IHH Healthcare's net profit nearly doubles on divestment gain
KUALA LUMPUR (Nikkei Markets) - IHH Healthcare, Asia's largest listed hospital operator by market value, cautioned of rising costs after its first quarter net profit nearly doubled on year, helped by one-off gain from partial sale of a non-core asset.
Net profit for the three months ended March 31 totalled 470.05 million ringgit ($108.71 million), jumping from 235.48 million ringgit a year earlier, IHH Healthcare said in an exchange filing. The company booked a gain of 313.4 million ringgit from the divestment of a 6.07% stake in India's Apollo Hospital Enterprise.
Excluding one-off gains, net profit slipped 15% to 201.8 million ringgit due to incremental write-down in value associated with the opening of two new hospitals in March, the company said. Quarterly revenue rose 8.5% on-year to 2.68 billion ringgit from 2.48 billion ringgit driven by existing and new hospitals.
"In the year ahead, IHH expects to face cost pressures on several fronts," the company said. "These include continued competition for talent, pre-operational and start-up costs from new operations, and higher purchasing costs with the stronger US dollar."
IHH Healthcare - which operates over 10,000 beds in 50 hospitals across 10 countries - said it will take steps to mitigate the cost pressure including taking on "higher revenue intensity procedures" and "ramping up new facilities to achieve optimum operational efficiencies."
Backed by Malaysia's state investment fund Khazanah Nasional, IHH Healthcare operates mostly in Malaysia, Singapore and Turkey.
The company has also expanded to China, Hong Kong and India as well as far-flung markets like Iraq as part of its overseas drive into emerging economies where large population coupled with rapidly rising income are driving demand for quality healthcare and advanced medical treatment.
The vast geographical footprint however, exposes the company to geopolitical uncertainties and currency movements that may result in translational differences in its balance sheet and income statement, IHH said.
"IHH adopts natural hedges where possible and continues to explore all options to de-risk currency exposure" for its Turkish unit Acibadem Holdings that also operates in Macedonia, Bulgaria and Iraq, the company said.
Shares of IHH Healthcare ended 0.3% lower at 6.00 ringgit apiece ahead of the earnings announcement, while the benchmark FTSE Bursa Malaysia closed 0.1% higher on Friday.
--Jason Ng--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.