Gerresheimer Back on Growth Path and Sets Course for the Future
DÜSSELDORF, Germany, February 14, 2019 /PRNewswire/ --
- 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 established
- 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 financial 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 U.S. 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 U.S. 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 EUR 131.1m 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 U.S. tax reform.
In July 2018, Gerresheimer acquired Sensile Medical, a Swiss technology company. Sensile Medical is a leader in the field of micro pump technology. Gerresheimer incorporated Sensile Medical into the newly established 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 leverage (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 acquisition-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 Division, capital expenditure mainly related to scheduled furnace repairs in the U.S. 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 workforce. 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.
Gerresheimer's expectations for the financial year 2019 are as set out in the following, in each case based on constant exchange rates. For the U.S. dollar-which is expected to have the largest currency impact on Group currency, accounting for just under 30 % of revenues in 2019-the exchange rate assumption is approximately USD 1.15 to EUR 1.00.
- Revenues are expected to be in the range of approximately EUR 1.4bn to EUR 1.45bn in the financial year 2019.
- Gerresheimer projects adjusted EBITDA of approximately EUR 295m in the financial year 2019 (plus or minus EUR 5m).
- In addition, there is other operating income of roughly EUR 90m in the first quarter of the financial year 2019 due to the derecognition of contingent consideration from the Sensile Medical acquisition. This results from a customer's announcement after the balance sheet date that he will not continue a project with Sensile Medical. Gerresheimer hedged this risk economically by agreeing to a contingent purchase price.
- Capital expenditure as a percentage of revenues will be approximately 12% in 2019.
Indicative medium-term guidance:
- For the years 2020 to 2022, average annual growth in revenues at constant exchange rates is expected to be in the 4% to 7% range.
- The Group is targeting an adjusted EBITDA margin of 21% in 2020 and 23% in 2021 and 2022.
- Capital expenditure will be around 12% of revenues in 2020-as in 2019-before returning to about 8% from 2021.
The long-term targets continue to apply, with Gx ROCE of around 15% and adjusted EBITDA leverage of 2.5x.
The full Annual Report is available at: http://www.gerresheimer.com/en/investor-relations/reports
For further information: http://www.presseportal.de/nr/9072/dokument?langid=2
Group Senior Director Communication & Marketing
Phone: +49 211 6181-250