IHH Healthcare's Q1 net profit nosedives 87.82% on forex losses, higher costs

PETALING JAYA: IHH Healthcare Bhd's net profit plummeted 87.82% to RM57.24 million in the first quarter ended March 31, 2018 against the RM470.05 million recorded a year ago, due to foreign exchange losses arising from the weakened greenback and the incremental depreciation, amortisation and finance costs incurred from the opening of the two new hospitals in March 2017, as well as the absence of a one-off disposal gain.
Revenue for the period under review grew 6.34% to RM2.85 billion from RM2.68 billion, driven by organic growth from existing operations, and the continuous ramp up of Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, both of which were opened in March 2017.
IHH expects pre-operating costs and start-up costs of new operations to partially erode its profitability during the initial stages, which it seeks to mitigate by ramping up patient volumes in tandem with phasing in the opening of wards at these new facilities in order to achieve optimal operating leverage.
"In addition, significant currency volatility against the group's reporting currency may affect the comparability of the group's financial performance across periods. The group constantly reviews its portfolio of investments with a view of rebalancing them to optimise returns," its board of directors said.
IHH said it continues to believe in the sustained demand for quality private healthcare in its home markets – Malaysia, Singapore, India and Turkey, and key growth market of Greater China.

"This is based on shifting favourable population demographics and a fast-growing middle and upper class in its home and key markets, as well as its centres of excellence in established medical hubs. The group will continue to draw on its rapid growth over the past few years to enhance service offerings at existing hospitals. It will also ramp up newer hospitals to further optimise operating leverage, consolidate acquired assets and prepare for the progressive opening of its slate of greenfield and expansion projects," it noted.
In a separate stock exchange filing, IHH said it has issued a second extension letter to the board of directors of Fortis Healthcare Ltd, in which it has extended the acceptance period until 11.59 pm on June 30, 2018.
Worth to note is that the previous enhanced revised proposal expired on May 15, after which IHH issued a letter to the board of Fortis extending the acceptance period until 11.59 pm on May 29.
IHH's share price gained 1.29% to close at RM6.26 with 9.31 million shares changing hands.