Al Noor Hospitals annual revenue and profit jumps, but margins under pressure

LONDON (ShareCast) - London-listed Middle Eastern healthcare provider Al Noor Hospitals (LSE: ANH.L - news) reported an increase in annual pre-tax profit and revenue on the back of further business expansion. The Abu Dhabi-based group said its pre-tax profit rose 36.4% to $83.9m (£56.6m), while revenue jumped 23% to $449.1m.

Al Noor, which opened three medical centres in Abu Dhabi last year, said outpatient volumes rose 17.6% to 2m, while inpatient volumes climbed 3.8% to 42,033.

In 2014, the FTSE 250 group acquired the Gulf International Cancer Centre, the only private cancer treatment centre in Abu Dhabi. It added that a new 40-bed hospital in Al Ain was on track to be opened in 2016 and that it was also expanding capacity at the Airport Road Hospital.

However, the company reported earnings of 70.9p per share, some 8% lower than consensus expectations and 2% below Numis analysts' estimates.

The brokerage said that while the company reported strong revenues, margins remained under pressure and it expected margin forecasts to be "significantly below consensus", as short-term costs will increase because of new investments.

Numis downgraded its rating on the stock to 'hold' but added there were reasons to remain optimistic about the company.

"Once we see consensus expectations moderate, we are likely to become more positive, since we see considerable longer-term upside from improving efficiency from doctors hired over the last two years," analysts said in a note on Monday.

The group said it will increase its final dividend to 9p per share for the year, bringing its total dividend payout to 12.7p per share, up 32% year-on-year.

Al Noor shares were down 2.04% to 1,056.00p at 09:20 on Monday.