Good day, and welcome to the Ansell Limited FY 2026 full-year results briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. For operator assistance throughout the call, please press star zero. I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Nathalie Ahlström, Managing Director and Chief Executive Officer, to begin the conference. Nathalie, over to you.
Thank you, operator, and welcome everybody. It is a privilege to be here today together with Fred and walk you through our fantastic, strong year, financial year 2026. Equally also talking about the outlook and then having the Q&A together with you. We will start with looking at the performance and then, as said, coming to the Q&A. Starting with the purpose. We have a really strong purpose. It is an emotional purpose. It is a powerful purpose, and this leading the world to a safer future, this is who we are. This is our business. This is what it is all about. That is how we have translated it then also to our financial year 2026, and that is how we are bridging then the strong momentum to financial year 2027. Let us start with the highlights of the year. As said, the highlight is a very strong delivery in quite dynamic market conditions.
The world is pretty. A lot is happening. As said, it is a strong delivery, and we grew the net sales by 5.7%, adjusted, in this environment. Where I am especially proud is that our second half growth momentum, 9.2% growth, really showed that we are also growing with volumes. Good, strong momentum here. On the sales growth, we also see that the momentum is in strategic areas. Areas to call out is our cleanroom and scientific business grew by 10% for the full year, and also U.S., by far the largest market, grew by 10%. Improving the mix, growing in the future strategic areas has really helped us deliver a strong financial year 2026 and also a very strong second half, where also volumes came back. Strong net sales growth, of course, translates into a strong EBIT delivery.
An EBIT margin of 15%, and we grew by 90 basis points versus last year. The star is, of course, Healthcare, and I will come to that soon. You also see that our GPADE grew by 70 basis points, and that is again thanks to this that we are growing in the more strategic areas where we are having higher gross margins and our value addition to customers is higher. Also, this financial year, 2026, as said, it was a dynamic market, and our really decisive actions when it comes to U.S. tariffs and Middle East crisis, things that are in our own hand on sourcing actions and then also price increases, helped to offset the impacts of both U.S. tariffs and Middle East crisis. Strong net sales growth, good EBIT margin, and that then also supported by a very strong cash conversion. Cash conversion of 113%.
We have a strong balance sheet in place compared to the financial year 2025, when our cash conversion was 91%. Why this really mattered was in the Middle East crisis, and I will talk about that a bit later. When Middle East crisis started, our focus was on enabling our customers to continue to serve, continue to ensure that we have availability, and that is where the strong balance sheet and strong cash conversion really supported us. Then finally, adjusted EPS at the top range of $ 1.486. That is a growth of 18.5% compared to last year. We are very proud of it, and that also then translates into a higher dividend. We increased the dividend by 35.7%. The full-year dividend is $0. 681. Strong on top line, EBIT, cash conversion, EPS.
This all is thanks to our strong team that we are having globally and the strong partnerships we are having with our customers and our partners. That is the highlight of financial year 2026. Then going to industrial. Industrial continued to perform on a high level. EBIT again grew, and we see that the EBIT grew by 9.7%, going from 17.3% to now to 18% EBIT margin. What we really see is that, of course, the net sales growth, especially mechanical, where you see the mechanical also grew much faster in second half, 7%. That supported the net sales growth, supported and then the overall higher growth in the second half.
Moreover, what supported the continued improvement on EBIT is, again, what I am talking about is moving the portfolio upwards, focusing on the strategic verticals, focusing on the strategic markets, and especially here in Industrial, it was again, U.S., the strong performance in the U.S., and also the verticals, aerospace and defense, that helped us to move the portfolio upwards. Then going to Healthcare, and I must say, I am so proud of the team to deliver this improvement in Healthcare, where you see a step change in the EBIT margin from 12.8% to 14.3% EBIT margin improvement over one year. Of course, what helps is, again, the volumes. Volumes is always helping. Here you see the exceptionally strong growth in second half, and especially the star performer is Cleanroom again. It shows that where we have strong positions, where we have very strong brands, we also can grow.
Of course, the Cleanroom that turbocharge the growth, majority of that was from the U.S. As said, in Healthcare, the second half growth of 12.3% really helped us. Both Industrial, Healthcare delivering Healthcare at a total new level. Then the dynamic world we are living in, looking at the U.S. tariffs. We have really offset the U.S. tariffs by sourcing optimization, where do we source, how are we serving the U.S. market, and then price adjustments. We also saw then in the second half that our U.S. growth momentum continues despite the price adjustments we have done to the market, and accelerated the growth in Industrial and Scientific, the Cleanroom, as I have mentioned before. This success in the U.S. tariff really has been enabled by the strong customer partnerships we are having in the U.S.
