Gerresheimer back on growth path and sets course for the future

2019-02-15, Gerresheimer AG

Revenues at constant exchange rates up 4.3% in the financial year 2018 to EUR 1,406.7m
Adjusted EBITDA at constant exchange rates at EUR 307.5m, excluding the Advanced Technologies Division and other one-off effects, and despite substantially negative energy costs and resin prices
Strong adjusted net income after non-controlling interests at EUR 178.0m (prior year: EUR 127.5m)
Sensile Medical acquired in July 2018 and successfully integrated; new Advanced Technologies Division estab- lished
Further increase in proposed dividend to EUR 1.15 per share (prior year: EUR 1.10)
Medium-term indication: expecting 4% to 7% average revenue growth at constant exchange rates

Gerresheimer AG closed the finan- cial year 2018 (December 1, 2017 to November 30, 2018) with good growth. “2018 was a successful year. We attained our goals. Gerresheimer has excellently paved the way for profitable future growth. On top of growth in our core business of pharmaceutical primary packaging, drug delivery devices and cosmetics packaging, we will develop additional growth momentum in the medium and long term. We will be helped in this by our good innovation pipeline and the new Advanced Technologies Division,” said Dietmar Siemssen, CEO of Gerresheimer AG.

Thanks in particular to a strong fourth quarter, Gerresheimer increased revenues at constant exchange rates by 4.3% from EUR 1,348.3m to EUR 1,406.7m in the financial year 2018. Reported revenues, meaning after exchange rate changes and acquisitions, grew in the financial year 2018 by 1.4% to EUR 1,367.7m. Organically—that is, adjusted for exchange rate effects, acquisitions and divestments—revenues were up 3.4% on the prior year.
The business with injection vials, ampoules and cartridges in the US saw a clear recovery in 2018. Molded glass also progressed well, with cosmetic glass products experiencing especially strong demand. Plastic vials for prescription drugs sold well in the US in 2018, as did plastic pharmaceutical packaging in India and South America. In Europe, plastic pharmaceutical products did slightly better than in the prior year. Syringe sales were also slightly up on the prior-year figure. Medical plastics systems showed only marginal growth as Gerresheimer had lost a contract for inhalers in Europe. As a result, the Company decided to close the affected plant in Kuessnacht, Switzerland, and implement further reorganization measures in that business. Inhaler production performed very well in the USA, on the basis of which Gerresheimer won a follow-up order for its plant in Horsovsky Tyn, Czech Republic.

Adjusted EBITDA at constant exchange rates was EUR 308.0m in the financial year 2018 compared with EUR 310.8m in the prior year. Three one-off effects compared with the prior year have to be taken into account here. Firstly, an expense of EUR 1.4m was recognized in the financial year 2018 for negative impacts in connection with the exemption from network charges granted to large electricity-consuming enterprises. Secondly, final fair value measurement of the put option for acquisition of the remaining 25% of shares in Triveni resulted in recognition of an expense of EUR 1.1m after an income of EUR 3.6m in the prior year. Thirdly, at constant exchange rates, adjusted EBITDA for the new Advanced Technologies Division is EUR 3.0m for the financial year 2018. Excluding these three one-off effects, adjusted EBITDA at constant exchange rates would have been EUR 307.5m and thus at the same level as in the prior year. Reported adjusted EBITDA in the financial year under review amounts to EUR 298.6m for an adjusted EBITDA margin of 21.8%.Net income, at EUR131.1m in 2018, was significantly up on the EUR 103.1m prior-year figure. Adjusted net income after non-controlling interests came to EUR 178.0m, compared with EUR 127.5m in the prior year. These improvements are mainly attributable to the positive impacts of the US tax reform.

In July 2018, Gerresheimer acquired Sensile Medical, a Swiss technology company. Sensile Medical is a leader in the field of micro pump technol- ogy. Gerresheimer incorporated Sensile Medical into the newly estab- lished Advanced Technologies Division. The focus of this division is on the development and manufacture of smart drug delivery systems.

Net financial debt increased due to the acquisition of Sensile Medical and amounted to EUR 886.4m as of November 30, 2018, compared with EUR 712.7m as of the prior-year reporting date. Adjusted EBITDA lever- age (net financial debt to adjusted EBITDA) temporarily rose to 3.1x. Gerresheimer return on capital employed (Gx ROCE), an important long- term performance indicator, was negatively impacted in the short term during the financial year 2018—notably due to the Sensile Medical acqui- sition—and came to 10.7%, compared with 12.9% a year earlier.

The Company set the course for further productivity gains and growth in 2018 with EUR 114.7m in capital expenditure. Capital expenditure in the Plastics and Devices Division focused on expansion of inhaler production in the USA and the Czech Republic, additions to the product portfolio and enlargement of production capacity. In the Primary Packaging Glass Divi- sion, capital expenditure mainly related to scheduled furnace repairs in the US and Germany, production plant modernization and automation, and expansion of finishing capabilities at the German cosmetic glass plant in Tettau.
“We have a sound plan for 2019, which entails building up further growth impetus in the medium and long term. At the same time, we will continue to strive for excellence, sharpen our customer focus and foster our work- force. In addition to our strong core business, we will identify new projects and areas, which will drive sustainable, profitable growth, making Gerresheimer even more successful,” Dietmar Siemssen added.

About Gerresheimer
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 about 10,000 employees and manufacturing operations in the local markets, close to customers. With plants in Europe, North and South America and Asia Gerresheimer generates revenues of approximately EUR 1.4 billion. The comprehensive product portfolio includes pharma- ceutical packaging products as well as convenient and safe drug delivery systems such as insulin pens, inhalers, micro pumps, pre-fillable syringes, vials, ampoules, bottles and containers for liquid and solid pharmaceuticals with closure and safety systems, plus cosmetic packaging products.