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Cape Town – The success of integrated health and care brands group Ascendis Health [JSE:ASC] lies in its strategy of diversification, CEO Dr Karsten Wellner said on Wednesday at the announcement of the interim results for the six months to December 2015.
"Our strategy is like that of a good soccer team where diverse talents combine to form an excellent team," said Wellner.
"Yes, SA is facing difficult times as a country, but our diversified product portfolio, strategy and customer base enables us to stay strong."
The drought in SA, for example, impacted sales in the group's Phyto-Vet division.
Ascendis Health delivered profit growth of 66% to R147m in the six months to December 2015. International sales now form 20% of the group's revenue.
Headline earnings for the half year grew by 48% to R131m, with headline earnings per share up 37% to 49 cents. An interim dividend of 9.5c per share has been declared, 19% higher than the prior year.
Ascendis, which owns a portfolio of market-leading brands for people, plants and animals, continued to benefit from its organic, acquisitive and synergistic growth strategies and an increasing focus on international expansion, according to CEO Dr Karsten Wellner.
Wellner, said the group’s first international acquisition of Spanish pharmaceutical group Farmalider SA, which was bought for R210m (49% stake), has been performing very well.
“The acquisition is aligned with our international growth strategy of diversifying across different international markets and increasing foreign denominated earnings,” he said.
Farmalider developes, licenses and manufactures mainly generic pharmaceutical products, with a leading position in the pain management market in Spain and a growing presence in other European markets.
According to Wellner, Farmalider is not only growing nicely in the Spanish market, but also in other European countries.
"It is this kind of business that helps us as a kind of rand hedge," added Wellner.
Locally the group announced in November 2015 the acquisition of the pharmaceutical business, Akacia Healthcare, for R345m, including a GMP accredited production facility. Akacia sells the market leading Reuterina probiotic range and the strong cold and flu brands Sinucon and Sinuend.
The group’s revenue for the six months increased by 40% to R1.9bn, driven by new product launches, international growth and acquisitions concluded over the past year, including revenue of R212m from Farmalider.
Revenue from foreign markets increased by 220% to R365m, accounting for 20% of total sales.
“We are targeting to achieve 30% revenue from outside South Africa by 2017 through exports, establishing offshore offices and acquiring international businesses. Ascendis brands are currently exported to more than 50 countries globally,” said Wellner.
On the plans for the remainder of the financial year, he said the group will continue to focus on international acquisitive growth to further improve its hard currency revenue base.
“We are currently evaluating opportunities to acquire companies for all three divisions in Australia and Europe. In South Africa, we are in negotiations for further bolt-on acquisitions across all divisions,” said Wellner.
Operationally the group’s priorities are to improve margins through strict cost control and focus on efficiencies, finalise the Sports Nutrition joint production project, open new routes to market in SA, accelerate growth in export sales and continue new product development and innovation.
Wellner said the group will continue to pursue its organic, acquisitive and synergistic growth strategies as it develops Ascendis into a global company founded on strong SA health brands.
He added that more synergies could also be expected from its optimisation projects.
"We have a holistic focus and are also looking at diversifying our customer base," he said.
