Gerresheimer Expects Increased Growth and Improved Profitability Mid-Term
Gerresheimer has announced it expects increased growth and profitability mid-term due to two new major orders with temporarily higher capital index (capex) / organic revenue guidance 2018 narrowed to the upper end of the range.
With the acquisition of Sensile Medical Switzerland under a share purchase agreement, 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.
Sensile Medical develops innovative drug delivery products and platforms, including digitally connected capabilities. It is already working highly successfully with customers on the development of devices for diabetics and patients with heart complaints.
Depending on the attainment of contractually specified milestones, the purchase price will be a maximum of €350m, with an initial payment of €175m.
Independently of this, Gerresheimer has secured major respective contracts for the manufacture of inhalers and for pre-fillable syringes for a major heparin producer.
At the same time, Gerresheimer lost a smaller order in the inhaler business, resulting in a restructuring that will affect the plant in Switzerland, which is to be closed by the end of 2019. As a result, and excluding Sensile Medical, there are changes in the planning of capital expenditures, profitability and revenues:
For 2019 and 2020, capital expenditures are expected to be higher by two to a maximum of four percentage points of revenues at constant exchange rates, among other things for the capacity expansion at the plant in Horsovsky Tyn, Czech Republic, further automation, and a new plant in Eastern Europe
At the same time, Gerresheimer anticipates that this will lead in 2019 and 2020 to an approximately one-percentage-point reduction in the adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) margin (relative to the financial year 2017) as a consequence of low-margin revenues in the engineering and tooling business for the new major orders and of increased expenditures for relocation, employee training and production start-up/ramp-up.
In 2021 and 2022, Gerresheimer expects that both revenues and the adjusted EBITDA margin will increase by two percentage points beyond the usual rate of growth while capital expenditures will return to around 8%.
For the current year, following up on the guidance given on 22 February 22, 2018, Gerresheimer anticipates a strong second half and has narrowed its forecast for revenues at constant exchange rates to the upper end of the guidance range, at €1.38bn to €1.4bn.