KPJ’s 1Q20 earnings slide 1.5%, foresees continued decline in 2Q20

The reduction in Ebitda and PBT is mainly contributed from the hospitals under gestation period, says healthcare provider


KPJ Healthcare Bhd is expecting a decline in second-quarter (2Q) earnings due to the effects of pandemic containment measures, after recording a 1.5% drop in net profit for the 1Q ended March 31, 2020 (1Q20).

It will remain active in providing its core services and adding new areas of services such as telemedicine and home visits, the group said in a Bursa Malaysia filing yesterday.

The private healthcare provider’s net profit stood at RM38.53 million in 1Q20 against RM39.13 million the year before, dragged by its loss-making subsidiaries and Covid-19 containment costs.

“The reduction in Ebitda and profit before tax (PBT) was mainly contributed from the hospitals under gestation period such as KPJ Bandar Dato’ Onn, KPJ Batu Pahat, KPJ Perlis and KPJ Miri, which remained as loss-making companies for the current quarter,” it said.

Quarterly revenue rose marginally to RM884.16 million from RM880.99 million a year earlier, contributed by higher hospital activities at the group’s Malaysian operations in tandem with the increase in outpatient and inpatient procedures performed.

The group said it also bore additional expenses during the Covid-19 crisis owing to larger purchases of material costs, personal protection equipment (PPE), ventilator machines, thermal scanners, surgical masks and hand sanitisers.

“The government’s Movement Control Order from March 18 till June 9, 2020, made a significant impact to the operations of the group,” it added.

Revenue contribution from the group’s Malaysian segment rose to RM844.6 million in 1Q20 from RM839.3 million a year ago, mainly underpinned by additional capacity in existing hospitals — particularly KPJ Seremban and KPJ Ampang Puteri — which opened new buildings. The opening of KPJ Batu Pahat and KPJ Miri also led to the increase in revenue.

Ebitda from the segment rose to RM147.8 million from RM147 million last year, but PBT fell 10% to RM61.3 million from RM68.4 million previously, due to the additional expenses incurred for test kits, PPE and other items.

The firm declared an interim dividend of 0.3 sen, to be paid on July 28, 2020.

“For the financial year ending Dec 31, 2020, the group recognises that its performance will be adversely affected by the Covid-19 pandemic which has caused a widespread economic slowdown in Malaysia and globally,” it stated.

Nevertheless, the group remains “cautiously optimistic” and will continue to focus on disciplined management of costs and operational cashflows.