I just came myself with Fred a few days ago from the U.S., and it's wonderful to see the good, strong partnerships we're having with our customers. At the same time, we are ready to respond to any further changes in the tariffs as we go forward. U.S. tariffs not the only thing. We also have Middle East crisis. Here I'm really proud about the team. We went really decisive. We went quickly out to the market to offset the impact of the Middle East crisis. First, as said, we focused on supply chain resilience. We wanted to ensure that we ensure availability to our customers. We have no disruptions in our production and serving the supply chain. As with the U.S. tariffs, we also saw that the brand pricing power is significant with Ansell.
I'm going to talk more about our brands because this really shows that we have the power of the brands, and we are really delivering added value services. Thanks to our brands, we were able to do the price adjustments and could offset one-to-one the cost of the Middle East crisis, and we will continue to be flexible with the pricing as the Middle East crisis evolves. Then finally, on balance sheet strength, as I mentioned, this was important because as prices were going up and down in March, April, May, we wanted to ensure that we have a strong balance sheet, that we can serve our customers no matter what, and we are the trusted partner now and in the future to our customers that they can serve then going forward. So that's U.S., Middle East. It's in our hands. We reacted decisively to this.
Finally, on sustainability, I'm really proud how we are improving on many fronts in sustainability. As a few examples, our safety, we reduced our accidents by 32% during the year. Another example is that today, of the sourced energy, 58% is renewable energy. That's, of course, a huge asset for us that we have 58% of our energy is renewable. So that also, of course, translates then into a financial impact that we, especially during the Middle East crisis, saw a benefit from. Then a more customer, consumer-facing area is that today, more than 90% of all our packaging is recyclable, reusable, or compostable. So proud to be here to talk about the strong financial year 2026 and what all the team, and together with our customer partners, we've been able to accomplish. Now I'll hand over to Fred to talk more about the financial performance in detail.
Over to you, Fred.
Thanks, Nathalie. Good morning, everyone. It's great to be speaking with you today. I'll spend the next few minutes talking through our financial performance for fiscal year 2026, expanding on Nathalie's earlier comments. Firstly, on sales, we were pleased with the adjusted sales growth of 5.7%, which excludes the effects of foreign exchange and some minor product exits, as well as the benefits we received from temporary order pattern favorability in both FY 2025 and FY 2026. In the second half of this year, we had $15 million in extra sales of Exam/Single Use products as customers increased purchases in response to the Middle East crisis. These sales will unwind in FY 2027, so we have excluded them from the adjusted sales growth calculation. Pricing was a key driver of sales growth for the year, particularly in the U.S., where we successfully offset the effects of higher tariffs.
We also increased prices in the final months of the year to offset higher costs resulting from the Middle East crisis. Pleasingly, as Nathalie had mentioned before, we saw sales really accelerate in the second half of the year, supported by improved volume trends. Our GPADE margin improved by 70 basis points versus FY 2025, a great effort given the significant cost headwinds we faced throughout the year. We spoke at the half-year results about margins being supported by sourcing productivity efforts and lower freight cost. We also saw benefits across the year from improved sales mix, particularly in Healthcare, with accelerated sales growth in our higher margin Cleanroom products. The net price and cost effects of U.S. tariffs and the Middle East conflict were moderately dilutive to our overall GPADE margin percentage.
Moving down the P&L to SG&A, this was well controlled with growth of 2.7% on an organic basis. Higher employee costs from both wage inflation and strategic hires were partially offset by improved SG&A productivity and the KBU cost synergies we mentioned before, which are tracking in line with our business case. On FX, while exchange rates were favorable on an underlying basis, we had a loss of $13.8 million on our hedge book, which meant that the currency was a headwind to EBIT of $4.3 million this year. When you put all this together, we achieved organic EBIT growth of 14.9% versus FY 2025, and a 90 basis point improvement in EBIT margin, growing to 15%, which is really great to see. Below EBIT, we booked $1.4 million in significant items.
This includes the APIP costs related to the upcoming ERP upgrades, largely offset by an initial refund of tariffs paid in the U.S. prior to the February Supreme Court ruling. The interest line was broadly the same as FY 2025, and our effective tax rate came in as guided at 24.1%. This all contributed to adjusted earnings per share of $1.486, an 18.5% increase versus last year on an organic basis, and a result we're very happy with given the external challenges we had managed over the course of the year. Included in the adjusted EPS was a non-recurring benefit of $0.033, which was largely due to the timing difference throughout the year between the cost that we've seen coming in through the P&L and the timing of when prices were adjusted in relation to the U.S. tariffs and the cost inflation from the Middle East.
Now let's move to the balance sheet, which is in great shape. Working capital was lower than June 2025, largely driven by a reduction in inventory in the second half as sales accelerated, and we also made targeted reductions in safety stocks in response to the Middle East crisis. Debtors were higher, largely due to the higher sales, and payables fell with purchases from outsourced finished goods suppliers lower than at the same time last year. Looking at returns, we delivered return on capital employed, or ROCE of 12.7% and return of equity of 10.6%. As we pointed out in the half-year results, the nominal reduction in ROCE versus FY 2025 is due to the partial inclusion of KBU capital employed in the denominator in the FY 2025 calculation, noting that we calculate ROCE based on the average capital employed on a trailing 12-month basis.
