Estia lifts interim profit, cuts full-year guidance

Estia has increased its first-half profit but downgraded its full-year guidance amid the ongoing aged care inquiry.

Shareholder meeting for Ardent Leisure Group (owner of Dreamworld) at which shareholder Ariadne is agitating for two board seats. Gary Weiss talks to shareholders. Picture Chris Pavlich for The Australian

Residential aged care provider Estia has downgraded its full-year guidance in the shadow of the royal commission into the sector, which it said had the potential to hit occupancy rates.

Estia (EHE) lifted its first half profit 4.1 per cent to $21.1 million for the six months to December 31, with revenue up 6.6 per cent to $289.7m as it prepares to open two new facilities in Queensland by August. But on Tuesday the company cut its full-year earnings guidance from mid single digit percentage growth to low-to-mid single digit percentage growth on existing homes - subject to no further material changes or extra regulatory conditions. Estia told analysts on Tuesday while lower occupancy assumptions played a part in the guidance, it was not going to offer a specific occupancy outlook. Total resident numbers dipped slightly by 55 during the period but had had a recovery in the past six weeks, the company said.

The moderated outlook also excluded Estia’s direct costs of responding to the royal commission - which in early January had risen to $1.2m - as well as fluctuations from opening new facilities and changes in government funding. Chief executive Ian Thorley confirmed Estia had not yet been asked to appear before the royal commission, which finished its first two weeks of hearings in Adelaide on February 22, and did not know when and if it would be. He said Estia would not try and predict future cost arising from the inquiry. “We believe that the future (of the industry) will have a key role for well governed, quality-focused operators like Estia with both scale and capital to meeting the demands for choice and for capacity needed to support the ageing demographics of Australia,” he said.

Witnesses at the inquiry have so far identified a range of issues across the sector, including sustainability of funding, poor staffing levels and the lack of adequate training, delays in the provision of home care assistance, high workloads experienced by carers, the financial pressures on providers and issues associated with the use of chemical and physical restraints. The next public hearings will be held in March.

At 10.47am (AEDT), Estia shares had slid 5 cents, or 2.1 per cent, to $2.36, a dive of nearly 30 per cent since the announcement of the royal commission in September.

The company announced on Tuesday it will pay a fully franked interim dividend of 8.0 cents per share, unchanged from a year ago.

AAP