Netcare to expand wings

Published Nov 23, 2015

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Johannesburg - Netcare said the private-hospital operator is seeking international acquisitions as full-year earnings rose 13 percent on the addition of new beds in its domestic market of South Africa.

“When the right opportunity presents itself we certainly have the resources to execute,” CEO Richard Friedland said in an interview in Johannesburg on Monday. “In this past year we did look at three separate opportunities and walked away from them. In our numbers you can see there are due diligence costs included - these were expensive exercises but very important for us.”

Netcare is benefiting from increasing demand for private health care in South Africa and the UK as higher earners switch from state-owned providers. The company added 584 new beds in its home market during the 12 months through September, bringing the total to 9 996, and plans to invest R2 billion ($143 million) on 44 more beds and other items this financial year.

“We believe there’s good growth in South Africa because people continue, unfortunately, to get sick irrespective of the downturn in the economy,” Friedland said. The company’s priority for international expansion is the UK, he said, its only other market.

Adjusted earnings per share excluding one-time items were R1.89 in the year through September, Johannesburg-based Netcare said in a statement. That was in line with the average estimate of 12 analysts polled by Bloomberg. Revenue advanced 6.1 percent to R33.7 billion ($2.4 billion). The final dividend was raised 13 percent to 54 cents a share.

The shares declined 2.8 percent to 37.99 rand as of 2:47 p.m. in Johannesburg, valuing the company at R55 billion. The stock is little changed this year, compared with a 22 percent gain at larger competitor Mediclinic International.

Mediclinic said last month it agreed to combine with Al Noor Hospitals Group of Abu Dhabi to boost expansion in the United Arab Emirates and take a London listing.

-With assistance from Janice Kew.

BLOOMBERG

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