Gerresheimer sets foundation for profitable growth in 2019

Gerresheimer AG brought the financial year 2019 to a successful close

  • Foundation for sustainable and profitable growth laid in 2019: annual revenue growth in the mid-single-digit percentage range targeted for 2020 and subsequent years
  • 2019 operating targets met: underlying revenues reach 1.40 billion EUR and underlying adjusted EBITDA 293 million EUR
  • Further increase in proposed dividend to 1.20 EUR per share from 1.15 EUR in the prior year

Dietmar Siemssen, CEO of Gerresheimer AG, said, “Together, in 2019 we laid the foundation to make Gerresheimer fit for the future and setting the Company firmly on the path to growth. We actively addressed the themes of innovation, excellence and sharpening our customer and employee focus and will continue to do so. We invested record sums in growth, capacities, process optimization and digitalization. Our clear goal: Sustainable and profitable growth.”

In 2019, Gerresheimer set the course for profitable growth. For future growth, the Company is focusing on new segments such as full solutions for biotech drugs, as well as innovation, generating higher revenues in fast-growing markets and capital expenditure.

The biggest Capex program in Gerresheimer’s corporate history was launched in 2019, paving the way for growth. Specifically, capital expenditure in 2019 amounted to 185 million EUR and centred on growth projects, building up capacity, process optimization and digitalization. This included the continued expansion of inhaler production at the Horsovsky Tyn plant in the Czech Republic, construction of the new plants in North Macedonia and Brazil as well as expanding the product portfolio and production capacity. Two new plants for the production of plastic primary pharmaceutical packaging also opened in China and India.

Other capital expenditure related to the scheduled furnace overhaul and expansion in Essen, Germany, as well as production plant modernization and automation at various sites. In addition, the new glass innovation and technology centre in North America was launched as part of a customer event.

Gerresheimer increased underlying revenues at constant exchange rates by 2.4 percent from 1,365.5 million EUR to 1,397.5 million EUR in the financial year 2019. Excluding the one-off effects from the unexpected cancellation of the project to develop a micro pump for the treatment of diabetes, revenues at constant exchange rates rose by 0.5 percent from 1,373.5 million EUR to 1,380.2 million EUR.

The syringe business performed very well in the financial year 2019. Revenues from plastic primary pharmaceutical packaging also grew, particularly in South America and Asia. Revenues from primary packaging glass showed healthy growth, notably driven by the strong demand for high-quality cosmetics packaging.

In the cosmetics packaging business, the Company is increasingly targeting sustainable solutions, primarily through the use of recycled glass and plastic. In Europe and Asia, revenues from injection vials, ampoules and cartridges rose significantly. By contrast, revenues from these products declined slightly in North America due to lower demand from a major customer.

In the Advanced Technologies Division, the micro pump for the treatment of Parkinson was successfully launched in the market. A new project for using the micro pump for the treatment of heart diseases was secured and is currently under way. Further potential uses of the micro pump in different therapeutic areas are now being examined with customers.

Adjusted operating EBITDA at constant exchange rates was 292.8 million EUR in the financial year 2019, up 0.7 percent on the prior-year figure of 290.6 million EUR. Adjusted EBITDA at constant exchange rates, excluding the extraordinary effects from the unexpected cancellation of the project to develop a micro pump for the treatment of diabetes, amounted to 396.1 million EUR in the financial year 2019, as against 300.2 million EUR in the prior year.

The unexpected cancellation of the diabetes project was due to a change of strategy at Sanofi. This resulted in the following non-cash extraordinary effects:
the cancellation of this project led to a contract modification and thus to a cumulative adjustment of the revenues recognized up to this point in the amount of 17.3 million EUR. This had a corresponding negative impact on adjusted EBITDA at constant exchange rates which was also impacted by 9.2 million EUR in this connection. In addition, impairment losses totalling 116.7 million EUR were recorded in the financial year 2019. This was offset by other operating income of 129.8 million EUR due to the de-recognition of contingent purchase price components relating to the acquisition of Sensile Medical.

Net financial debt increased year on year and amounted to 942.7 million EUR as of November 30, 2019, compared to 886.4 million EUR as of the prior-year reporting date. Adjusted EBITDA leverage (net financial debt to adjusted EBITDA over the last twelve months, according to the credit line agreement in force) amounted to 2.4x as of November 30, 2019.

The Management Board and the Supervisory Board will propose to the Annual General Meeting on June 24, 2020 to distribute a dividend of 1.20 EUR per share for the financial year 2019. In the prior year, the dividend was 1.15 EUR per share.

Guidance for 2020
For the financial year 2020, Gerresheimer forecasts:

  • Revenue growth in the mid-single-digit percentage range
  • Adjusted EBITDA margin of around 21 percent
  • Capital expenditure amounting to approximately 12 percent of revenue

Indications for subsequent years

  • Annual organic revenue growth in the mid single-digit percentage range
  • Targeted medium-term adjusted EBITDA margin of 23%
  • Annual capital expenditure of between 8% and 10% of revenues

The Annual Report 2019 is available here: