Medtronic posts revenue growth expectations, expense cuts
Medtronic has presented its five-year growth targets that include expectations for earnings that will expand faster than sales and smaller businesses that will grow faster than its heart-rhythm device business.

The Minneapolis-based Medtronic projects a revenue growth of 9 percent to 11 percent a year through its 2013 fiscal year, and earnings growth of 11 percent to 14 percent in that span, William A. Hawkins, Medtronic's president and CEO, told analysts at an internet-broadcast meeting.

Hawkins said Medtronic is "comfortable we have multiple paths" to reach its revenue goals. "We feel very good about the targets we've set out," he added.

He also noted that Medtronic plans to boost operating margins by 300 to 400 basis points by fiscal 2012, and to reduce selling, general and administrative expenses by 250 to 350 basis points by that time. The company is targeting cuts to spending in non-production-related areas, such as health IT.

The company said it is ready to cut costs more, should revenue growth come in slower than expected. Gary Ellis, chief financial officer, said during the conference that he expects Medtronic to exceed its yearly sales growth goals within each business unit.

The U.S. market for Medtronic's biggest products, implanted defibrillators, has been sluggish for years following industry recalls that began in 2005. However, overseas markets have grown more quickly, and Medtronic has been shifting resources to put more focus on international markets, the company said.

Pat Mackin, president of Medtronic's Cardiac Rhythm Disease Management business, said that Medtronic expects revenue growth of 2 to 4 percent a year for the U.S. business, a 2 to 3 percent decline in average selling prices and stable market share. The company also sees heart-rhythm growth of 9 to 11 percent in international markets, with emerging markets playing a key role.

"There is still a significant opportunity outside the U.S. in these emerging markets," Mackin said.