If you normalize for this KBU in the denominator, the FY 2025 ROCE would have been 11.2%, translating to a 150 basis point improvement in FY 2026 on a like-for-like basis. Turning next to cash flow, which was really strong in FY 2026. The biggest increase you see in statutory EBITDA was driven by our double-digit earnings growth, helped further by a large reduction in significant items, noting that we were booking KBU transactions and integration costs last year. Net receipts were significantly higher than FY 2025, driven by statutory earnings growth and the improvement in working capital I outlined on the previous page. With growth in net receipts outpacing EBITDA, our cash conversion came in at 113% compared to 91% in FY 2025, as Nathalie noted before. Net CapEx was $48.6 million, lower than FY 2025 following the completion of construction of our greenfield India surgical facility.
We also took the decision to prioritize only our most strategic capital projects while we were navigating through the effects of the Middle East crisis in the latter part of the year. With the strong growth in net receipts and a reduction in CapEx, we were able to deliver a substantial year-on-year increase in our operating cash flow. This gave us the ability to fund the on-market share buyback program to the tune of $118.4 million, while also reducing net interest-bearing debt by $52.3 million as well. Let me wrap up by saying a few words on our funding profile. Our net debt to EBITDA was 1.3x at the end of this year, compared to 1.6x this time 12 months ago, and we have significant liquidity with $752 million of cash and undrawn bank facilities.
Furthermore, the maturities of our debt are relatively long-dated, and we have approximately 65% of our facilities at fixed rates. You can see that our funding position is healthy, our maturity profile is well-balanced, which gives us flexibility to continue to pursue value- accretive growth opportunities in addition to capital management initiatives. With that, I'll hand it back to Nathalie to talk about our strategic priorities and our outlook for FY 2027.
Thank you, Fred. Talking about the strategic priorities, and this is really important for us, how do we drive higher growth? How do we drive higher profitability? And also what is the capital allocation to it? When we look at our strategic priorities, our focus is really how do we increase customer centricity and accelerate profitable growth. To this, we have three levers. Two of them are growth levers, and the final one is funding the growth lever. We are starting with commercial excellence. Commercial excellence, how can we enhance the value we are driving to customers? I will on all these levers also come back to you and show an example and a proof point what we delivered in financial year 2026. So commercial excellence. Secondly, the growth lever, really looking at focus on our strategic markets.
Which are the key markets and verticals where we have higher margins, we have higher profitability, and we see the verticals are also having organically better growth, and we are focusing on this and also the capital allocation on this. So better returns. Finally, funding the growth lever, where we talk about operational excellence, and I will give a few examples about that how can we increase our return of capital employed and at the same time ensure that we are closer to customers, we are serving our customers much better because we are true believer that the better we have our supply, the more intimate we are to customer, the more our demand and growth will be. Good. Then going to the commercial excellence, and it is an area where we have a lot of opportunities going forward and a few proof points already from financial year 2026.
When we look at our top five, only five brands that we are having in the company, they account for 58% of the net sales. So we really are a brand-driven safety company where brands do deliver value, and we also see that of course, thanks to the pricing adjustments we have had to make in U.S. tariffs and also in Middle East, that the brands do count. So these five brands, in total, they grew 1.2x faster than the whole company, so they are really delivering value. Secondly, the top five brands, the gross margin is 220 basis points higher than Ansell average. So growing faster and accretive to our profitability as we go forward.
Of course, as we go forward, we will focus on how can we generate more value to our customers and how can we also make the big brands bigger, because that is where we get the scale benefit of our large portfolio. So it is not only about the brands, we are also having our AnsellGUARDIAN tool that we have spoken about in the past. With the AnsellGUARDIAN tool, that is our main global sales tool where we can show the safety benefits, the safety impact our products are having at our end customer sites. We see that when we use the AnsellGUARDIAN, we have 50% higher sales on newly converted accounts. Not only AnsellGUARDIAN, then of course innovation.
Innovation is hugely important for us and will continue to be so. When we talk about the strategic verticals and strategic markets, it's easier also to target the focus on the innovation. As an example, we see that in mechanical, in our gloves and products in mechanical, we had 18% of the sales last year came from new products launched only in the last five years. Innovation does matter. Commercial excellence continue to drive value for the customers. Secondly, focus on strategic markets. I mentioned U.S. many times during this call, and I will continue to do that in the years to come. Today, U.S. is 43% of our total net sales. It's, of course, the most dynamic booming market in the world if you look at the totality.
By focusing on the U.S. and also our other in total top five countries, we see that we are going to be able to allocate capital and drive growth much better and being closer to customers. In total, U.S. grew 1.8 x faster than the whole company, Ansell. That's really driven by our strong brand presence and our strong end user partnerships, like I spoke about that we are having in the U.S. Of course, the prime example is Amazon, a huge end use customers for us. We are very proud of the innovation and the very close cooperation we are having with Amazon to continuously develop new solutions, not only product solutions, but many other solutions to ensure that we have a structurally made partnership with Amazon going forward.
