Europe Unit Sees Sonic Reaffirm Outlook

By Glenn Dyer | More Articles by Glenn Dyer

Primary Healthcare’s (PRY) rival, Sonic Healthcare (SHL) had better news for shareholders and the market yesterday in its first half report.

A small rise in dividend also helped, unlike Primary.

The company which operates here and offshore, reaffirmed its full-year guidance for 5% earnings growth after telling the market that a strong first-half performance in its German and Swiss units had helped offset a struggling Australian business (which was partly Primary’s problem). Sonic shares eased early on, but ended the day up 0.6% at $22.04.

Sonic, which is Australia’s largest pathology operator and has laboratories in eight countries, reported a statutory net profit for the half year ended December 31 of $197 million, up 5%, on a 1% rise in revenues to $2.48 billion.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were up just 1% to $414 million.

Sonic CEO Dr Colin Goldschmidt said the company had performed strongly in the half-year, with German and Swiss operations showing particularly strong organic revenue growth and cost management, while its biggest revenue segment, Australia, remained burdened by regulatory issues.

“Our Australian businesses have continued to suffer from current government policies, despite providing critical health care infrastructure for the country and essential, best-in class services for clinicians and patients,” he said in yesterday’s statement.

Sonic’s Australian laboratory revenue growth of 6.6% included about 2.6% relating to an acquisition in South Australia completed in the prior year.

The US business – its second largest segment – posted revenue growth of 3.3% to $535 million, which Sonic said was the highest level for several years.

The company stuck to its previous forecast of a 5% rise in its preferred measure of underlying EBITDA, (excluding the effects of currency fluctuations or acquisitions) in 2016-17. Sonic also said it is on track to meet guidance for interest expense growth of 5% to 10% this financial year.

A dividend of 31 cents a share will be paid, up one cent from the 2015-16 interim.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →