Ramsay Health Care will be looking to its core Australian business to repeat its 2016-17 performance in the coming year after its European operations saw a slowdown in growth in the year to June.
The company said yesterday it is targeting core earnings per share growth of between 8% and 10% on 206-17’s 261.4 cents a share.
And if that happens, shareholders can look at another boost to dividends on top of the surprisingly strong 13% plus in the full year payout for the year to June 30.
Ramsay lifted full-year net profit 8.6% to $488.9 million thanks to growth in admissions and procedural volumes across the company’s Australian business.
The country’s largest private hospital operator said revenue from services for the year to June 30 grew marginally, up a tiny 0.2%, to $8.7 billion, from $8.68 billion a year ago.
There was no signs of the problems that smaller rival, Healthscope reported last week with its Australian hospitals group. The company will pay a fully-franked dividend of 81.5 cents, up sharply from the 72 cents a share final for 2015-16.
That makes a total of 134.5 cents a share, up from 119 cents a share paid the year before, a rise of more than 13%.
Investors liked the report at first and then gave it the thumbs down, Ramsay shares losing more than 5% to $68.10 continuing the trend since last week when the shares hit their 2017 peak of $75.75 on August 22.
Managing Director Craig McNally said in yesterday’s statement that growth across Ramsay’s Australian arm helped deliver strong revenue and earnings (EBIT) growth, while its international business also performed well amid challenging tariff environments.
"Australia remains the powerhouse of our business and delivered another year of impressive earnings growth, driven by strong demand and our brownfield developments," Mr McNally said in the statement.
Mr McNally said the company had continued to invest heavily in the Australian market with the opening of two new facilities – The Southport Private Hospital in the Gold Coast and the Border Cancer Centre in Albury – this financial year.
The Australian and Asian sector contributed $4.7 billion in revenue, up 7% on a year ago, and $649.6 million in earnings (EBIT), up 13.6% (fatter profit margins).
Ramsay’s business in France saw a small 0.3% rise in revenue to $3.31 billion, while operations in the UK saw a 4.6% rise to $729.9 million.
Mr McNally said the company expects strong growth in its Australian hospital business to continue in the year ahead and its business in its international markets are well positioned.
Ramsay has also made some headway with its new pharmacy business, which is on track to total 55 retail pharmacies. Ramsay is concentrating on sites near hospitals so it can extend both medication and other integrated care services beyond the hospital walls.
