Gerresheimer AG kept up its successful trend in the second quarter of the financial year. In more than 40 plants around the world, the Duesseldorf-based, MDAX-listed Group manufactures glass and plastic pharma packaging together with products for the safe and convenient drug delivery such as insulin pens and asthma inhalers. “Our business did well in the second quarter, too. We achieved healthy growth in both revenues and earnings. We continue to deliver our growth strategy. We will continue to achieve profitable growth as we are well positioned worldwide and reap the benefits of long-term megatrends in healthcare,” said Uwe Röhrhoff, Chief Executive Officer of Gerresheimer AG.
The Group sustained its revenue growth in the second quarter of financial year 2015 (financial year 2015: December 1, 2014 to November 30, 2015). Revenues increased by 6.3% to EUR 356.4m. On an organic basis, meaning adjusted for exchange rate effects, acquisitions and divestments, revenues grew by 1.9% compared with the prior-year quarter. Very strong growth was achieved in revenues with medical plastic products such as asthma inhalers and blood glucose skin-prick aids for diabetics. Pharmaceutical plastic packaging products also sold well. Tooling and engineering revenues returned to normal after very high revenues in the prior-year quarter. Business with pharmaceutical primary packaging made of glass recovered as expected as the year progressed but remained slightly down on the prior-year quarter.
As part of the portfolio streamlining decided on at the end of 2014, Gerresheimer is going to close its glass plant in Millville, USA, in the third quarter of 2015. The entire moulded glass production will be consolidated at the Chicago Heights plant, which in turn will undergo expansion and infrastructure improvement in the course of the forthcoming furnace overhaul. Product quality will also be enhanced as a result. Revenues in the laboratory glassware business were slightly up.
The Group generated adjusted EBITDA of EUR 72.1m in the second quarter of 2015, an improvement of 10.6% on the prior-year quarter. At constant exchange rates, adjusted EBITDA came to EUR 70.3m. The adjusted EBITDA margin was 20.2% in the second quarter, rising above the margin of 19.4% in the prior-year quarter.
All three divisions contributed to the improved margin. Net income was EUR 22.4m in the second quarter of 2015, 7.4% higher than in the prior-year quarter. Earnings per share stood at EUR 0.65, compared with EUR 0.61 a year earlier. Adjusted earnings per share came to EUR 0.84, versus EUR 0.73 in the comparative prior-year quarter. Gerresheimer’s capital expenditure in the second quarter of 2015 was EUR 19.9m, as against EUR 25.1m in the prior-year quarter. The lion’s share of capital expenditure was accounted for by primary packaging glass plants. The focus remained on capital expenditure on vial and cartridge machinery as well as on routine furnace overhauls. Production capacity expansion for medical plastic systems such as inhalers also continued in the Czech Republic and the USA.
In light of the positive market environment, Gerresheimer refinanced its syndicated loans ahead of schedule. A new EUR 450m revolving credit facility with a five-year term was signed on June 9, 2015. The EUR 400m in bank loans otherwise due to expire in 2016 were redeemed on June 15, 2015. The Group thus gained a slight increase in the facility amount at lower cost and on improved terms. This lays a solid foundation for its onward growth strategy.
Assuming that the sale of the tubing glass business to Corning Incorporated is completed by the end of 2015, and with the figures based in each case on constant exchange rates and excluding acquisitions and divestments, Gerresheimer’s expectations for financial year 2015 remain as follows. Gerresheimer anticipates organic revenue growth of between 1% and 3%. This corresponds to a revenue corridor of some EUR 1,300m to EUR 1,330m. Regarding adjusted EBITDA, Gerresheimer expects an increase in a target corridor of EUR 255m to EUR 265m. Capital expenditure in financial year 2015 is forecast to represent around 9% to 10% of revenues at constant exchange rates.
Assuming completion of the sale of the tubing glass business by the end of 2015, Gerresheimer’s expectations for 2016 to 2018 are as follows:
- Annual organic revenue growth is expected to average 4% to 6%.
- The adjusted EBITDA margin will be approximately 20% in 2018.
- Capital expenditure will be in the range of 8.0% to 9.5% of revenues at constant exchange rates.
- Return on capital employed (ROCE) will increase slightly.
Gerresheimer is a leading global partner to the pharma and healthcare industries. The company’s special glass and plastic products contribute to health and well-being. Gerresheimer is a global organization with 11,000 employees and manufacturing operations in the local markets, close to customers. It has over 40 production facilities in Europe, North and South America and Asia generating revenue in excess of EUR 1.3 billion. The comprehensive product portfolio includes pharmaceutical packaging products as well as convenient and safe drug-delivery systems such as insulin pens, inhalers, pre-fillable syringes, vials, ampoules, bottles and containers for liquid and solid pharmaceuticals with closure and safety systems, plus cosmetic packaging products.