19 Mar 2014

Abano forecasts higher profit

7:30 pm on 19 March 2014

Abano Healthcare is predicting its annual net profit will be higher than forecast in the independent report it commissioned last November to help fend off an unwanted takeover attempt.

Abano said net profit would be between $4.5 and $5 million, up from $2.8 million in the 12 months to May last year.

The company said that reflected an improving performance from its dental business, despite the strong New Zealand dollar depressing its Australian results, and the Bay Audiology business moving towards break-even.

The Grant Samuel report valued Abano's shares between $8.30 and $10.05, compared with the $7.80 per share price indicated by interests associated with former Abano Healthcare director Peter Hutson.

Abano said the valuation review was prompted by Mr Hutson's continued criticism.

Managing director Alan Clarke said the forecast result was also above analysts' forecasts and would be mainly due to two key factors.

"First thing is the dental business is doing what we said it was going to do. It's growing strongly.

"We actually came through an Australian economic bump which was quite significant very well. The New Zealand dental business continued to grow and continued to deliver on its promises.

"The second big reason is that the audiology business in Australia has moved rapidly into much better space and the losses that were generated last year have effectively been halved and that business is now producing positive EBITA (earnings before interest, taxes and amortisation) on a monthly basis."