Ansell Is Cautiously Optimistic on North American Demand — Interview

Ansell’s distributors in the region have reported softer rates of growth against a backdrop of higher interest rates and uncertain end-market demand, but the company is seeing no signs that sales could start shrinking, Mr. Salmon told Dow Jones Newswires on Monday.

“Very consistently across North America, everyone is talking about this impending recession and everyone is saying, ‘I don’t see it yet,'” Mr. Salmon said.

“It’s always six months away it seems, and it continues to be six months away.”

North America is Australia-listed Ansell’s largest source of revenue, representing 44% of its US$1.655 billion in sales for the 12 months through June.

The picture in Europe is more mixed, while demand visibility remains challenging in China, Mr. Salmon said. Ansell is hoping that China can boost industrial activity at the start of the 2024 calendar year, which would increase domestic demand for Ansell’s gloves and other products.

The official gauge of China’s manufacturing activity improved slightly in July but remained in contraction for a fourth straight month, pointing to continued weakness in the world’s second-largest economy.

Ansell expects customers globally to keep running down existing inventory through much of fiscal 2024 and temporarily lower production while focusing on the reliability of its supply networks, Mr. Salmon said.

The potential for new Covid-19 variants to suddenly increase demand of single-use gloves is less of a factor than costs in customers’ decision-making, Mr. Salmon said. Holding inventory is expensive and products have a shelf life, he added.

“Most people’s memories are short, and while many customers are now more pressured by current economic circumstances, they’ve reverted to more traditional decision patterns,” Mr. Salmon said.

Write to Stuart Condie at [email protected]