KUALA LUMPUR (May 25): Foreign exchange losses, higher operating expenses and an absence of gain from disposal all combined to drag IHH Healthcare Bhd’s first quarter net profit to RM57.24 million, down 87.82% from RM470.05 million a year earlier. 

Earnings per share for the quarter ended March 31, 2018 (1QFY18) slumped to 0.44 sen, from 5.71 sen a year ago. 

In 1QFY17, IHH had bagged RM313.4 million from the disposal of its 6.07% stake in Apollo Hospital Enterprise Ltd.

Minus the one-off item, the decline in IHH’s 1QFY18 net profit would have been lower at 63.46%. 

In a filing with Bursa Malaysia, the group said it recognised RM159.8 million forex losses on translation of its non-Turkish lira-denominated borrowings in the quarter, higher from RM94.1 million recognised in 1QFY17. 

Meanwhile, its operating expenses nearly doubled, amid commencement of operations at Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital beginning March last year, combined with the ramp-up of operations in other outlets.  

“Operating expenses also increased in 1QFY18 with the recognition of RM104.0 million forex losses,” particularly from weaker a US dollar on the group’s greenback-denominated cash balances, IHH said.

Overall, IHH’s posted a weaker quarter across all operations, except for its Parkway Pantai group segment.

However, IHH’s quarterly revenue rose 6.34% to RM2.85 billion, from RM2.68 billion in 1QFY17.

The group attributed the increase in revenue to “organic growth from existing operations, and the continuous ramp-up of Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital”.

Moving on, IHH said its expansion projects in Malaysia and China and completion of other projects in Turkey, “will provide sufficient capacity to meet demand”. 

Additionally, IHH plans to ramp-up patient volumes in tandem with phasing-in opening of wards at its new facilities to achieve optimal operating leverage, as well as mitigating the pressure of pre-operating and initial start-up costs of new operations. 

To address its susceptibility towards forex translation differences, IHH constantly reviews its portfolio “with a view of rebalancing them to optimise returns”. 

IHH’s share price has slipped off its one-year high of RM6.33 on May 22. At last close, the counter gained 8 sen or 1.29% to RM6.26, giving the international healthcare group a market capitalisation of RM51.58 billion.