Ansell profit rises, fixing IT problems

Ansell Ltd says it is rectifying problems with its new business processing system which have resulted in the gloves and condoms supplier losing sales and customers in the key North American market.

Ansell started rolling out its Project Fusion enterprise resource planning (ERP) system in North America in July 2011 ahead of a rollout in its markets elsewhere.

The new information technology platform will replace 25 old platforms.

Ansell, at its annual general meeting in October 2011, said the $80 million IT upgrade had been more troublesome than expected.

Ansell on Wednesday reported a 1.1 per cent increase in its first-half net profit and maintained its guidance on earnings per share for the full 2011/12 financial year despite the problems with the new ERP system.

The company said strong growth in emerging markets — China, southeast Asia and the Middle East and Africa — and strength in Ansell's condoms business had been partly offset by weakness in some European markets and difficulties with the new ERP system.

Ansell chief executive Magnus Nicolin said there had been coding problems with the ERP system, leading to its North America unit having difficulty communicating with the other IT systems within Ansell.

"The effect of the systems not talking to one another is you make mistakes, you ship the wrong product, you ship the wrong quantity and so forth," Nicolin told analysts and reporters during a briefing on Wednesday.

Consequently, Ansell had lost sales of about $US13 million to $US15 million ($A12.07 million to $A13.93 million), and some of its smaller customers had walked away.

Nicolin said Ansell had a comeback plan.

"There are product launches, there are new initiatives, there's a whole slew of activities to re-engage with customers and get them back on board and get them excited and so forth," Nicolin said.

"That is the primary focus now as opposed to damage control."

Ansell chief financial officer Rustom Jilla said the problems with the ERP system would still result in some negative effects in the second half of the financial year but not of the same magnitude as in the first.

Nonetheless, Jilla said, the pace of improvement in the ERP system had not been what Ansell had envisaged in August, September and October of 2011.

"It's been harder, slower yards than we would have expected," Jilla said.

Ansell on Wednesday reported a net profit of $64.9 million for the six months to December 31, 2011, up from $64.2 million in the prior corresponding period.

In US dollars, which is Ansell's operating currency, net profit rose nine per cent to $US66.6 million ($A61.86 million).

Full-year earnings per share guidance remained within the previously forecast 97 to 103 US cents (90.77 to 96.38 Australian cents) range.

Ansell said the economic outlook was mixed, with a recovering US economy and strong Asia Pacific expected to offset a weaker European economy and euro.

"The benefit of lower input costs should also flow through in the second half," the company said.

Ansell shares were two cents higher at $14.97 at 1138 AEDT on Wednesday.

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