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Ryman posts 15% gain in first-half earnings on sales growth, affirms FY guidance

Thursday 17th November 2011

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Ryman Healthcare, New Zealand’s largest retirement village operator, posted a 15 percent gain in first-half profit after speeding up its building programme. The company affirmed its guidance for full-year earnings growth.

Net profit rose to $59.6 million, or 11.9 cents a share, from $52.3 million, or 10.4 cents a year earlier, the company said in a statement. Sales rose 18 percent to $74 million.

Ryman lifted its build rate by 22 percent to 550 units annually last year to meet what it said was “strong demand” across the country. In the latest six months it built and opened 199 units and 170 aged-care beds, up from 190 and 117 respectively a year earlier.

The decision to speed up the building programme “is starting to pay dividends,” said chairman David Kerr.

Operating cash flow jumped 27 percent to $91.6 million and Kerr said this provided the funds to invest in new hospital and dementia care facilities.

The company is “experiencing strong levels of pre-sales at our new villages so we expect to achieve our target of 15 percent underlying profit growth for the full year,” he said.

The shares climbed 2.3 percent to $2.65 and have gained 12 percent so far this year. The stock is rated ‘outperform’ based on the consensus of six recommendations compiled by Reuters. The median target price is $2.84.

Underlying profit, which excludes a deferred tax liability and unrealized fair value movements, rose about 15 percent to $41 million.

Ryman cited estimates by Statistics New Zealand that the number of kiwis aged 75 or over will more than double to 516,000 over the next 20 years, boding well for the long-term prospects of rest-home operators.

The company announced on Nov.1 the acquisition of its first site in Melbourne, which has more than 2,500 units and beds, though it didn't give a purchase price nor say how much they bought the land for.

Ryman also purchased land for new villages in Waikanae and Howick in August. It plans to open new villages in Gisborne, Tauranga and Christchurch in the coming year.

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