March 20, 2017 / 11:07 AM / in 10 months

Russia's MD Medical to ramp up investments after profit jump

MOSCOW, March 20 (Reuters) - Russia’s MD Medical Group said on Monday it plans to more than double investments this year to ramp up its network of clinics and hospitals after 2016 net profit jumped 29 percent.

The company, which listed its shares on the London Stock Exchange in 2012, has benefited from rising demand for private healthcare services among middle class consumer seeking better quality.

In a sign of confidence that demand will stay strong, MD Medical, which specialises in women’s health, said earlier its strategy envisaged the opening a nine new hospitals and a number of clinics by 2021, and expansion to new Russian regions.

In certain regions, the company is becoming first to offer services such as In Vitro Fertilization (IVF), providing patients with an alternative to travelling to other cities.

In 2017, its capital expenditures will rise to around 5.3 billion roubles ($92.3 million), Deputy Chief Executive Andrey Khoperskiy told reporters on a conference call, compared to 2.2 billion roubles last year.

The biggest single investment project, worth 2.6 billion roubles, is the construction of a hospital in Samara, in central Russia, where the group already has a network of women’s health clinics, he said.

Investments will also go into the opening of hospitals and clinics in other regions, including Tyumen and Irkutsk, in Siberia, while the company is also considering two acquisitions, Chief Executive Officer Mark Kurtser said.

It will finance the investment programme with its own funds and debt and does not currently plan to raise capital on the equity market by selling additional shares, Kurtser added.

The company’s net profit grew 29 percent in 2016 to 2.3 billion roubles on the back of a 37 percent jump in EBITDA to 3.7 billion roubles and a 28 percent increase in revenue to 12.2 billion roubles.

That growth was driven by improved results of existing clinics and the acquisition and opening of new ones. It said earlier there were 20 percent more babies delivered in its hospitals in 2016 than in 2015, while the number of IVF cycles rose 51 percent.

The company also recommended a final dividend for the year of 338 million roubles, or 4.5 roubles per share, compared with 500 million, or 6.66 roubles per share, for 2015. ($1 = 57.4459 roubles) (Reporting by Maria Kiselyova and Olga Popova; Editing by Christian Lowe)

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