Fall in oil and gas revenues lead to slump in Bupa half-year profits
- Credit: PA
Private healthcare firm Bupa has seen half-year profits slump 45% after it was hit by reduced revenues in the oil and gas sector and a one-off charge.
Statutory pre-tax profits tumbled from £255.4m to £139.6m in the first six months of the year, with the company taking a £112.3m hit from an early redemption of historic debt.
Chief executive Evelyn Bourke told the Press Association: 'Globally, corporate oil and gas contracts have suffered as a result of the falling oil price, resulting in reduced revenues and profits. While oil and gas firms still see the benefit of having cover for employees, they are reducing some of the benefits.'
Oil prices have plunged over the past 18 months, and Bupa's business in Saudi Arabia was particularly affected.
The firm said: 'Some corporate clients have faced economic pressures, particularly in the oil and gas sector, reducing the corporate and SME (small and medium enterprises) books. This has had a significant impact on earned revenue in some regions and remains a key area of focus for 2016.'
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Nevertheless, revenue was up 7% to £5.3bn on a constant currency basis with Bupa, which operates globally, benefiting from the fall in sterling.
Underlying pre-tax profits were up 2% to £261.7m in the period.
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Ms Bourke, who was appointed chief executive in April, added that she plans to refresh Bupa's strategy under her leadership.
'The focus will be on the customer experience, building loyalty and digital. We will also continue to expand selectively in markets where we see the most opportunity - China, the Middle East, the UK and North America.'
Bupa covers 32m customers in 190 countries, running hospitals, care homes and health insurance schemes.
The chief executive said the firm, which operates 283 homes and 27 retirement villages in the UK, remains 'committed' to the care home sector. However, she warned that in the face of falling local authority fees and rising costs, Bupa would close homes that were no longer sustainable.
'We are in active negotiations with local authorities to ensure their fees reflect the true cost of care. We have been prepared to close homes in the past and we will again if they are not sustainable.'
The care sector has been vocal about the impact of the National Living Wage on profitability.
On Brexit, Ms Bourke said that Bupa will look to mitigate any impact through enhancing the customer experience.
She added: 'The immediate impact on Bupa's financial position following the EU referendum in June has been limited. While there will be some operational and legal impacts, it is too early to conclude how the Leave vote will affect our underlying businesses and employees. We will continue to monitor the situation closely.'