Gerresheimer reports strong second quarter with 4.6% organic growth

Vaccination campaigns open opportunities for specialty glass vials

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Gerresheimer
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.

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.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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