JOHANNESBURG – Listed health and care brands, Ascendis Health, yesterday unveiled a new blueprint that it has pinned its hopes on for growth as it posted higher revenue in 2018.
The company said that it had identified the pharma and consumer healthcare sectors as its core business, based on management belief that increased focus on these units would bolster the group’s market position.
Chief executive Thomas Thomsen said Ascendis planned to drive geographic expansion and growth by strengthening its current foothold in Europe, the Middle East and Africa.
“The strategy complements the core businesses, based on pre-defined investment criteria, including strategic alignment and financial returns,” Thomsen said.
Yesterday, Ascendis Health reported a 21 percent increase in group revenue to R7.7 billion during the year end to June from R6.4bn.
It said international revenue increased 35 percent to R3.7bn and benefited from the acquisitions of Remedica in Cyprus and Sun Wave Pharma in Romania.
International revenue now accounts for 48 percent of the group’s total sales, up from 43 percent in 2017.
The group said that its medical and animal health units would complement the business, with management planning to strengthen and scale them.
“Following soul-searching and a study on the business, and going through all the data, we decided that we could not continue on this path,” Thomsen said, referring to the results of a view process aimed to boost cash generating and enhancing profitability. Management also moved to dump its biosciences division, charging that it would be divesting from the business as part of the strategy.
“We have decided that biosciences is not a core business and does not fit into our group in the long term. We are patient and we will sell only when we find the right buyer,” Thomsen said.
The company previously announced that it planned to divest in Ascendis Sports Nutrition, Ascendis Direct Selling and the group’s pharmaceutical manufacturing facility in Isando, Gauteng. Proceeds from the disposals were expected to be reinvested in the business to improve organic revenue growth, reduce gearing and enhance financial returns, the company said.
The group has operations in Spain, Cyprus, Hungary, Romania and Australia, while most of its businesses are focused in South Africa.
It said it would shift its operating model to a global division model from the current focus on South Africa and Europe by next year.
“A single global operating model will reduce complexity and allow for a clear strategy with faster decision making and greater accountability,” it said.
Through this model, the group said it aimed to generate between 7 and 10 percent revenue growth rate.
It said it also targeted a growth rate and 22 to 25 percent earnings before interest, tax, depreciation and amortisation margin by the 2023 financial year.
Ascendis shares closed 0.95 percent higher at R10.60 on the JSE yesterday.