Higher wage costs and the recent Covid-19 lockdown have weighed on Radius Care's half-year profit.
Photo: 123RF
Key numbers for the six months ended September compared to a year ago:
- Net profit: $1.3m vs $2.1m
- Revenue: $66.7m vs $61.4m
- Underlying profit: $11.2m vs $12.4m
- Final dividend: 0.7cps vs 0.58
The aged care operator's executive chairman Brian Cree said the company had performed well over the half, despite having seven facilities in the Northland, Auckland and Waikato regions operating under Covid restrictions.
"We continue to see costs across the business rising, particularly for labour, food and consumables," he said.
Radius's wage bill rose 10 percent over the six month period to $39.3m and "other expenses" rose 20 percent to nearly $15m.
"Some of these cost increases are directly attributable to Covid-19 related border restrictions affecting labour supply and others to supply chain issues affecting food and consumable goods prices," Cree said.
Occupancy at the company's villages was above historic levels at 92 percent, although this is slightly lower than the level recorded at the conclusion of Radius' financial year in March of 93.4 percent.
It had been a busy year for the business which debuted on the NZX late last year, as it raised about $48m in capital and acquired the land and buildings of four facilities it had leased for a number years in Auckland, Waikato, New Plymouth and Canterbury.
In October, it also purchased an integrated care facility in Invercargill.
Radius' portfolio is made up of 23 properties, 1,784 beds, and 101 village units across the country.
It has new developments under way or planned to start at four facilities, the last of which is expected to be completed by 2024.
Cree said the company's outlook was positive as it was well placed to continue its growth phase.
Covid-19 would continue to present a significant challenge to its business in the near term, he said, as the additional costs of operating as an essential service would not be recovered from income that was set under annual negotiations with the government.
Radius was forecasting a full year underlying profit of between $21.5m and $23m, which is down on the underlying result achieved last year of $23.4m.