With this, in the last year, thanks to the good cooperation, we helped to reduce 65% of all hand injuries that Amazon had in their warehouses, in their sites. This is a true example of where we double down on customers, we focus on the strategic markets, we focus on strategic verticals, we grow faster than the company, and we deliver value to our end customers. Commercial excellence, focus on end use, selected strategic markets, and finally, operational excellence. This is the funding the growth lever that I was talking about earlier. The funding the growth lever, we are looking at three building blocks. These three building blocks, how can we simplify Ansell and that way serve our customers faster and be more agile and also, of course, always be competitive? These three building blocks in operational excellence are, how can we simplify our product portfolio and brands?
I spoke earlier about make the big brands bigger. How can we simplify our supply chain, and how can we simplify ways of working? These are areas we're going to continue to work on, and I'll continue to talk about this to you as we go forward in the months and years to come. Look at a few examples on the next slide. We had APIP that we have delivered and delivered the $50 million recurring savings that are already achieved. With these three building blocks on operational excellence to fund the future growth, with a simplified product portfolio and brands, with a supply chain and ways of working, we will continue this really good work. I'll give just a few examples that we already executed now in the second half of the year.
As an example, our TouchNTuff product, we've reduced the areas of touch points between our sites and also how we produce it and make it in a more streamlined, simplified way, and that has led to a 66% reduction in lead time to our customers. Another area is HyFlex. Doing a bit opposite, instead of simplifying to one place, HyFlex, instead of only producing in one place, we're now producing in three places to be closer to the customers, and that has reduced our lead times by more than 90%. Again, customer centricity is at the key of everything we do. Then another one where we talk not only about lead times, but of course also on cost competitiveness is in Kimtech, in our Cleanroom space where our goggles, we used to have four suppliers, and we are moving to one supplier.
That, again, with the scale, reduces our lead time by more than 68%. We'll continue to work on this to ensure that we are able to serve and able to be close to our customers. As I said, in this dynamic world, it's really about supply and availability, and supply creates demand. On the strategic priorities, really to sum up, we have three levers. Two are growth, commercial excellence, selected markets and verticals that we're focused on, and then the funding the growth lever, operational excellence. We'll continue to talk about this. We'll continue to bring you up to speed and bring you examples of how we are advancing so that you can see the impact that we are driving through the strategic priorities. Of course, there's a capital allocation element to it as well.
With the strong financial year 2026, I think it's a good segue to go to the outlook. Our outlook adjusted EPS for the year, financial year 2027, is in the range of $1.58 - $1.70. This outlook, really, the assumptions behind it is that we are seeing that our sales momentum will continue both from a volume and value point of view, the strong momentum we had in second half. Secondly, our strategic priorities, where we're focusing on the more higher value-added products, the faster-growing verticals and markets, will also support the sales growth going forward. On the negative side, of course, we can't ignore the very dynamic macroeconomic market we have around us, the macroeconomic uncertainty. That's always a downside that we will have to navigate as we go forward. Assumptions then on earnings is that the commercial excellence will continue to drive profitable sales growth.
As I said, also this, how do we focus on moving the portfolio upwards towards higher gross margin product? Operational excellence will enhance productivity, and as said, we'll bring more examples as we go forward. Then, in addition, we assume a 9 million FX benefit versus financial year 2025. Then on capital allocation, as Fred was saying, we came down in financial year 2026, and we are continuing this level, this much lower level, in financial year 2027. We are continuing to invest in growth. However, what we have now layered in is a strategic capital allocation in the areas that matter to drive growth in the selected markets, the selected verticals, and also in the innovation related to this. Then we'll continue to do the existing share buyback program. So very excited of financial year 2026, and at the same time, we have to be realistic.
We live in a very dynamic world, and we will continue to tackle it as we go forward. With that, I hand over to Q&A. Thank you.
If you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. That is star one if you wish to ask a question. Your first question comes to the line of Dan Hurren from MST. Your line is open.
Oh, good morning. Thanks very much. Look, if we look at sales outside of the U.S. and adjust that a little bit, it looks like you have done low single digit ex-U.S. I was just hoping you could talk about your experience in markets that may have seen some competitor product directed away from the U.S. and into those other countries and what the experience has been.
Thanks, Dan. I would say U.S., as we mentioned so many times on this call, has been the highlight of the second half and the whole financial year. I would say that also comes back not only our focus on the products and our customer relationships there, but it is also the underlying economy. We also see a strong growth in Cleanroom in other markets and in Europe in our selected focus areas. When I talk about these top five countries, the ones that really move the needle, the rest of the countries are in Europe. At the same time, we know that the industrial or macroeconomic situation in Europe and the rest of the world is not as booming as it is in the U.S. That is why the U.S. really stands out.
The good news about that is, of course, that we continue to see strong macroeconomic momentum in the U.S., and we are well-positioned to be there and benefit from our scale of 43% of our net sales in U.S. already today. Fred, anything you want to add?
