South African healthcare provider Ascendis Health said on Monday it plans to dispose of smaller local non-core businesses as part of a strategic review aimed at improving cash generation and enhancing profitability.
Ascendis, which generates 60 percent of its profit outside South Africa, said it will sell its sports nutrition business, its direct selling and network marketing business as well a production plant in Johannesburg.
These three assets were deemed non-core or underperforming, Chief Executive Thomas Thomsen said in a statement.
“In this strategic review process we have had to make difficult decisions but realise they are imperative to strengthen our market position and grow the company profitably,” Thomsen said.
The sale processes are underway and the proceeds will be reinvested to improve organic revenue growth and financial metrics, Thomsen added.
Ascendis Sports Nutrition, with brands such as SSN, has a fragmented product portfolio in South Africa, the company said. This has lead the group to focus solely on its biggest sports nutrition brand, Scitec.
Hungary-based Scitec, which was acquired by Ascendis in 2016, is one of the leading sports nutrition brands in Europe and exports products to more than 90 countries worldwide.
Ascendis, which also has operations in Spain, Cyprus, Romania and Australia, spent 2016 focusing on offshore growth and expansion in order to diversify exposure and risk to the South African economy.
In South Africa, as part of the strategic review, it will consolidate its pharmaceutical manufacturing facilities in Gauteng province.
“We are acutely aware of the impact of these decisions on our people and the affected employees will have the option to be transferred to the new owners to ensure job retention,” Thomsen said.
Source: Reuters
