Netcare adjusted HEPS expected to fall, partly due to exchange-rate factors
On Thursday, hospital group Netcare said its adjusted headline earnings per share (HEPS) for the first half of its 2017 financial year were expected to be between 9% and 13% lower than the adjusted HEPS of 91c reported for the first half of 2016.
This was owing to, among other factors, the expected effect of currency conversion due to the stronger rand.
In a pre-close trading update, it noted that the average rand exchange rate against the pound had been considerably stronger in the period under review, which would negatively affect the conversion of the UK results.
Its South African hospitals and emergency services division had also experienced a very challenging period of trading for the period under review, characterised by low growth in the local economy and in total medical scheme beneficiaries.
"The results for the period under review have also been adversely impacted within our emergency services division by the significant reduction in revenues from industrial sites in Mozambique, as prevailing economic difficulties are curtailing activity within the mining and resources sectors," Netcare said.
The group also noted that in its previous guidance that it had indicated that it expected earnings before interest, taxation, depreciation and amortisation margins to decline due to the potential affect of sizeable new "efficiency options" being introduced by medical schemes.
However, the take-up on these "efficiency options" had been lower than anticipated to date and the effect on margins in the first half of 2017 was expected to be minimal, it said.