Ramsay Earnings: Strong Volume Growth Across All Regions; Shares Are Cheap

Narrow-moat Ramsay’s first-half fiscal 2024 revenue increased by an impressive 8% in constant-currency terms to AUD 8.1 billion, driven by 5% volume growth, tariff uplifts, and indexation. Despite this, the underlying EBIT was slightly softer than we expected, up 5% to AUD 505 million and dragged down by the underlying European EBIT, which fell 22%. The decline primarily reflects tariff increases that did not adequately compensate for cost inflation. However, we expect a significant second-half seasonal skew in Europe supported by a French tariff increase commencing March 1, 2024. As such, we decrease our fiscal 2024 group EBIT forecast by only 2% to AUD 1.1 billion and leave our long-term estimates broadly unchanged.