Arvida's chief executive Jeremy Nicoll says Omicron restricted its aged care admissions and increased labour costs. Photo: 123RF
Aged care and retirement village operator Arvida has posted an increased interim profit on the back of higher sales and margins.
Key numbers for the 6 months ended September compared with a year ago:
- Net profit $89.2m vs $75.5m
- Underlying profit $38.9m vs $26.6m (excludes changes in property values and other one offs)
- Revenue $109m vs $94m
- Resale margins 30 percent vs 21 percent
- Interim dividend unchanged - 2.5 cents a share
The company, which manages 35 villages, reported solid growth in revenue and margins boosted by its purchase last year of six villages from Arena Living.
"The retirement living side of our business continued to experience strong demand and delivered solid sales performance for the six months," chief executive Jeremy Nicoll said.
The value of all occupation rights sold was up by nearly a third, as the company sold more existing units at higher prices, while markedly higher margins for the resale of the just-acquired Arena units also lifted revenue.
Arvida's margins on the resale of units rose to 30 percent from 21 percent the previous year, while the margin on new units was 20 percent.
The company delivered 51 new units in the first half, but said it expected to complete 270 for the year, above its target of 250.
Nicoll said Omicron had restricted its aged care admissions and increased labour costs.
"The operational challenges of managing Omicron, as well as very difficult government funding and immigration policy settings, had had a considerable impact on care profitability in the period."
He said this week's government announcement of $200m for nurse pay parity was welcome, and recent immigration changes to allow in more foreign nurses was starting to reduce staffing pressures, but allowing overseas nurses an immediate pathway to residency would be better.
Arvida's chair Anthony Beverley said an increasingly negative economic outlook along with existing regulatory, funding, housing, and healthcare factors would add to pressures in the sector.
"Funding for aged care continues to materially lag the actual cost of care that is now resulting in the loss of care beds throughout New Zealand."
The company would continue to build care suites, or retrofit them where possible, because of an expected increase in demand, but would review how much of its overall offering they would make up.