Wakefield first-half earnings fall on weak economy

Tuesday 9th November 2010

Wakefield Health posted a 21% decline in first-half earnings, once one-time tax and interest rate swap adjustments are removed, as the tepid economic recovery curbed demand for private health services.

Adjusted profit fell to $2.79 million in the six months ended September 30, from $3.55 million a year earlier, the company said in a statement today. Sales fell 2.3% to $39 million. The one-time accounting adjustments led to a net loss of $1.87 million as it recognised changes to tax depreciation rules that rendered many companies’ net income line meaningless this year.

The first-half results for the private hospital owner show a continuation of the previous year’s themes, where ACC and District Health Board contracting volumes weakened and the number of private patients declined. The company also incurred a $350,000 one-time cost from its failed takeover of Norfolk Investments.

“In light of the challenging trading conditions, the company increased it focus on containing costs and managing working capital,” said chief executive Andrew Blair.

“Month-on-month revenue has been irregular and given the substantial proportion of the company’s costs are relatively fixed, a small decline in revenue adversely impacts operating earnings to a greater extent,” he said.

Shares of Wakefield last traded at $6.60 and have declined about 12% this year.

The company will pay a first-half dividend of 7 cents a share, down from 8 cents a year earlier.

Chairman Alan Isaac said economic conditions “appear to be a factor in the continuation of suppressed demand for private health services, particularly for major surgeries that are patient funded or have a major patient contribution.”

“As economic conditions improve, it is expected that demand will again pick up, though predicting the extent and timing of this remains difficult,” he said.

Businesswire.co.nz

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