No, I think you have summed it up really well. The only thing I would add to that is that competition is clearly intensified through the Middle East crisis. However, our strong brands have really come through loud and clear, and our differentiation of those stronger brands have come through loud and clear in this pricing power. Not only that, but also in the volume growth we are seeing in the second half.
Thanks very much. Look, perhaps a question for Fred. We are still getting to the bottom of it, but it looks like in the accounts there is a $25 million impairment that is associated with the Indian plant. Can you give us any details on that and if this is within underlying earnings? Of course, I am only asking because the impairments were excluded from underlying earnings in 2025. I am just trying to understand if that has been a consistent treatment.
Yep. Good question, Dan. We did have selected lines that we impaired as we look to optimize our supply chain and optimize the supply in our network to drive our costs down, especially with the Middle East crisis, having a better cost position is really, really important here. We did take a non-cash write-off of some selected manufacturing lines, and the Indian plant had one as well.
But just the treatment of that, you pulled the impairments out from last year, but they appear to be included this year. Is that correct?
No. The impairment, I talked about the $0.033 of one-time non-recurring EPS in FY 2026. Those non-cash impairments were sitting in that $0.033 of EPS.
Oh, understood. Okay.
Yeah.
That is great. Thank you very much.
Yep.
Your next question comes from the line of Saul Hadassin from Barrenjoey. Your line is open.
Good morning. Thanks for taking my question. I was wondering about the second half growth within the Cleanroom gloves segment, and that 17% growth. I wondered if you could talk to how much of that was volume versus price. As a follow-up, clearly there's been some favorable timing as it relates to price increases at the back end of FY 2026. As we look into FY 2027, do you still get favorable pricing coming through relative to what's happening in the Middle East? Or will you temper some of that pricing based on what's happened to, say, input costs in the last month or so? Thank you.
Thank you. I can start and then hand over to Fred. Thanks for the question. I would start with the Middle East pricing question. What we promised to the customers, and we speak about this a lot, is that the cost inflation we saw in Middle East crisis, we passed on to customers. When cost inflation is coming down, we are also going to adjust our prices. We are going to be very flexible here and just reflect the cost inflation that we are having. Your question about the Cleanroom growth, and as you said, it was very strong in second half, and that kind of very strong growth you don't only get by pricing and value. There's volume as well. This total financial year growth of 10%, majority of that came from the U.S. Fred, do you want to add?
Just to expand on the Middle East pricing. We did start to price into the market in that May- June timeframe. You will see the impacts as we move into FY 2027 of that full-year effect of pricing in the Middle East. On the Cleanroom, Nathalie is exactly right. There were strong volumes being seen, and I think this speaks volumes to the KBU acquisition we had done almost two years ago now, where we're seeing the power of that brand, the power of the Ansell brand together, really unlocking a lot of opportunities in the marketplace.
Sorry, can I just follow up with that 10% Cleanroom growth? Are you willing to split out what was volume versus price?
Yeah, we won't talk to exact numbers, but I can tell you that there were strong volumes, probably to the tune of almost half of that being volume impacts.
Great. Thanks very much. That's all I had.
Your next question comes from the line of David Bailey from Morgan Stanley. Your line is open.
Yeah, thanks. Good morning. I was interested in the top five accounting for 58% of revenues. Just strategically, how you think about growing that going forward. Obviously, there's a gross margin benefit associated with that. But in terms of thinking about growing those brands further, what's the strategy here, and do you think that will continue to grow over the coming years?
Thank you. Very good question, and that ties to the strategic priorities. With the top five being 58% of our net sales, and as we continue in the, what I said, the operational excellence to simplify our product portfolio and brand portfolio, that means that we are focusing on these big brands and making them bigger. Because then we are just much more efficient, and we also make our life much easier to our customers when we have certain big brands that matter and support our customers. Now, I talk about the distributor customers as they go and represent us forward. Also, the innovation investments will be into these big brands. So again, focus on scale, make the big brands bigger, and also enhance the value they are delivering to the customer. So yes, we will see that they're going to drive growth faster than the rest of the company.
That is the key of being very strict on strategic priorities and capital allocation to really drive the profitable growth momentum. As I promised, I'm going to come back to these kind of examples every time we meet.
Yeah, understood. Just in terms of the guidance, it looks relatively clean. There's the $ 9 million of FX benefit coming through. Is there anything else to call out in relation to the guidance range of $ 1.58 -$ 1.70 in terms of movements within particular lines to think about?
No. It's just execution.
Understood. Thank you.
Thank you.
Your next question comes from the line of David Philipp Nathan from Goldman Sachs. Your line is open.
Thanks. Hi, Nathalie. Hi, Fred. Thanks for the presentation. Just wanted to touch on your guidance. If we think about the FX movements and also the share buyback into 2027, I think my numbers would suggest the NPAT grows about mid-single digits, at the midpoint, that is. If I then think about the composition between sales and margin, also considering that, I guess, your FY 2026 period had a one-off benefit that you're calling that's timing related. If you think about the FY 2027 split between sales and margin, could you give us a sense then of what's happening? Do you expect margins to stay flat? Does it grow? That'll be pretty helpful to think about your sales performance.
