In a slower day for corporate news, SA’s biggest hospital operator, Netcare, seemingly pleased the market with its news of local profit growth. SA’s second-biggest, Life Healthcare, disappointed on Thursday. In international news, US competition regulators have barred the former CEO of Pioneer from sitting on the board amid a mega deal with Exxon Mobil.
Netcare, which operates the largest private hospital network in SA, said on Friday that its normalised group core profit is expected to grow by between 7.3% to 7.7% in its six months to end-March, outperforming revenue growth of just over 4%. Total paid patient days decreased by 0.8% compared to the prior period, but the group was helped by easing load shedding, which helped cut diesel costs to R39 million from R68 million. Total operating costs have been well contained, it said, notwithstanding a high inflationary environment and the declaration of an extra public holiday on 15 December, which led to an increase in staffing costs of approximately R22 million. Pleasingly and notwithstanding the lower volumes, the core profit margin in the core hospital and pharmacy operations sub-segment strengthened even when excluding diesel costs and strategic initiatives, supported by a favourable revenue mix and tight cost control. Netcare, valued at R16.8 billion on the JSE, had risen about 3% late on Friday afternoon. It has, however, fallen by more than a quarter in the past year.
Paper and packaging group Mondi said on Friday market conditions continued to improve in its first quarter to end March, with stronger order books leading to higher sales volumes across our range of paper grades compared to the prior quarter. This was supported by a solid performance in its downstream converting operations. Average selling prices were lower compared to the fourth quarter; however, recently announced paper price increases are starting to come through. Costs remained broadly stable when compared to the prior quarter, while it added its underlying core profit was in line with expectations. “While we entered the year with lower selling prices compared to the prior year, improvements in demand have supported our initiatives to increase selling prices across the business,” CEO Andrew King said in the update. “We remain well positioned to benefit from this growing demand with our strong operational leverage, broad product offering and organic growth investment projects, which remain on track and on budget.” Mondi was up 1% on Friday afternoon and has gained about 13.5% in the past year.
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