‘Aggressive’ NMC lifts profits and margin as expansion pays off

NMC, the health care group, boosted its earnings last year despite a rise in net debt and financing costs. (Photo courtesy of NMC)
Updated 07 March 2018
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‘Aggressive’ NMC lifts profits and margin as expansion pays off

LONDON: UAE private health care operator NMC boosted profit and revenue in 2017 following acquisitions but net debt and financing costs shot up as expansion led to rise in borrowings.
The number of beds at its private hospitals increased from 679 to 1,365, up 101 percent year on year as growth took off. Net profit rose 38 percent to $209 million and revenue grew by a third to $1.6 billion.
Expansion meant net debt increased during the year from $431.3 million to more than $ 1billion, in line with management’s expectations.
“Net debt was equivalent to 2.9 times EBITDA (earnings before tax, interest, depreciation and amortization), remaining at a very comfortable level relative to the group’s cash flow generation capacity,” said a company statement.
The debt increase was “largely attributed to the acquisitions made during the year”.
The group’s largest acquisition during 2017 was the purchase of Al-Zahra Hospital that was financed via borrowings, but also utilized the proceeds of a share placing raising $322 million in December 2016.
Total finance costs for were $63.8 million compared to $41.7 million in 2016. “This was mainly on account of the higher facility amount availed to refinance the existing debts as well as to finance the acquisitions,” said the company.
It added: “Overall, our growth in revenue and improved profitability are attributed to both an improvement in performance of our existing hospitals and medical facilities and the acquisitions made within the Middle East, Europe and South America over the last 2 years.”
Pursuing an “aggressive international expansion program from 2016”, the company now has over 35 percent of its licensed bed capacity in the Kingdom of Saudi Arabia, where the company has introduced long-term and multi-specialty care services. The enlarged group received over 5.7m patients in 2017.
Prasanth Manghat, CEO said: “We see 2017 as setting the stage for many more years of growth for the company and we begin 2018 with confidence.”
Higher margins associated with the health care business continued to elevate overall group margins, with consolidated EBITDA margin reaching 22 percent in 2017, up 180 basis points year on year, added Manghat.
With the health care division remaining the primary focus of NMC’s organic and inorganic expansion plans going forward, “the trend of increasing contribution from this segment to group’s revenues and profitability is expected to continue for the foreseeable future”.
NMC is a constituent of London’s FTSE 100 Index where the shares fell 3 percent on Wednesday.


Glencore launches $1 billion additional share buyback

Updated 25 September 2018
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Glencore launches $1 billion additional share buyback

  • Glencore said in July it would buy back shares worth up to $1 billion in a program of purchases running to the end of 2018
  • Many mining stocks have pared gains over the past few months as metals markets weakened

LONDON: Commodities trader and miner Glencore said on Tuesday it would repurchase more of its shares worth up to $1 billion, increasing the size of an existing buyback program that followed a subpoena from US authorities.
Glencore said in July it would buy back shares worth up to $1 billion in a program of purchases running to the end of 2018. It has now extended the program to the end of February 2019.
The London-listed miner, with a market capitalization of $61 billion, announced plans to repurchase shares after the US government investigation into bribery and corruption sent the stock down more than 15 percent since the start 2018.
Companies across the mining industry have been handing money back to shareholders after a recovery from the mining and commodity crash of 2015-16 and in response to pressure from investors not to spend cash on buying assets that they say may never deliver returns.
Global miner Rio Tinto said last week it will return $3.2 billion to shareholders from its sale of Australian coal assets in addition to existing buyback programs.
Glencore’s share price had already been hit by concerns about political risk in Democratic Republic of Congo, where it mines just over a quarter of the global output of cobalt, because of a mining code that was signed into law in June.
After publishing first-half results just below analyst forecasts in August, the company, which has aggressively slashed its debt since 2015, said it would favor share buybacks over deal-making.
Many mining stocks have pared gains over the past few months as metals markets weakened in response to global trade tensions and uncertainty about Chinese demand.