20 Nov 2020

Rest home operator sees higher profit during pandemic

12:21 pm on 20 November 2020

Ryman Healthcare's full-year result has been hit by the Covid-19 pandemic.

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Photo: 123RF

The country's largest retirement village operator's half-year profit has risen on the back of higher property valuations but Covid-19 has hit its underlying earnings through higher costs and constrained trading.

The company's profit for the six months ended September was $212.4 million compared with $188m the year before.

But leaving aside $124m of valuation gains the underlying result fell 14 percent to $88.4m as it spent more to keep Covid-19 out of its 39 rest homes on both sides of the Tasman, while being forced to slow down the building of new villages and the sale of empty units.

"It has been a tough six months due to the ongoing impact of the pandemic, which increased costs substantially and restricted our ability to sell in key markets during the extended lockdowns," chief executive Gordon MacLeod said.

He said Covid-19 had cost it $50m in higher expenses to protect residents and staff. There were no cases of the virus in any of its villages.

Ryman's revenue was marginally higher at $299m, with income from in-house care rising but income from the sale of new and used units falling.

The half-year dividend fell to 8.8 cents a share reflecting the drop in underlying profit.

MacLeod expected sales would improve now that most of the Covid-related restrictions have been removed.

"While there is likely to be some ongoing uncertainty due to the pandemic, there is clearly a lot of pent-up demand in the housing market and we are in a good position to continue to invest heavily in new homes and jobs."

"We are anticipating cash collections of at least $275m in the second half from new sales. With 12 villages in progress and more on the way, we will be creating more than 2000 jobs as well as homes and care for more than 4000 residents," he said.

Ryman is also going to appoint a chief executive for its Australian operation, where it has been developing villages in Victoria which it plans to use as a base to expand into other states.

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