Ryman Healthcare says demand strong but 1H growth likely limited
Demand at Ryman Healthcare's existing villages was strong in the first quarter but growth in the first half of the year will be limited, chairman David Kerr told the company's annual general meeting.
Trading is in line with expectations but "development earnings would be heavily weighted towards the back end of the second half in line with the timing of the construction programme at Ryman's developing villages. Growth in the first half of the year would be limited as a result," said Kerr.
He said planning consents for new villages in Australia's Burwood East and Coburg had been lodged and work was underway at the Brandon Park site as the Melbourne expansion gathers pace. Design teams were developing plans for new villages at Mt. Eliza on the Mornington Peninsula and Geelong. Work is also about to start on new villages at Devonport and Lynfield in Auckland.
The company's bank facility has been extended by $125 million to $1.125 billion, providing increased working capital to fund the expansion and landbank in Melbourne, said Kerr.
Ryman has five villages under construction and another 11 in the pipeline. It owns 31 villages that are home to more than 10,000 residents in Australia and New Zealand. In May it reported a 13 percent lift in underlying profit to $178 million for the year to March 31. Its medium term target is to grow underlying profit by 15 percent.
Kerr also said that the government's proposed policy changes for skilled migrant workers had created uncertainty for many employees and Ryman has met with government ministers to express their concerns.
"We will do our level best to recruit staff locally as we grow, and the increased funding the Government has provided to increase pay rates in the sector will definitely help with local recruitment. That said, there is a skills gap which we need to fill each year and skilled migrants are likely to continue to be a critical part of our workforce," he said.
In April, Immigration Minister Michael Woodhouse unveiled a 'Kiwis first' immigration policy which made it harder for firms to hire overseas, with new restrictions on temporary work visas for anyone earning less than the median wage. The government then planned to categorise high and low-skilled temporary work visas depending on how much a person earns, introduce a three-year limit for how long low-skilled workers can stay, and impose a one-year stand-down period.
Earlier this week, however, Prime Minister Bill English confirmed that proposed changes to skilled migrant visa conditions are under review following complaints from businesses and the regions.
The stock last traded at $8.94 and is down 5.4 percent over the past 12 months.