Aiming to increase cash generation and spur profitability, Ascendis Health Limited on Monday announced plans to sell smaller local non-core businesses in South Africa.
Asides a production plant in Johannesburg, Ascendis also plans to sell its sports nutrition business, its direct selling and network marketing business that has been deemed non-core or under-performing.
The decision to get rid of non-core businesses in its home market is part of a strategic review for the company. The South African health provider will also consolidate its pharmaceutical manufacturing facilities in Gauteng province as part of the strategic review
Chief Executive Thomas Thomsen in a statement said “In this strategic review process we have had to make difficult decisions but realize they are imperative to strengthen our market position and grow the company profitably.”
With 60 percent of its profit generated outside South Africa, Thomsen added sales processes is underway for the South African assets while the proceeds will be reinvested to boost organic revenue generation and financial metrics.
In March, Founding Chief Executive Officer Karsten Wellner, who has stepped down from his role, told Bloomberg that the company will shelve its acquisition strategy for a year as the group wants to reduce debt and prioritize organic growth.
Operating in Spain, Cyprus, Romania and Australia, Ascendis in 2016 focused on offshore growth and expansion in order to diversify exposure and risk to the South African economy.
Speaking on the significance and impact of the assets sale on its staff Thomsen said “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.”