German packaging firm Gerresheimer going strong

German packaging firm Gerresheimer has reported healthy first half financial results, boosted by a series of strategic acquisitions and favourable market conditions, with the firm's recent initial public offering promising to help keep the outlook rosy.

Operating profits more than trebled over the first half, according to the company, coming in at €23.8m.

The company's sales for the first half of the year rose by 40 per cent over last year to hit €447.3m, largely due to sales from the Wilden Group, acquired by Gerresheimer at the beginning of the year.

The acquisition of the plastic drug delivery systems specialists is just one example of the company's drive to increase its presence at the forefront of the pharmaceutical packaging industry, having also acquired the pharma glass business of US firm Comar in March this year.

72 per cent of the company's sales for the first half were for products destined for the pharma and life sciences markets, with the key divisions of tubular glass, plastic systems and moulded glass all performing strongly.

The tubular glass segment improved first-half sales by just over 5 per cent compared to the equivalent period last year, reaching sales figures totalling €130.9m. Sales from the unit's syringe division were especially strong, particularly for ready-to-fill (RTF) syringes with sales increasing by 34 per cent over the first half 2007.

A second line for sterile ready-to-fill syringes (including glass machines and needle mounting lines) came online during the first half of the year, to help promote the continued growth of this segment.

The plastic systems division performed strongly, with sales reaching €135.9m, €109.8m of which was generated by the Wilden Group. Higher sales of dropper bottle systems, particularly for eye drops, also contributed to the unit's performance during the first half of the year.

The moulded glass division, which provides glass containers, infusion bottles and tablet jars among other packaging products to the pharma industry, also performed well over the first half, with sales growing by 7 per cent over the same period last year.

Sales from the unit reached €154.6m, due to growth in sales of pharmaceutical bottles and vials in Europe and North America, and cosmetics containers in Europe. Higher productivity and quality improvement also played a role in the performance of the segment, according to the company.

Gerresheimer's life science research division was the one unit that saw a drop in performance judging by the company's half year results.

The division concentrates on the production of specialised tubular glass products for R&D in the pharma and life sciences industries and general laboratory requirements. According to the firm's report, the 5.6 per cent decline in sales to €29.6m was primarily due to foreign exchange rates negatively impacting the financial results.

The company has been investing steadily over the first half, with €36.7m invested in fixed assets. The investments relate mainly to an overhaul of furnaces in the US for the tubular and moulded glass divisions, though also include a cash injection to increase capacity at the Wilden sites.

With the world market for pharmaceutical and life-science products showing strong growth with sustained annual growth rates of around 7 per cent, Gerresheimer has recognised the need to increase productivity to meet increased demand, and anticipates total investment for 2007 to therefore reach up to €95 - €100m.

Gerresheimer listed on the Frankfurt Stock Exchange's Prime Standard market in early June, with the initial public offering (IPO) bolstering the company's coffers by €456m. Although too late to have an impact on the company's first half results (which report up to the end of May), the cash boost is set to help reduce debts and finance further growth at the company.

The impact of the IPO will be clearer in the company's third quarter results, with the decreased interest burden expected to result in "a distinctly positive earnings contribution."

The company's performance over the second half of the year is anticipated to continue positively, with organic net sales growth for the year estimated at 8 - 9 per cent. The recent acquisition of Comar is set to boost sales figures in the tubular glass division, with the Comar pharma glass business achieving net sales of €3.4m over the first half.

The company is hoping that a recent joint venture with Thermo Fisher Scientific to provide products for use in pharmaceutical R&D will also improve the fortunes of the life science research unit.

Ever pursuing expansion plans, the company says that the future will hold further acquisitions, particularly in primary pharmaceutical packaging and drug delivery systems, as well as in diagnostics and life science research products.
Source: in-pharmatechnologist