Ascendis’ actions spare it from knocks

CRAFTY hedging against a weakening rand and focusing on both preventative and interventive medical care products enabled pharmaceutical manufacturer Ascendis Health to shoot the lights out in the year to June with more than 50 percent growth in profit.

The group has, as a result, not “taken any knocks” from the weakness of the rand and is instead hedged four months ahead on the currency.

“As you know, the rand is not always very kind to local manufacturers and local companies, and to mitigate this we are growing our export and exhibitors position worldwide to have a natural hedge against foreign exchange induced rand weakness,” Ascendis chief executive Karsten Wellner said yesterday on the sidelines of the group’s results presentation.

The group grew revenue by 74 percent to R2.8 billion from R1.6bn in the prior reporting period. Its performance was driven by comparable organic growth of 11 percent and key acquisitions concluded over the past year, which include income from Respiratory Care Africa – on the books for 11 months, Arctic Healthcare Brands for 10 months and The Scientific Group for five months.

Revenue generated from foreign markets increased by 39 percent to R259m, accounting for 9 percent of the group’s total sales.

Ascendis brands are currently exported to 52 countries globally.

Earnings before interest, tax, depreciation and amortisation (Ebitda) grew by 71 percent with an Ebitda margin of 15 percent, down from 15.2 percent in 2014.

Operating profit increased by 69 percent to R362m from R214m in 2014. Profit before tax was 59 percent higher at R293m up from R184m in the previous period.

The performance for the year resulted in headline earnings growth of 53 percent to R209m from R137m in 2014 with headline earnings per share increasing 25 percent to 80c, impacted by a 23 percent increase in the weighted average number of shares in issue during the period.

The directors have increased the total dividend by 27 percent to 19c per share.

Turning to the performance of it divisions, Pharma-Med raised revenue by 204 percent to R1.2bn or 44 percent of total revenue.

Consumer brands grew revenue by 44 percent to R949m and accounted for 34 percent of group revenue.

Phyto-Vet increased revenue 13 percent to R620m, contributing 22 percent to group revenue.

“These are very good numbers we are showing today based on strong acquisitive growth and organic growth from that side. We are upbeat about our numbers in sometimes difficult trading environments,” Wellner said.

He said the group’s acquisitive growth strategy continued to focus on the acquisition of platform companies for all business units and mainly target opportunities in Australia, Europe, the US and Africa.

In South Africa, the group is in negotiations for bolt-on acquisitions across all divisions.

A good approach

The integration of The Scientific Group into the medical devices division will enable management to create economies of scale between the three complementary medical businesses in the group.

Meanwhile the purchase of Spanish drugmaker, Farmalider, is expected to create many synergies through cross-border licensing of dossiers and opening new markets and customers for Farmalider and the Ascendis Pharma division.

“We are looking at selective markets. Of course, we are looking all over the world because with internationalisation you have got to have a good approach, which is important because a lot of companies burn their finger with internationalisation.

“But my personal experience has been international markets for many years in eastern Europe, Middle East and Africa for many years; I know what it’s all about,” Wellner said.

Ascendis shares on the JSE yesterday climbed 3.5 percent higher to close at R14.80.