Yeah. Thanks, Dave. I'll start and then hand over to Fred. Sorry, Dave. Yeah, of course, a healthy growth and the momentum we've had in second half of this year supports it. At the same time, we have to be realistic and think that it's a very uncertain dynamic world around us. But with our focus on the strategic markets, the strategic verticals, where we see underlying faster growth, and where we also see that our brands are having a stronger power. By focusing on that, we will see a continued growth momentum. Then, of course, that translates into continued margin enhancement. And like I said on that assumption slide, it's really the commercial excellence at how do we make the big brands bigger? How do we translate the value we're driving to the customers and talk about that?
The operational efficiencies that we are going to get in our focus on the funding the growth lever on simplifying the portfolio, supply chain simplifications, and ways of working.
Yep.
Fred.
Maybe I can add, on the SG&A line, we're continuing to look at productivity initiatives within that line. We grew 2.7% year-on-year in FY 2026. We're looking to even be around that same level in FY 2027 because we know that it's really going to be important to leverage the scale that we're seeing in the top line, both in SG&A. And then we also have on the GPADE line a lot of productivity initiatives, both in the supply chain and also in the commercial networks, that are going to help drive that GPADE percentage faster up.
Yep. Okay. No, thank you. That's useful. On the Healthcare segment, I would say the Exam/Single Use part of the portfolio did really well in that second half period, even if you exclude the stocking that you called out. Could you give us a sense of what's been driving that? Is it largely just price increases, or is there any volume dynamics or market share implications we should be considering as well, please?
Yeah, thanks. That's a really good question. I have myself been intimately involved in the customer meetings when we did the Middle East price adjustments. I would say what really resonates with our customers, our distributor, and end users is that in this time of global disturbances, when you are a strong player, you have a strong balance sheet, and you say, "We are here to focus to serve you, and we are here to ensure availability"; that goes a long way. I would say that's behind the faster volume growth in Exam/Single Use, as we had the financial strength to buy the raw materials even when they were higher cost, and ensure that our customers all the time had their products. Again, supply equals demand.
Great. Thanks, Nathalie . Can I just follow up on a point on there? Do you feel the share gains that you made in that part of the business is sustainable into 2027?
I would say it's too early to say. Too early to say, and we are very focused on looking at the point of sales data, that how are they moving, both in Industrial and Healthcare to see how we are doing. At times of crisis, customers tend to lean to the ones who can deliver security like we did with availability. I think it's too early to tell what is a stickiness, and then also what is the next crisis around the corner.
Okay. Thanks, team.
Thank you.
Your next question comes to line of Laura Sutcliffe from Citi. Your line is open.
Hello, thank you for taking my questions. Could you talk a little bit about the significance of your biggest customers? I know you probably can't give us a lot of detail about the Amazon contract specifically, but maybe if you could just talk in general about those big contracts. You talked about your biggest brands, but how much overlap is there between your biggest customers and your biggest brands?
Yeah. Amazon is a huge customer for us. We are focused, I actually just came out of Amazon working meeting last week in the U.S. We are focused in on not just selling a product, selling an innovation. We are really looking at how we can systematically, in a partnership, tie ourselves together for the long term. Oops. Long term, and it is not only about just moving the product forward. It is about much bigger solutions that we are looking to ensure that Amazon can drive their safety culture and their needs going forward. As you said, I cannot tell too much about it, but maybe in the future I can also continue to give examples about the Amazon partnership, which is fantastic.
As I said, it is not only product- based, it is not only innovation based. It is really about looking at the total go-to-market, looking at the total solutions, how we can partner together and make that into structural setup that we are together. When you asked about the brands, they only buy one brand from us.
Very helpful. Thank you. Second question, I am sorry if this was mentioned earlier and I missed it, but did you have to buy in much product over the course of the year just gone to smooth the effect of raw material cost availability, inventory bouncing around?
You mean in the Middle East crisis?
Just in general, but yes, I suppose I was thinking about it being rooted in the Middle East. Yeah.
As it has been such a dynamic world, our operations team have done a fantastic job in actually being daily in meetings with our biggest suppliers to ensure that we get the right quality product. Not only that we get the right raw materials, but we get the right quality product, and also that financially we have the balance sheet strength to get it. Fred, do you want to build?
Yeah. Over the last few years, we have really invested behind a much stronger supply chain, and part of that is the partnerships that we have built with our vendors, particularly on the NBR side, which is obviously the most volatile right now in terms of not only cost, but supply. That partnership has really given us the opportunity to make sure that we can supply the market with no disruptions, and it has worked out brilliantly at this point.
