Plastics division driving Gerresheimer in Q1

By Gareth Macdonald

- Last updated on GMT

Related tags: Cent, United states dollar, Thermo fisher scientific, Revenue

German packaging giant Gerresheimer reported a positive set of
first quarter results for 2008, largely due to the success of its
plastics division in the expanding medical plastics market.

Group sales for the period increased 18 per cent to €239m ($379m), with adjusted earnings before interest, depreciation and amortization (EBITDA) climbing around 20 per cent to €43m. Quarterly net income reached €2.5m, up from the €4m loss the firm recorded in the comparable period last year. Plastics and life science businesses ​ The performance of Gerresheimer's plastics business, which achieved sales of €77m up 37 per cent on the year earlier quarter, was boosted by a steep rise in the demand for both inhalation devices for chronic diseases and products used in diabetes care. The company said that the expanding medical plastics market, coupled with continuing moves to optimize the portfolio of its Gerresheimer Wilden subsidiary, had further improved profitability. It also reported that, more recent acquisitions such as the Spanish PET manufacturing specialist EDP and the Brazilian pharmaceutical packaging company Allplas had made a positive contribution to sales. The largest expansion in percentage terms was seen in Gerresheimer's Life Science Research Division. Revenues increased 82 per cent year on year to €22m, largely due to the inclusion of sales derived from the joint venture partnership that it established with Thermo Fisher Scientific last year. Glass divisions ​ The demand for ready-to-fill (RTF) products, primarily in China and the US, far exceeds current manufacturing capacity. In particular, a limited quantity of RTF syringe products has seen pharmaceutical firms worldwide compete to secure supplies, placing specialist producers in a favourable position. Despite this market opportunity, Gerresheimer's quarterly earnings from tubular glassware were a modest €15.7m, up just €700,000 on the comparable period last year. Analysts at Dresdner Kleinwort said that costs associated with repairs to Gerresheimer's borosilicate furnace and the relative strength of the euro against the US dollar had outstripped the 9 per cent improvement in sales to €66m that the division achieved. On a more positive note, Gerresheimer announced plans to establish an additional RTF line early next year. It also reported that the pharmaceutical glassware unit that it acquired from Comar last year had been successfully integrated into its North American production operation. Meantime, sales in Gerresheimer's moulded glassware division grew 5 per cent to €77.6m, considerably ahead of the market average. The firm said that its 2007 decision to invest in production facility repairs had enabled it to improve productivity and, as a result, gross margins. Market reaction positive ​ Gerresheimer's CEO, Axel Herberg, said that the firm's objective for 2008 is to achieve sales growth of 13 to 15 per cent and an improvement in the adjusted EBITDA of more than 19 per cent Analysts at Standard & Poor agreed with Herberg's positive forecast, upgrading the company's rating. They explained that Gerresheimer's positive EBITDA, sales and leadership position in markets characterized by high entry barriers, will allow it to sustain its growth rate in the short to medium term.

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