Gerresheimer reports strong second quarter with 4.6% organic growth

Vaccination campaigns open opportunities for specialty glass vials

Gerresheimer ampule production line. Photo - Gerresheimer

Gerresheimer announced profitable growth in the second quarter of 2020. “As a key supplier to the pharma and healthcare industry, we have significant responsibility for ensuring patients worldwide to receive the medication they need. We have guaranteed this over the past few months and maintained our delivery capacity at all times. New growth opportunities are now opening up for us in the pharma business. We are prepared for the strong demand for injection vials for the forthcoming vaccination campaigns and are additionally expanding capacity. As planned, we aim to maintain the growth which we saw in the second quarter. We are working continuously to implement our strategy for profitable and sustainable growth. To that end, we are investing in quality, capacity, digitalization, new markets, and smart new drug delivery products,” said Dietmar Siemssen, chief executive officer of Gerresheimer.

Gerresheimer generated revenues of EUR 363 million (approximately Rs 3000 crore) in the second quarter of 2020, marking 4.6% organic growth in the core business compared to the same quarter of the prior year.

Gerresheimer Qualitaetskontrolle 300dpi 01
photo – Gerresheimer

Impacts of pandemic under control

The global pharma business has developed well in the current Covid-19 pandemic. This benefited Gerresheimer, too, with its primary packaging for liquid and solid drugs, syringes, and drug delivery devices such as insulin pens and asthma inhalers. There is currently demand from many pharma companies, in particular for injection vials for future vaccination campaigns against Covid-19. Gerresheimer has already invested heavily in quality and capacity in this business in 2019 and 2020 and will continue to do so. This means the company will be very well prepared to support the vaccination campaigns. Gerresheimer sees additional medium-term to long-term opportunities in the pharma business as a result of the pandemic. Temporarily reduced demand for high-quality perfume flacons has been more than offset by increased demand for drug packaging and drug delivery devices.

The second quarter of 2020 saw adjusted EBITDA increase on an organic basis by 6.9% to EUR 84 million (approximately Rs 715 crore). Adjusted net income came to EUR 38 million (approximately Rs 325 crore) in the second quarter of 2020. In the same period, adjusted earnings per share after non-controlling interests amounted to EUR 1.18 (approximately Rs 100). The strong second-quarter free cash flow of EUR 45 million (approximately Rs 100) was used to reduce net debt relative to the first quarter. Adjusted EBITDA leverage decreased from 3.4 times at the end of the first quarter to 3.2 times as of 31 May 2020.

Guidance for 2020

According to the press release, Gerresheimer’s forecast for the financial year 2020 is unchanged. It includes revenue growth in the mid-single-digit percentage range; adjusted EBITDA margin of around 21%; capital expenditure amounting to roughly 12% of revenues; indications for subsequent years; annual organic revenue growth in the mid-single-digit percentage range; targeted medium-term adjusted EBITDA margin of 23%; and annual capital expenditure of between 8% and 10% of revenues.

The quarterly statement for the second quarter of 2020 is available here.

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