The ANN result is not great. But nor is it as calamitous as the market is pricing either.

Mostly negative foreign exchange pressures, and the cost of exiting Russia.

It’ll work clear of the pandemic overhang that’s affecting the health segment, and the base business is a steady grower.

You can see the below FX and asset sales adjusted numbers “Organic CC”, which highlights margins and earnings are better than what they might seem at first blush.

The guidance change is from FY23 of US$115c-$135c to US$110c-$120c.

ANN trades at 15x and is “normally” a fairly defensive business. We are happy to look past the near term issues.

We’ll come back to this note after we’ve gone through the earnings call.


ANN is indeed most of the way through, if the revenues of the Healthcare are any guide, having unwound the pandemic boom/boon.

Operating income is suffering from supply chain issues, firstly we see that the pandemic boom is unwound, secondly we see deterioration in the industrials segment.

Margin wise, that decreased profitability looks like the below. Not huge variation, but current numbers are pretty close to the historical bottom.

The key question on the call was “when will your margin go back up”, which is essential but neither is it insightful. Management see no long run impediments, but it is a “wait and see” / “trust us” type outcome.

Overall, ANN is a pretty decent, usually stable cash generator. So, we’ll stick with it, across our direct equity portfolios.

It seems clear we got hit with a value trap, and that the pandemic unwind had further to run than we thought, AND, that in addition to those pricing pressures, was getting hit with supply chain issues to boot, but, at $25, we will bottom draw it.

As always, whenever you make a mistake, as long as the balance sheet isn’t over-geared, you’ll probably come out the other side.

ANN’s balance sheet is strong, which will buy it time to muddle through.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.