Ansell chief executive Magnus Nicolin has warned China of “brutal” consequences as manufacturers leave the country over rising costs and fears at the escalation in trade war with Donald Trump.
“So many manufacturers are moving out of China at breakneck speed. You don’t see it in the China-reported GDP growth numbers yet. I suspect that sooner or later it will be visible,” Mr Nicolin said.
“It’s going to be quite brutal for China here, in a short while.”
Mr Nicolin said while Ansell had moved some production out of China “mostly because of (the) trade war, it probably would have happened anyway, because China is frankly a very expensive place to produce in these days. So we can produce a product at 20-30 per cent lower cost in Vietnam or Sri Lanka.”
Ansell opened one new plant in Sri Lanka about six months before the trade war started “with the intent of moving production out of China and into Sri Lanka. “So we were well ahead on that plan so to speak, when the crap hit the fan,” he said.
So many manufacturers are moving out of China at breakneck speed. You don’t see it in the China-reported GDP growth numbers yet.
Magnus Nicolin, Ansell chief executive
Mr Nicolin made the comments in an interview with The Age and Sydney Morning Herald after the release of the company’s full year results for fiscal 2019.
Ansell reported a full-year adjusted attributable profit of $US150.9 million ($222.2 million) for the year, up 2.9 per cent on the previous year and ahead of consensus expectations of a $US146.9 million result.
The rubber glove manufacturer declared a full-year dividend of US46.75 cents per share (68.84 cents), up 2.7 per cent on the previous corresponding period.
Mr Nicolin said fiscal 2019 posed a series of challenging conditions including a slowdown in some economies, but the company “successfully navigated” these headwinds.
“Challenges included higher raw material costs, a weaker European economy, Brexit, heightened US rhetoric with import tariffs, and some indications of a potential slowdown in the American industrial sector,” Mr Nicolin said.
Ansell’s sales from continuing operations totalled $US1.49 billion, up 0.6 per on a continuing basis and 3.2 per cent on a constant currency basis.