Netcare a defensive pick

Johannesburg - Hospital group Netcare is expected to demonstrate the defensive nature of its business when it reports significantly higher earnings for the year ended September.

In a trading update released on Thursday, the group said it expected headline earnings per share to have grown by 25% to 35% over the period.

Analysts have said the group's defensive business shielded it from the effects of the recession, as sick people have to go to clinics and hospital despite the downturn.

"It essentially means that their earnings are going up by 25% and their growth is in line with market expectations," an analyst said.

"The South African and United Kingdom businesses improved their earnings. People were concerned with UK having been affected by the recession; it's a good sign that they have improved," he said.

Netcare also said earnings would be further enhanced by the savings in finance costs as a result of lower interest rates, and the reduction of interest-bearing debt arising from the proceeds on the sale of the Ampath Holdings Trust.

Netcare is a South African private healthcare group with 59 hospitals in the country and 51 in the United Kingdom.

The analyst said that with the economic downturn having put a damper on many businesses, Netcare has done well, though "it's a bit difficult to say until we have seen its figures".

- Fin24.com