Medical giant Bupa suffers blow as profits plummet 72%
Private medical group Bupa reported a 72% plunge in profits after a difficult year saw UK jobs slashed and customer numbers fall further.
The group axed 15% of its workforce - around 500 jobs - at its UK private medical insurance business Bupa Health and Wellbeing (BHW) last year as wider economic woes continued to weigh on customer numbers, down by 2% to 3m.
Its aggressive cost action helped increase profits at the insurance arm, which drove a 14% increase in underlying earnings in the European and US business.
But this was not enough to offset the impact of spending cuts and healthcare reforms in the US and UK, which left it with a £249.2m hit as it wrote down the value of a raft of recent acquisitions, including Bupa Home Healthcare and the Cromwell Hospital in London.
Pre-tax profits plummeted to £118m in 2010 from £416.5m in 2009. Bupa said underlying profits rose 9% with the write-downs stripped out, helped by the UK insurance boost and a strong performance in Australia and Asia.
The recessionary climate and rising unemployment has taken its toll on demand for health insurance as companies cut staff and reduce their payrolls.
Ray King, chief executive of Bupa, said he hoped UK customer numbers will stabilise in 2011 amid tough economic conditions.
"Until corporates expand their payrolls again, the opportunity for growth is somewhat constrained," he said.