Ascendis Health posts sterling maiden results

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Ascendis Health chief executive Karsten Wellner says the growth is sustainable. Photo: Supplied

Johannesburg - The resilience of consumer markets targeted by the recently listed Ascendis Health and the company’s aggressive acquisition drive saw it double revenue and more than quadruple operating profit in the six months to December last year.

Ascendis, whose business is divided into three units, ramped up its headline earnings to R54 million from R4m in the previous year.

Its divisions are consumer brands (nutraceuticals, vitamins, sports nutrition and skin care products), Phyto-Vet (plant and animal health and care) and Pharma-Med (prescription drugs and medical devices).

It has been a very acquisitive company, with three transactions pursued since its listing on November 22 last year.

The company, one of the fastest-growing health-care groups in the country, has pursued growth organically and through acquisitions with many more in the pipeline as its management evaluates projects in all divisions.

“It’s organic growth, it’s acquisitive growth and our export growth, so it is sustainable. Our gross profit improved nicely, which shows that we are not too affected by the subdued consumer expenditure and we are not too affected by the rand,” Ascendis chief executive Karsten Wellner said.

Ascendis’s Phyto-Vet and consumer brands divisions were aimed mostly at higher living standards measure (LSM) groups, and the company said this made them more resilient to weaker economic conditions. Consumer brands include nutraceuticals, vitamins, sports nutrition and skin-care products, while phyto-vet houses brands such as Marltons and Efekto.

In the six months to December, Ascendis’s operating profit jumped 366 percent to R88m from R19m a year earlier, delivering what appears to be an impressive first set of interim results. Revenue increased by 114 percent to R662m and its operating margin improved to 13 percent from 6 percent.

But equity analyst Ryan Seaborne from 36One Asset Management said the year-on-year results were not comparable, as some of the acquired businesses contributed to last year’s financials for a couple of months when they were not part of the 2012 results.

“But they have managed to deliver on management’s promise. The base earnings are reasonable when you look at what management promised to deliver,” he said.

Wellner said the company achieved 12 percent organic growth when acquired businesses were not included.

Ascendis said it was also confident that it would achieve full-year pre-listing forecasts and add new acquisitions’ benefits to that. The company targeted earnings of R124m after tax for this financial year.

As the company ramps up its domestic portfolio, growing the foreign customer base is receiving its immediate focus.

The company exports its products to 45 countries, mainly in Europe and Africa, and in the period under review, it increased its foreign revenue by 209 percent.

It said there was a keen interest from offshore distributors for several brands that Ascendis was not exporting yet and this provided an opportunity to grow revenue at the same level as last year, depending on the rand’s performance.

But exports are not the only route planned to increase foreign revenue. Its international expansion strategy also includes establishing offshore operations and acquiring international businesses.

The stock soared 7.37 percent to close at R10.20 yesterday. - Business Report


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