Maybe I can add in what you said about the operational excellence, where I also said that we are going to simplify the supply chain. That, of course, means that not only like we are doing with the brand, let us make the big brands bigger, also how can we in the supply chain ensure that we partner with the big ones and we make the partnerships bigger, so that when we have these disruptions, global disruptions, that we are there and we have the joint muscles to breeze through it.
Thank you very much.
Your next question comes from the line of Craig Wong-Pan from RBC. Your line is open.
Thank you. Just wanted to ask about the industrial margin. For the full year, there was improvement year-on-year, but if we look from first half to second half, there wasn't much expansion like we've traditionally seen. I guess if you look for the second half 2026 on second half 2025, it did decline. Just wanted to understand if you could, yeah, explain what happened there and how we should think about that margin going forward, if there is typically going to be the usual seasonality or not?
Yeah. So great question. On the industrial margins, you're right, we did have a dip in the second half, but if you looked at the full year, we did see the margins improve year-on-year. There is a little bit of seasonality and timing within those margins first half to second. To really answer the question going into FY 2027, we will be sustaining the full year margins that we saw in FY 2026 going forward and looking to expand them as well.
Okay. Next question, just on the portfolio. Nathalie, you talked about making the big brands bigger, and you kind of alluded to simplifying the portfolio. If there are product lines shrunk or exited from, I guess my question is, does that lead to kind of impairments around the brands there or manufacturing lines or equipment?
Yeah. That's a good question. When we are talking about the operational excellence and the simplification we are doing, we're still working on the details. I would say we are now focused on the areas that will really quickly deliver value to the business. Of course, we need to work out the details.
Okay. My last question, just on the ERP investments, have you come to any estimate around the size or quantum of that?
Yeah. We have not come to the dollar amount of what the savings would be. We want to make sure that we can implement across the globe, and that's when you'll start to unlock the savings benefit, when the full systems are in place globally. That'll be in about two years from now, and that's when we'll have a better estimate of what that savings unlock will be.
On one ERP, I can also add.
Okay.
On one ERP, I can also add that our priority has been to be flexible on the Middle East cost inflation and the pricing needs, and that's been our number one priority. We wanted to do that well, and therefore, one ERP has been delayed.
Okay. Thank you.
Your next question comes from the line of Andrew Paine from CLSA. Your line is open.
Yeah, morning. Thanks for taking my questions, and congrats on the result. Just one on the liquidity. You have obviously highlighted the liquidity available here. Just be good to know what your medium- term outlook for this. Just really wanting to get an understanding around the mix of priorities around internal investments, M&A, and capital management that you called out, and also just to get an understanding of where your net debt to adjusted EBITDA target is over the long term.
Yeah. So let me answer that. Couple of things. One is on the latter part of your question, we are still targeting 1.5x - 2.5x net debt to EBITDA as our target range. We are slightly below that at this point, but that gives us a tremendous amount of agility, especially in these tough times with Middle East crisis. We do have the agility to really react. More importantly, it also gives us the ability to look for the highest- growing, highest- returning type initiatives that we can put capital against. In terms of that liquidity, obviously we are always looking at M&A opportunities, but they come as often as they come. So we are constantly looking at those opportunities, but there is nothing at this point that we would like to disclose at this time.
On M&A, I would just add that a healthy company needs to deliver sustainable organic top line growth. So full focus now on the strategic priorities, full focus on delivering the organic top line growth. Only then do we deserve to do the next M&A. So focus, priority, organic growth at the moment.
Okay. That is great. Thanks. Then just coming back, I know you have mentioned the foreign exchange benefit of $ 9 million in FY 2027, but you are also just talking about the expected reduction in hedge book losses there. Can you just run us through what that is and have a look at that?
Yep. As you'd mentioned, we had $13.8 million of hedge losses in FY 2026. We expect $9 million of that to unwind into FY 2027. We expect that the currencies, which were bouncing around, if you remember, in the first half, they've typically stabilized in the second half. We expect that stabilization to continue from a translation standpoint.
Okay. That's great. That's all I had. Thanks.
Yep.
Your next question comes from the line of Vanessa Thomson from Jefferies. Your line is open.
Good morning. Thank you for taking my questions. I wanted to ask you mentioned just then that you were aiming to keep flexible pricing given the Middle East disruption. I just wondered what that meant, and is price neutrality the goal? Just a bit more color there.
Yeah. As we had said before, we were looking to offset any kind of tariff, and in this case, Middle East increased cost through pricing, and we've accomplished that at this point. There was a timing difference between the actual cost increases and the timing of when we brought the pricing into the marketplace, and it was a net benefit to us, and that was built into that non-recurring $ 0.033 of EPS. We basically, at the end of the day, covered outside of that timing difference the cost with price.
Thank you. Also, there was discussion of organic top-line growth being the primary focus for now. In the past, that's been flagged as 3%-5% organic growth. Is that still what we should be thinking?
I think we have to come back to that, what is our financial targets as we go forward? But as said, we have the financial strategic priorities to look at the commercial excellence and then selected markets that we know are structurally growing faster, and also the selected verticals that we know are structurally growing faster. But down the line, we owe you as we look at the financial targets.
