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European operations boost Sonic Healthcare's earnings

Nicholas Grove  |  15 Feb 2017Text size  Decrease  Increase  |  

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Sonic Healthcare (ASX: SHL) has recorded a 5 per cent rise in statutory net profit for the first half of fiscal 2017 to $207 million, following strong performances from its German and Swiss operations.

The result was achieved on the back of a 1 per cent rise in revenues to around $2.48 billion, the pathology services provider said in a statement to the ASX on Wednesday.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) before one-off costs rose 6 per cent in constant currency to $431 million.

Sonic also said it remains on track to achieve full-year guidance provided in August 2016 of EBITDA growth of around 5 per cent.

The company declared a half-year dividend of 31 cents, up 3.3 per cent on the same half in the prior year. The dividend will be 20 per cent franked, and payable on 11 April 2017 to shareholders on the register as at 8 March 2017.

Commenting on the results, Sonic CEO Colin Goldschmidt took aim at the Australian government, saying the company's local operations "have continued to suffer from current government policies".

Regardless, he said the company's German and Swiss operations showed particularly strong organic revenue growth and cost management in the half, while other international operations were "generally performing to expectation".

Goldschmidt expects Sonic's recent laboratory acquisitions in both Germany and the US to "significantly enhance group earnings in 2018 and future years".

"These transactions are integral to our ongoing, successful core strategy to lead the consolidation of targeted fragmented laboratory markets," he said.

"I am also particularly pleased that our strategy to partner with hospital systems in the US for laboratory services is gaining momentum, with two joint ventures recently announced and a number of others in prospect.

"More than half of the total US$50-billion-plus laboratory market in the US is comprised of hospital system laboratories, representing a significant growth opportunity for Sonic."

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Nicholas Grove is a Morningstar journalist.

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