Gerresheimer extends business model and increases growth forecast

Gerresheimer has secured two major orders for the manufacture of inhalers and prefillable syringes

With the acquisition of Sensile Medical, Gerresheimer is extending its business model in the direction of an Original Equipment Manufacturer (OEM) for drug delivery platforms with digital and electronic capabilities for pharmaceutical and biopharmaceutical customers.

Gerresheimer is acquiring Swiss technology company Sensile Medical AG and thus fundamentally extending its business model. The acquisition enables Gerresheimer to offer drug delivery platforms with digital and electronic capabilities for pharmaceutical and biopharmaceutical customers. “…Sensile Medical lays the foundation for a major extension of our business model in innovative application areas. We have also secured two major orders in our normal business, meaning that we can expect higher revenue growth and increased profitability in the medium term. The first half of the current financial year is going as expected, with earnings per share, in particular, performing well. We anticipate a strong second half year and have accordingly narrowed our revenue forecast to the upper end of the range,” said Rainer Beaujean, Speaker of the Management Board and Chief Financial Officer.
For the financial years 2019 and 2020 – without consideration of Sensile Medical – the adjusted EBITDA margin will therefore be temporarily reduced by approximately one percentage point, compared with the financial year 2017. This is a consequence of proportionately higher revenues in the low margin engineering and tooling business for the new major orders as well as increased expenditures for relocation, employee training and production start-up/ramp-up.
In the years 2021 and 2022, revenues – without consideration of Sensile Medical – are expected to increase by two percentage points beyond the usual rate of growth, as is the adjusted EBITDA margin. Capital expenditure will then return to approximately 8%.
The Company’s expectations for the financial year 2018, in each case at constant exchange rates and without acquisitions or divestments, are set out in the following. In addition the potential effects of the acquisition of Sensile Medical, which are presented separately above have to be added. In total, for the US dollar – which is expected to have the largest currency impact on the Group currency, accounting for about a third of Group revenues in 2018 or about 40% of adjusted EBITDA – Gerresheimer has assumed an exchange rate of approximately USD 1.12 to EUR 1.00. As before, about a rise or fall in the US dollar against the euro by about one cent has an impact of around EUR 4m on revenues and EUR 1m on adjusted EBITDA.
Gerresheimer’s long-term target for the entire Group, including Sensile Medical, is that the Gx ROCE forecast remains unaltered, despite the acquisition of Sensile Medical, at approximately 15%.
Due to the acquisition of Sensile Medical and the associated purchase price payment, the Company expects a temporary increase in adjusted EBITDA leverage to above 3.0x. Gerresheimer nonetheless continues to consider a figure of 2.5x to be about right for the ratio of net financial debt to adjusted EBITDA, with temporary variation above or below this tolerated because M&A activity cannot be planned in exact detail.
Estimates for the years 2019 to 2022 and the assumptions for the new division, including Sensile Medical, will be given in further detail in the guidance provided by the company on publication of its Annual Report 2018 in February 2019.