Okay, thank you. My last question was just around, you mentioned that HyFlex now is being manufactured in three locations to improve speed to market. Are there other products that that's under consideration for? Dare we ask, would that ever lead to onshoring production within the U.S.? Thank you.
Thank you. When there is so much happening in the world all the time, we have to be very agile. From a customer centricity point of view, think how do we serve our customers the best? I have spoken a lot about this, ensuring availability at the right time and reducing lead times. Yes, we are looking at different options and also how to ensure, for the U.S. market, that we are TAA compliant. Today, we have two factories that are TAA compliant. What are the other needs as we go forward? Yes, we are always looking at different solutions.
Thank you. That is all I had.
Your next question comes to the line of David Low from UBS. Your line is open.
Thank you. Thanks for taking my questions. Could we just come back to the price issue? There has been a lot of price movement with tariffs and then the Middle East. Could I get you to break down roughly what the split is between price and volume for the business in 2026 and what the likely benefit is as we move into 2027, please?
Yeah. So David, good question. As I mentioned in FY 2026, the sales growth of 5.7%, you can look at as predominantly pricing. If you remember in the first half, we had much lower volumes. We did see that turn around very nicely in the second half. But when you combine the two halves together, we're slightly down in volume for the year. But the key message here is the second half, that acceleration of volume growth was seen, and it was really important for us to see that as we move into FY 2027 as well. It's predominantly pricing, with volumes being slightly down.
As we think about FY 2027, how much price benefit, given where your starting point is and what the plans are, is likely to come through in 2027, assuming input prices don't move from here?
Yep. So we believe there'll be a healthy mix both of volume and pricing as we move into FY 2027. We won't obviously tell a specific number, but we do believe the volume growth will continue. Obviously, with the markets the way they're reacting and the dynamic and volatile markets we're in, that could change on the volume side, but we do see a path to a healthy mix.
I would add also with the strategic priorities, when we're looking at the attractive verticals, the key markets, we will also see that all volume is not good volume. That's key of commercial excellence, is where do we allocate our focus? It might be that from a commercial excellence, there's business that is not so attractive. That's part also of simplifying the portfolio and the brands. Again, moving with the portfolio-
All right.
-working on the portfolio roles as we go forward.
Great, thanks. My other question, it's not been lost on anyone that data centers are a huge level area of investment in the U.S. and even back here in Australia. But how much exposure does Ansell have to that dynamic?
We do have exposure to data centers in U.S. and globally. However, once they're built, you don't need a lot of PPE in the factories or in the centers. But while you build them, there's massive investments going into a lot of different areas in the supply chain. Yes, this is something where we are really focused on what are the hazards, what are the safety hazards, and how can we serve it the best going forward, not only in the U.S. but globally.
All right. Thank you very much.
Thank you.
As a reminder, if you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. Your next question comes from the line of Christine Trinh from Macquarie Capital. Your line is open.
Good morning. Thanks for taking my question. Just changing tact a little bit on raw materials. We saw that inflation up about 100% earlier this calendar year, and the oil price is just continuing to bounce around, but still pretty high. How are you seeing raw materials trending now, and what are you assuming into the FY 2027 outlook, please?
Hi, Christine. Good question. Let me step back and talk a little bit about what we saw in the second half. If you remember, in the first half, we saw our biggest commodities are most volatile on the latex side. They actually were coming down in the first half. Then we started the second half, and we started to see them increase. Around the April, May, June timeframe, they started to accelerate with the Middle East crisis. They have now come down a little bit over that next period of time, and we are seeing a stabilization at this point. We believe as we move into FY 2027, those costs will have stabilized, and those are the ones that are mostly tied to the oil types of products.
The caveat to that is that obviously Middle East crisis is dynamic, and these things can turn on a dime. We are going to be prepared, and we are monitoring this almost daily. As these commodity costs shift, we are prepared to do the appropriate pricing actions in the marketplace to offset those costs dollar for dollar, as we have been doing all along, not only with tariffs two years ago and into this year, but also on the commodity cost side on Middle East.
Perfect. Thank you.
There are no further questions at this time, so I would like to hand back.
Thank you. Thank you, everybody, and thank you for the good questions. Just as a summary, we had a strong financial year 2026. We are really proud of what the team delivered, and in this dynamic market environment with the U.S. tariffs, Middle East crisis, and at the same time, being able to grow the top line and the profitability and a strong cash conversion in the year. Now with the strategic priorities being started to be outlined, it will make it much easier for us to focus on where it really matters, focus on innovation, focus on our talents, focus capital investments in these areas to continue to deliver strong performance. That, of course, first translate then into our guidance for financial year 2027, with the outlook of delivering $1.58 - $ 1.70 EPS as we go forward.
This is a team effort, and I really want to thank all of our team internally and all our strong customers. It's heavy lifting in this kind of changing world, and a lot of customer intimacy here and also all our supply partners. Thank you.