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Things still aren’t looking great at Mediclinic’s recently-acquired Middle East business, but they’re not quite as bad as the FTSE 100 hospital operator thought, according to its latest trading update.
Mediclinic bought a group of hospitals in Abu Dhabi in 2015 via a reverse takeover of Al Noor, but integrating the purchase has proven harder than the company expected. In February the company, which also runs private hospitals in Switzerland and southern Africa, warned that full-year revenues and profit margins at the unit would be lower than previously forecast.
In a pre-close trading update today, however, it said full-year revenues from the Middle East business fell in line with February’s guidance, but said its underlying profit margin was not quite as low as expected, at between 10.5 per cent and 11.5 per cent.
The company also said it expects performance to improve in the new financial year.
Shares have climbed to the top of the FTSE 100 in early Thursday trading, gaining 4.2 per cent.
Revenues at its Swiss and southern African businesses both increased in the year to March 31, with slight improvements in margins in Switzerland and a slight reduction in margins in Africa.
Danie Meintjes, Mediclinic chief executive, said:
Mediclinic’s largest two platforms, Switzerland and Southern Africa, in addition to our Dubai business, all performed in line with expectations during the 2017 financial year. However, as previously announced, the Abu Dhabi business underperformed having been impacted by a major regulatory change in addition to certain business and operational challenges. We have been focused on resolving these issues and stabilising performance in the Middle East. Our confidence in the long-term growth opportunities of the region remains strong and we currently expect performance in the Middle East to improve as we progress through the 2018 financial year.