September 27, 2018 / 2:31 PM / a year ago

UPDATE 1-S.Africa's Netcare sees lower hospital margins, shares fall

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JOHANNESBURG, Sept 27 (Reuters) - South Africa’s Netcare expects the core profit margin at its biggest division, hospital and emergency services, to fall 30-50 basis points this fiscal year due to a weak economy, it said on Thursday, sending its shares to a seven-month low.

In its last financial year, South Africa’s second-largest private hospital operator made a margin on earnings before interest, tax, depreciation and amortisation (EBITDA) of 21.1 percent.

The company reported “lower demand from private self-pay patients and a decline in foreign patients resulting from more stringent credit control measures applied to these patients.”

In its primary care division, EBITDA margins are expected to remain broadly in line with last year’s 15.2 percent, it said.

Netcare’s shares fell as much as 13 percent to a level last seen in mid-February.

Netcare has been in Britain for a decade via a controlling stake in BMI Healthcare but said in March it would exit the country because of difficult trading conditions and belt-tightening by Britain’s National Health Service.

BMI Healthcare is nearing a 2 billion pounds ($2.6 billion) restructuring deal that could cut millions of pounds from its annual rent bill, a person familiar with the matter said on Tuesday.

“Netcare’s disposal plan continues, although no disposal transaction has yet been concluded,” Netcare said.

In South Africa, Netcare expects to register a 6 percent rise in patient days, which represent customer stays in its hospitals.

However, the primary care division has experienced a decline in the number of patient visits at Medicross GP and dental clinics.

$1 = 0.7623 pounds Reporting by Nqobile Dludla; Editing by Alexander Winning and Mark Potter

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