Ramsay Health Care meets FY guidance, Europe slows

Australia’s largest private hospital operator Ramsay Health Care has met its full year guidance posting core net profit growth of 12.7 per cent to $542.7 million, due to growth in admissions and earnings in its Australian business, while its international divisions suffered amid tariff reductions.

The $14.5 billion company said Thursday that group revenue was virtually flat at $8.7 billion, or up 4.1 per cent in constant currency terms. Group earnings before interest and tax was up 5.2 per cent to $943.4 million. Core EPS was up 13 per cent to $2.314.

In February Ramsay upgraded guidance tipping 12 per cent to 14 per cent core net profit and core earnings per share growth for 2016-17, up from 10 per cent to 12 per cent previously stated.

UBS was looking for core NPAT growth of 11 per cent. Analyst Andrew Goodsall said the key will be the fiscal 2018 guidance with European operations and foreign currency headwinds.

New chief executive Craig McNally – the former chief operating officer and a 29-year company veteran – said while the Australia remains the powerhouse of Ramsay’s operations posting strong earnings growth, its European businesses delivered on expectations.

Mr McNally took over from former long serving CEO Chris Rex on July 3.

The company declared a fully franked dividend of 81.5 cents, payable September 28 up from 72 cents a year ago. Total dividends for the 2017 year were $1.335.

Australian hospitals (and pharmacy) revenue grew 7 per cent to $4.7 billion in the year to June 30.

Australian earnings before interest and tax climbed a strong 13.7 per cent to $649.6 million, primarily driven by strong demand and brownfield developments.

Revenue at Ramsay’s UK operations was up 4.6 per cent to £449.2 million while earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (EBITDAR) was up 1.7 per cent to £113.9 million.

Revenue at its French unit was nearly flat at €2.2 billion, and EBITDAR also was virtually flat per cent to €448.3 million, after two years of tariff reductions.

Ramsay’s Générale de Santé is now France’s largest private hospital operator with 124 facilities after buying another nine hospitals in Lille in 2016.

Mr Rex previously said in March that Ramsay would look to claw back losses incurred after two years of tariff cuts under the former Hollande government.

Mr McNally said Wednesday the new French government is seen as an uplift in business and consumer sentiment.

The company is tipping core EPS growth this new 2018 fiscal year of 8 per cent to 10 per cent, supported by strong growth in its Australian hospitals business.

More to come.


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