Ryman targets previous growth rate

Ryman Healthcare has set a target of 15 per cent annual earnings growth, as it is poised to benefit from a growth in demand from an ageing population.

"Our medium-term target remains 15 per cent growth annually," said David Kerr, chairman of the listed aged-care provider. "It'll take us a little time to get back to that, so we underline the word medium."

Demand for Ryman's facilities had improved as the economy and housing markets began emerging from more than a year of recession, he said.

The company develops, owns and runs retirement villages, rest homes and hospitals. So far this year, Ryman's shares have gained 12 per cent, compared with a 5.4 per cent rise in the NZX 50 index. They closed yesterday up 5 cents at 157.

In the latest March year, Ryman reported net profit fell 9 per cent to $66 million, on changes in the value of its investment properties. But its trading earnings rose and paid a higher dividend.

That broke its run of six consecutive years of 15 per cent annual earnings growth.

Ryman has 21 retirement complexes and 4500 residents in New Zealand, and on average is opening two new facilities a year, a pace it expects to continue.

"We've got a good land-bank and a low level of debt, which gives us plenty of headroom to acquire land when it becomes available in the right place," Mr Kerr said.

Demand had shown no sign of abating, but the supply of new retirement facilities had eased as the recession had hit development projects.

Ryman's target demographic is people aged 80 and over, a group which is set to grow three-fold in the next 20 years.

Ryman is exposed to the housing market because it sells new units at market rates, and can also profit or lose when a vacated unit is sold to new occupants.

While that might hurt earnings, it did not affect demand, Mr Kerr said, as people were entering retirement homes for lifestyle reasons, rather than the market value of units.

The residential housing market has declined about 10 per cent from its peak in early 2008, but has recently shown signs of stabilisation.

But this fall has also been a boost to Ryman as land for new developments has become cheaper, as has the cost of building.

Ryman relies on bank debt to fund developments.

- Reuters