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Real Economy News in Real Time
R/€ = 15.99 Change: -0.02
R/$ = 13.31 Change: 0.03
Au 1312.57 $/oz Change: 6.14
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Ascendis reports strong headline earnings growth

12th September 2017 BY: Anine Kilian
Contributing Editor Online

JSE-listed pharmaceuticals company Ascendis Health has reported strong growth in normalised headline earnings of 92% to R645-million for the year ended June 30.
 
The group’s revenue increased by 64% to R6.4-billion, with acquisitions contributing R2.3-billion, the company said in a statement on Tuesday.
 
Despite a challenging economic environment, the group’s normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 78% to R1.1-billion, with the Ebitda margin strengthening by 130 basis points to 16.9%.  
 
Since listing in 2013, Ascendis has grown revenue at a compound rate of 81%, while Ebitda has grown by 102% a year. 
 
Ascendis CEO Dr Karsten Wellner said in a statement on Tuesday that, following the group’s international acquisitions of Cyprus-based pharmaceuticals manufacturer Remedica Holdings and European sports nutrition business Scitec, Ascendis has been transformed into a global healthcare business, with a natural hedge against currency fluctuations.
 
“These acquisitions have been game changing, as 60% of our earnings are now generated outside South Africa,” he noted.
  
The group’s foreign revenue rose by 497% to R2.8-billion and accounts for 43% of total sales.

Ascendis has operations in Spain, Cyprus, Hungary, Romania and Australia. While most businesses are focused on their home and regional markets, Remedica exports about 80% of products into high-growth emerging markets. 
 
Remedica has been successfully integrated, Wellner said, with ongoing synergy projects within the Ascendis Pharma-Med division covering cross-selling, procurement, research and development, new product development and production.

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“Remedica generated revenue of R987-million since the acquisition, with a profit of R243-million, ahead of expectations.” 
 
Scitec, the third-largest sports nutrition brand in Europe, reported sales of R1.2-billion and a profit of R121-million.

“The business has been negatively impacted by external factors, including an increase in world market prices of whey protein, one of the most important raw materials in sports nutrition. We have taken decisive steps to improve profitability, including appointing a new head of the business, focusing on new sales channels, expanding into new markets and developing a strong new product development pipeline,” he explained.
 
Wellner said Scitec provided an international platform for Ascendis’s Evox and SSN brands to expand abroad, and for Scitec to grow in Africa and Australia.
 
Locally, Ascendis acquired the Southern African animal health operations of Cipla India, with effect from June 2017.
 
Looking at the year ahead, Wellner said the group would continue to pursue its proven strategy of organic, acquisitive, synergistic and international growth to create shareholder value. 
 
“We have initiated projects to enhance organic growth and margins. 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,” concluded Wellner. 

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EDITED BY: Samantha Herbst Creamer Media Deputy Editor
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