(NYSE: COV), a leading global provider of healthcare products, today outlined the key strategic initiatives, growth opportunities and innovations that are expected to drive the Company’s growth in 2014 and beyond at a meeting held here for the investment community.
Chairman, President and CEO José (Joe) E. Almeida spoke about Covidien’s plans to address the changing healthcare landscape and the Company’s evolving strategies, including broaden innovation focus, portfolio and investment opportunities, emerging markets and operational leverage.
“Despite the challenging external environment, we are delivering a very solid performance in 2013,” Almeida said. “Our focus on growth, leverage and capital allocation will be the drivers of our future performance. We will make further investments to expand our capabilities, particularly in emerging markets, and to capitalize on the market opportunities across our business.
“We are evolving our commercial model, offering value-added services, and launching a steady stream of new products in all product lines. Our strategic investment opportunities, combined with additional portfolio management activities, will accelerate our growth,” he added. “We will use our strong cash flow to fund business expansion, while remaining committed to return at least 50% of our free cash flow to shareholders through dividends and share repurchases.”
Chief Financial Officer Charles Dockendorff provided an outlook for fiscal 2014. The Company estimates that net sales in the 2014 fiscal year will increase 2% to 5% versus 2013 net sales. Net sales are expected to increase 2% to 5% versus 2013 in the Medical Devices segment and be about even with 2013 net sales in Medical Supplies. All sales growth rates assume current foreign exchange rates.
Excluding the impact of one-time items, the operating margin is expected to be in the 21.5% to 22.5% range, and Covidien anticipates the effective tax rate will be in the 16.0% to 17.0% range for fiscal 2014. In addition, the Company is targeting a dividend payout ratio in excess of 35% over time and is committed to achieving a payout ratio of at least 30% within the next 12 months.