[South Africa] Ascendis profit up 28 per cent as half year revenue tops R4 billion
Ascendis Health has reported a 27% increase in revenue to R4 billion for the six months to December 2017, driven by the strong performance of the group's international operations which grew revenue by 50% to R1.9 billion.
The health and care brands group increased operating profit for the half year by 28% to R602 million.
The group's acquisitions of Sun Wave Pharma in Romania and Cipla Vet and Cipla Agrimed in South Africa in June 2017 contributed to the gross profit margin strengthening by 160 bps to 44.2%.
The normalised EBITDA rose 28% to R653 million. Headline earnings on a normalised basis grew by 20% to R353 million with normalised headline earnings per share 7% higher at 75.8 cents. The weighted average number of shares in issue increased by 12% during the reporting period.
The balance sheet was strengthened as Ascendis settled vendor debt of R1.1 billion.
Earlier this week Ascendis announced the appointment of Thomas Thomsen as the new CEO with effect from 01 March 2018. He succeeds Dr Karsten Wellner who has been CEO since the founding of Ascendis in 2011.
Dr Wellner said the international acquisitions of pharmaceutical manufacturer Remedica in Cyprus, European sports nutrition specialist Scitec (both in 2016) and nutraceuticals business Sun Wave Pharma in Romania (2017) have transformed Ascendis into a global healthcare business.
"Ascendis has expanded its international operations to Spain, Cyprus, Hungary, Romania and Australia, and products are exported to over 120 countries globally. 57% of the group's earnings are now generated outside of South Africa," he said.
The Ascendis brand portfolio is housed across three divisions: Pharma-Med, Consumer Brands and Phyto-Vet. Pharma-Med, which contributed 50% of group sales, increased revenue by 20% owing to the strong performance of the pharma business of Remedica and the Medical Devices business.
Consumer Brands increased revenue by 39%, benefiting from the acquisition and strong growth of Sun Wave Pharma. Margins in the sports nutrition businesses were impacted by higher global prices of whey protein, a key raw material in sports nutrition products. Scitec, which is the third largest sports nutrition brand in Europe, was further impacted by its lack of direct online presence and sales declined by 7.8%.
Scitec has implemented remedial strategies, including launching a new sales and marketing programme, and building digital capabilities for online strategies.
Phyto-Vet, the biosciences business in the Ascendis stable, again experienced good revenue growth of 29%. The performance was boosted by the recently acquired Cipla business which reported double digit sales and profit growth.
On the group's plans and prospects, new CEO Thomas Thomsen said Ascendis will continue to pursue organic and more focused synergistic growth strategies across its South African and international businesses to increase revenue growth and profitability.
"Operationally our focus will be on turning around the performance of Scitec while generating synergies from our recent acquisitions of Remedica, Scitec, Sun Wave and Cipla. We are also targeting to improve margin, reduce gearing levels and improve cash generation," he said.
Thomsen said a strategic business review has been initiated to create a sustainable market position for Ascendis Health and to accelerate organic growth following several acquisitions locally and offshore in recent years. The review is expected to be completed late in the 2018 financial year.