KUALA LUMPUR (Nov 27): IHH Healthcare Bhd's net profit fell 53% year-on-year in the third quarter ended Sept 30, 2017 (3QFY17) to RM82.09 million from RM173.3 million, despite higher revenue, as higher depreciation, amortisation and finance costs following the opening of new hospitals in Hong Kong and Istanbul in March weighed on earnings.
"These costs were in line with expected start-up costs arising from the opening of the new hospitals," said IHH Healthcare in press statement filed with Bursa Malaysia today.
Quarterly revenue, meanwhile, climbed 15% to RM2.8 billion from RM2.44 billion, which it said was due to the organic growth of its existing operations, and the continuous ramp up of the hospitals it opened earlier this year.
For the first nine months of FY17 (9MFY17), its net profit grew 33% to RM868.7 million from RM654.86 million, while revenue rose 12% to RM8.26 billion from RM7.39 billion.
"We continue to deliver topline and earnings before interests, tax, depreciation and amortisation (EBITDA) growth, underlining the inherent strength of our differentiated strategy," said IHH Healthcare managing director and chief executive officer Dr Tan See Leng.
"While the start-up costs for Gleneagles Hong Kong and Acibadem Altunizade have had a short-term impact on our earnings, these were according to our plans and within expectations, creating the momentum to take us to the next level on full ramp up next year," said Tan.
"We are now well positioned to make further headway in the important market of Greater China as our next home market. At the same time, we have a strong pipeline of expansion projects in our home markets where we consolidate our strong market position.
"We also continue to build out our cutting-edge capabilities, and now have the distinction of being the region's only private healthcare provider with in-house molecular diagnostics capabilities to customise medical treatment after acquiring Angsana Holdings," Tan added.
Meanwhile, it expects to face cost pressures on several fronts in the coming year.
"These include wage inflation from increased competition for talent in home markets, rising purchasing costs with the stronger US dollar and higher pre-operating costs and start-up costs from new operations, which would partially erode profitability in the initial stage," IHH Healthcare said. To mitigate these effects, it said it will remain prudent in cost management.
Separately, IHH Healthcare said its deputy chairman Datuk Mohd Azlan Hashim will take over as non-executive chairman on Jan 1, 2018, following the retirement of incumbent Tan Sri Dr Abu Bakar Suleiman on Dec 31 this year.
Mohd Azlan, 60, was the executive chairman of the then Kuala Lumpur Stock Exchange Group from 1998 to 2004, prior to his appointment as IHH Healthcare deputy chairman in 2011.
"He also serves on the Boards and certain Board Committees of IHH subsidiaries, namely Parkway Pantai Limited and Acibadem Saglik Yatirimlari Holding A.S. Group," said IHH Healthcare.
Shares in IHH Healthcare closed one sen or 0.18% higher at RM5.65, with 5.06 million shares traded for a market capitalisation on RM46.55 billion.