SINGAPORE (Sept 3): Healthcare provider IHH Healthcare saw its net profit drop 47.8% to RM165.11 million ($54.83 million) in 2QFY2018 ended June 30 from RM316.56 million a year ago, owing mainly to the absence of a one-off gain of RM241.1 million from its divestment of Apollo Hospitals recorded in 2QFY2017.
Quarterly revenue fell 4% to RM2.66 billion from RM2.77 billion a year ago, owing mainly to the effect of the strengthening of the ringgit against the currencies of the countries in which it operates.
In a filing with Bursa Malaysia on Aug 28, IHH said excluding the effects of the strengthening ringgit, the group’s revenue for 2QFY2018 increased 14% y-o-y on sustained organic growth from existing operations and the continuous ramp-up of Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, which opened in March last year.
The weak quarterly performance dragged the group’s net profit for 1HFY2018 down 71.7% to RM222.34 million, from RM786.61 million, even though revenue rose a marginal 1.1% to RM5.51 billion, from RM5.46 billion in 1HFY2017.
In a statement on Aug 28, IHH managing director and CEO Dr Tan See Leng said that, in Turkey, it is watching lira developments closely and accelerating plans to restructure and reduce Acibadem’s foreign debt to manage its exposure to currency volatility. He also said that adding Fortis Healthcare to the group signified a “transformational growth opportunity” for IHH.
On July 13, IHH announced the proposed acquisition of a controlling stake in Fortis through a INR40 billion ($772 million) subscription to a preferential allotment of equity shares for a 31.1% interest in Fortis and subsequent mandatory cash open offer for up to an additional 26% equity interest, at an offer price of INR170 a share.
Earlier last month, IHH saw overwhelming support from Fortis shareholders for the preferential allotment. It will undertake the mandatory cash open offer this month, subject to regulators’ approval.
IHH says it believes in the long-term growth potential and sustained demand for quality private healthcare in its home markets of Malaysia, Singapore, India and Turkey, and the key growth market of Greater
China.
It notes that pre-operating and start-up costs of new operations are expected to partially erode its profitability during the initial stages, but it seeks to mitigate this by ramping up patient volumes in tandem with phasing in the opening of wards at the new facilities. — The Edge Financial Daily
Tan Xue Ying is a writer with The Edge Malaysia
