Sonic Healthcare expects expansion in the United States and Germany to boost its growth, despite the gloomy US economy.
The international pathology, radiology and medical centres group on Tuesday reported a record net profit for the 2011/12 financial year, up 7.3 per cent to $316 million compared with the previous 12 months.
Chief executive Dr Colin Goldschmidt said the company expected to increase its earnings by five to 10 per cent this financial year, pointing to the US and Germany as key markets for future growth.
"Our big growth for the future is probably going to come out of the USA and Germany where the markets are still quite fragmented and our positions are still relatively young," he told investors.
By comparison, the Australian laboratory market was more mature and consolidated, he said.
Revenue growth in the US for 2011/12 year ending June 30 was 11 per cent, including acquisitions.
But once acquisitions were stripped out, that left organic growth at just two per cent.
"That sounds low but we have an unprecedented low-growth environment in the US lab market," he said.
"That two per cent is higher than our major competitors have reported recently."
The low growth was probably associated with the high unemployment rates in the US, where private health insurance is provided by employers, Dr Goldschmidt said.
The number of insured people was likely to improve once the economy started to pick up, he said.
Germany performed better with six per cent organic growth.
Dr Goldschmidt said the company's return on invested capital contributed to the strong results.
Sonic reached a critical mass in the US and Germany markets following a number of acquisitions, which would now inevitably slow, Dr Goldschmidt said.
Overall, the pathology and imaging industry would be underpinned by the growing needs of an ageing population, more genetic tests, and a push towards preventative medicine, he said.
Sonic maintained its partly franked final dividend at 35 cents a share.
Keep reading - next article