time there is no Jana Drama.
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Remember that? Jana Drama?

That’s the force of nature that often comes in like a bitter cold front before every major competition she ever competed in as a 400 metres runner.

Normally, the Jana Drama involves injuries. How many of those have we ridden with her?

From the blown knee cartilage before the 2004 Olympics in Athens and the sight of her being pursued by the media pack as she hobbled around on crutches, to the toe injury that kept her away from Beijing four years later, to another foot injury that finally ended her athletics career before London four years after that.

The Jana Drama was hard for Jana Pittman to ignore after she completed her final training session with Astrid Radjenovic in the women’s two-man bobsled in Sochi on Sunday morning.

”The biggest thing for me is that I got here injury free,” she said on a cold morning at the Sanki Sliding Centre. ”I lost the last two Olympics because of injury. Actually, it’s the last three. To be able to finish the last training session and know I am putting my spikes on in two days time, with nothing wrong, is phenomenal. So I’m very grateful for this lady.”

She says this pointing to Radjenovic, who has often been the forgotten part of Pittman’s incredible comeback story that will see her become the first female athlete to compete at the summer and winter Games for Australia.

Asked if she is surprised to be reflecting on her former, drama-filled life as a track athlete, she said: ”I can’t not. We’re at the Olympics. I’m pretty lucky. I’ve been given a real gift and a second chance. I’ll carry that with me for the rest of my life. Even if I never go to another Olympics, to finish on a high together would be great. It doesn’t matter what the result is. The fact that we got here after all we’ve been through in the last year, and what this one [Radjenovic] has done for seven years, it’s just fantastic. I could retire happy if I did.”

Of course, the Jana Drama extends beyond the injuries.

From fallouts with former relay team member Tamsyn Lewis, to her on-again-off-again-on-again-off-again relationship with English athlete Chris Rawlinson that was dragged through the women’s magazines, to stories about her removing breast implants to improve her athletic career.

The Australian public, which can be as fickle and dramatic as she could be, fell out of love with Pittman very quickly.

In an interview with ABC Radio in 2011, she admitted: ”You know, I have made so many mistakes and so many of them have been written out, you know, through the public. You know, boobs in, boobs out, divorced, remarried, divorced. Like it’s, it’s quite comical when I look back on it really … So I guess the situation is that I’m the bad girl and that’s it.”

The shame of it is beneath the Jana Drama lies a pure athlete called Jana Pittman, who has as much defiance and ability as any we’ve seen.

In 2003, at the age of 20, she was the youngest person to win the world championship in the 400 hurdles. She won it again in 2007. If not for injury, an Olympic gold medal would likely be hers, given her ability in the event.

When she abandoned athletics, she tried her hand at boxing and rowing, and then bobsleigh.

In her role as brakeman, she does most of the heavy pushing at the start.

She has subsequently whacked on 11 kilograms thanks to the combination of heavy lifting and more than enough protein shakes, meat and carbs to fuel a footy team. The result: she has the legs of an NFL linebacker.

”You eat for Australia,” she laughed.

Don’t go expecting medals, Australia, from Pittman and Radjenovic, although they finished ninth in their final training session.

”We’re realistic,” says Radjenovic. ”Tenth to 15th is where we would plan to finish. We could sneak into the top 10 if we have a great few days. We’ll wait and see.”

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