Leading international medical diagnostics company Sonic Healthcare Limited (ASX: SHL) reported a slight decline in net profit for the six months ended 31 December 2014, which it blamed on "challenging market conditions" in two of its key markets.
Despite the decline in profit, Sonic Healthcare still increased its interim dividend by 2 cents or 7.4% to 29 cents.
So What: Sonic Healthcare reported a net profit of $174 million for its first-half operations on the back of a 6.1% lift in revenues ($2.014 billion), which was in line with guidance provided by the company in November last year. While challenging conditions in its Australian Pathology and USA markets impacted the result, the company said volumes had strengthened more recently, which together with cost initiatives, should underpin earnings growth in the second half of the financial year.
At the same time, Sonic Healthcare's German and UK businesses performed strongly, while it also announced that it would begin providing laboratory services in Canada – a very strategic move for the company.
Now What: The stock fell 0.5% early in the session, although it has gained nearly 12% over the last 12 months. This compares favourably to the S&P/ASX 200's (Index: ^AXJO) (ASX: XJO) 9.6% return and the 5.8% return from rival Primary Health Care Limited (ASX: PRY).
Sonic Healthcare said it was still on track to deliver earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 2-4%, while it also expects a currency tailwind for the remainder of the year. Indeed, Sonic Healthcare's long-term growth prospects remain very impressive, but there's another stock which could be an even better buy today.
