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Diversity, organic growth, acquisitions boost Ascendis

Cape Town – The strength of diversity both in products and clients has helped health and care brands group Ascendis Health [JSE:ASC] in a volatile market, according to CEO Dr Karsten Wellner.

The group’s results for the year to June 2015 show increased operating profit by 69% to R362m and revenue by 74% to R2.8bn.

Headline earnings grew by 53% to R209m with normalised headline earnings per share up 31% to 94 cents. The total dividend was increased 27% to 19c per share, including an interim dividend of 8c.  

Wellner said revenue was driven by strong organic growth through new product development and launches, as well as key acquisitions.

"We have had strong product launches during the financial year and innovation. These will drive our sales forward. If you are a brand company you must constantly reinvent yourself,” said Wellner.

“Because of what is happening with the rand one needs exports in hard currency to balance your imports."

READ: Ascendis aims at exports, synergies, innovation

Ascendis has three divisions, namely Consumer Brands (nutraceuticals, complementary medicines, sports nutrition and skin care products), Phyto-Vet (plant and animal health) and Pharma-Med (prescription drugs and medical devices).

Pharma-Med increased revenue by 204% to R1.2bn and accounted for 44% of total revenue. Consumer Brands grew revenue by 44% to R949m (34% of revenue) and Phyto-Vet increased revenue 13% to R620m (22% of revenue).

Revenue generated from foreign markets increased by 39% to R259m.

Ascendis products are exported to 52 countries and account for 9% of total sales.

Wellner said Ascendis is targeting to achieve 30% of total revenue from international markets by 2017.

Shortly after the end of the financial year Ascendis purchased an initial 49% stake in Spanish pharmaceutical group Farmalider for R210m. This deal increases the foreign revenue contribution of the group to 21%.  

“This acquisition is aligned with our international growth strategy of diversifying across different markets and increasing foreign denominated earnings,” said Wellner.

The Scientific Group, which was acquired by Ascendis for R284m in February 2015, is being integrated into the Ascendis Medical division. Ascendis Medical is now the second largest medical device business in the country, with annual turnover in excess of R1bn.

READ: Ascendis Health makes yet another  acquisition

Wellner said the group's acquisition pipeline includes an ongoing search for targets in Europe, the US and Africa, while in SA there are five deals in various stages of negotiations as well as several deals in all divisions being evaluated.

As for future plans, Wellner said the aim is to create a truly international company.

“Internationally we will look to acquire platform companies for all our business units. Operationally our priorities are to improve margins, focus on cost control and efficiencies, accelerate growth in export sales and continue new product development and innovation to ensure our continued growth momentum,” said Wellner.

He said the aim will also be to increase local or in-house production,

"In the next 12 months we will definitely have more news on organic and acquisition growth internationally," concluded Wellner.

ALSO READ: Ascendis Health concludes BEE deal

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