This article is from the Australian Property Journal archive
AUSTRALIA’S largest private hospital operator Ramsay Healthcare has posted a 20.6% fall in net profit to $388.34 million for FY18, due to industry headwinds.
Net non-core items of $191.0 million were recognised in the period. The non-core items were principally due to Ramsay UK recognising an onerous lease provision and asset write downs related to certain UK sites of $122.0 million (net of tax) and Ramsay Générale de Santé (RGdS) recognising restructuring costs of $29.9 million (net of minorities and net of tax).
The company was battered by United Kingdom operations, where revenue was down 5.2% to £424.2 million and EBITDAR fell 9.8% to £102.7 million. The group’s French division revenue was up marginally, by 0.3% to €2.2 billion. EBITDAR down 0.6% to €445.7 million.
However, in Australia the revenue rose 5.5% to $4.9 billion. EBITDA was up 12.1% to $896.0 million.
Core net profit was up 6.8% to $579.3 million and core earnings per share rose 7.0% to 279.8 cents. Revenue increased 5.4% to $9.2 billion and EBITDA lifted by 6.2% to $1.4 billion.
Ramsay declared a final dividend of 86.5 cents fully franked, up 6.1% on the previous corresponding period, bringing the full-year dividends to 144.0 cents fully franked, up 7.1%.
Managing director Craig McNally said the company had delivered a solid result during the period in challenging circumstances.
“Despite the headwinds we faced in all our markets, Ramsay Health Care has delivered a good result driven by the quality, diversity and scale of our hospitals, which continue to achieve above market growth, as well as our disciplined cost management focus.
“As disclosed to the market in June, our FY’18 results were impacted by the significant downturn in NHS volumes in our UK business as well as softer growth rates in our Australian business and the decision to temporarily slow down the rollout of the Ramsay Pharmacy franchise network while we invest in infrastructure and resources to successfully scale this franchise business for the long term.
“Notwithstanding the positive tariff adjustment in the UK which came into effect in April 2018, demand management strategies had a negative impact on NHS volumes in our Ramsay UK hospitals during the year and particularly in the second half.
“In Australia, the business performed well despite industry headwinds. Our hospitals maintained admissions growth above the industry growth rate, which is currently being impacted by affordability concerns and the ongoing negative focus on private health insurance,” he added.
McNally said the normal growth attributable to brownfields in Australia was lower in FY’18 as the company concentrated on investing in upgrading existing accommodation and additional consulting suites, which will strategically position its hospitals for the future.
McNally said, “In FY19 we expect underlying earnings growth to be subdued driven by a combination of challenging circumstances in the UK, a slower rate of growth in Australia, and a neutral outlook in France.
“However, long term industry fundamentals are continuing to drive the market for healthcare. We expect growth initiatives including our brownfield programme and investments aimed at strengthening our business, to contribute strongly to earnings beyond FY19.
“At the same time, our strong balance sheet provides headroom for expansion and we have increased our focus on investigating acquisition opportunities and new areas of growth.
“Based on current operating conditions in each of our core markets and barring unforeseen circumstances, in FY19, Ramsay is targeting positive Core EPS growth of up to 2%, adversely impacted by anticipated higher interest and tax in FY19. This corresponds to Core EBITDA growth for the Group of 4% to 6%.” McNally said.
Australian Property Journal
