Ascendis vows to pursue organic and acquisitive growth

LISTED health and care brands group Ascendis Health has vowed to pursue organic and acquisitive growth in the year ahead as the strategy paid off with healthy profits in the year to end June.

Ascendis said the acquisitions boosted its earnings 60 percent during the period.

Chief executive Karsten Wellner said that the group felt there was no need to relent on the proven strategy and international growth to create shareholder value.

“We have initiated projects to enhance organic growth and margins,” Wellner said.

“This includes consolidating our medical devices division, focusing on cost efficiencies across the group, in particular in the sports nutrition business, rationalising manufacturing facilities in South Africa and investing in new product development and launches.”

Wellner said the group would buy smaller complementary bolt-on businesses in the next financial year with a particular focus in the higher growth economies in central and eastern Europe as well as South Africa.

He said Ascendis would also target fast growing health and care market segments.

Ascendis Health increased international sales following the completion of two acquisitions in Europe in August last year. It paid €260 million (R4.03 billion) for Remedica and €170m for Scitec to take the combined deals to around R7.3bn.

It has since concluded the acquisition of Sun Wave Pharma in Romania late in the reporting period for €42.5m.

Wellner said Remedica had now been successfully integrated into the business with ongoing synergy projects within the Ascendis Pharma-Med division covering cross-selling, procurement, research and development, new product development and production.

Remedica generated revenue of R987m since acquisition, with profit of R243m being ahead of expectations.

Scitec, the third largest sports nutrition brand in Europe, reported sales of R1.2bn and profit of R121m.

“These acquisitions have been gamechanging, as 60 percent of our earnings are now generated outside of South Africa,” Wellner said.

Group foreign revenue increased 497 percent to R2.8bn during the period to account for 43 percent of total sales. Wellner said the company was currently exporting products to more than 120 countries. Ascendis has operations in Spain, Cyprus, Hungary, Romania and Australia.

Group revenue increased 64 percent to R6.4bn for the period under review with acquisitions contributing R2.3bn. Headline earnings on a normalised basis increased 91 percent to R645m, while normalised headline earnings per share increased 29 percent to 156.4 cents a share.

In South Africa the group’s normalised earnings before interest, tax, depreciation and amortisation (Ebitda) increased 78 percent to R1.1bn, with the Ebitda margin strengthening by 130 basis points to 16.9 percent.

The directors decided against paying a dividend. An interim dividend of 11c a share was declared in March.

Ascendis Health shares declined 1.26 percent on the JSE yesterday to close at R21.23.