Gerresheimer kicks off technical plastics sale

By Phil Taylor

- Last updated on GMT

Related tags Marketing

Gerresheimer has formally started the process to sell off its technical plastics business, keeping its promise to exit non-core businesses and focus on more lucrative sectors such as medical and pharmaceutical plastics.

Technical plastics, which makes products such as mobile phone casings and automotive parts, makes around €70m in annual sales but is much less profitable than Gerresheimer’s other divisions, with low single-digit profit margins compared to margins of around 19 per cent across the group.

Disposal of technical plastics is the third tranche of Gerresheimer’s refocusing effort. It sold off its consumer healthcare business at the beginning of June to Krallman Group for an undisclosed sum. This unit, which made toothbrushes and interdental care products, brought in sales of €24m a year.

Earlier in the year Gerresheimer also sold off its aluminium packaging activities with annual sales of €3.3m. It has said in the past that there are 20-30 possible purchasers for the technical plastics unit.

It good to see that management keeps delivering on its promises to exit all non-core activities​,” commented analysts at Dresdner Kleinwort.

“We continue to like the defensive character of the business model​, they added, noting that Gerresheimer is building a “dominant market position in a niche market with high barriers to entry in combination with very little price pressure​.”

Prospects for the business are rosy because demand is also being driven by a growing end market, according to Dresdner Kleinwort.

Gerresheimer employs 550 people in its technical plastics business at locations in Germany, the Czech Republic and Mexico as well as through joint ventures in Italy and Bulgaria. It acquired the business in 2007 as part of its purchase of the Wilden Group.

The analysts expect a book loss from the disposal, but note that profit margin improvements should offset that one-off negative impact in Gerresheimer’s full-year results.

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