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IHH Healthcare posts 19% fall in Q3 net profit on unrealised forex losses

IHH Healthcare Berhad on Thursday posted a third quarter net profit of RM118.5 million (S$39.4 million), down 19 per cent year on year, dragged by unrealised foreign exchange losses of RM217.1 million, with the translation of non-Turkish lira denominated borrowings by Acibadem Holdings in Q3 2015 into the group's financial statements.

Earnings per share stood at 1.44 sen.

Revenue for the quarter rose 16 per cent to RM2.06 billion, driven by continued organic growth at existing hospitals and ramp up of its three newer hospitals - Acibadem Atakent Hospital in Turkey, Pantai Hospital Manjung and Gleneagles Kota Kinabalu in Malaysia.

Operational profit after tax and minority interests, which strips out exceptional items and the effects of PLife Reit (real estate investment trust), grew 30 per cent to RM210.9 million on the back of strong earnings before interest, tax, depreciation and amortisation growth and a reversal of an over-provision for tax of RM15.2 million in the previous corresponding period. 

"The group continued to benefit from its diversified operations of 41 hospitals across 10 countries as a stronger Singapore dollar, against the Malaysian ringgit helped to offset the impact of a weaker Turkish lira on its translation into the ringgit, which is IHH's reporting currency."

The robust demand for quality private healthcare services in the region, especially in India and China, continues to present opportunities for IHH to expand its footprints, the group said.

It expects to have sufficient capacity to support demand for quality private healthcare across its home markets, which will drive revenue growth.  

IHH also said it expects higher cost of operations arising from wage inflation given the increased competition for trained healthcare personnel.

The group said as it extends its footprint across the region, it will be exposed to currency volatility in the countries where it operates that may result in translational differences in its balance sheet and income statement.

It added that it will continue to optimise and proactively manage its capital structure, including borrowing in the functional currency of its operating entity or in the same currency as its foreign investment, where possible.

Concurrently, Acibadem continues to take firm action to hedge its cash flow, such as conserving hard currency and medical tourism receipts to service its non-lira obligations, said IHH.

Said IHH chairman, Abu Bakar bin Suleiman: "As we venture forward, our differentiated business strategy, along with our solid balance sheet, ensure that we will continue to create long-term value for our shareholders. We are in a strong position to expand our reach globally and capitalise on this growing demand for quality healthcare in key growth markets. At the same time, we remain committed to ensure that we continue to serve our communities as a trusted healthcare partner by providing patient-centred treatment options."