Gerresheimer cuts forecast despite pharma packaging growth

14-Jul-2009 - Last updated on 15-Jul-2009 at 10:43 GMT

Gerresheimer has cut its forecast for 2009 after a poor second quarter that saw gains made in drug packaging pegged back by falling demand from the cosmetics industry.

Earnings for the period fell 11.4 per cent to €47.5m ($67m) while revenue, excluding that contributed by the technical plastics unit sold to FBH earlier this month, slipped 2.2 per cent to €251m.

Gerresheimer said that despite the current industry-wide trend towards inventory reduction, drug sector demand for its products had increased in the second quarter with medical plastic systems being a real growth area.

The firm added that its primary pharmaceutical packaging division made an important contribution in Q2, with demand for vials and ampoules in China and Europe being the key driver.

In contrast, Gerresheimer’s cosmetics packaging and laboratory glassware businesses both shrank in the second quarter due to what the firm described as “purchasing cautiousness.”

Gerresheimer now expects full-year sales to be, at best, only 1 per cent higher than in 2008 on an EBITDA margin of around 18 per cent, down from the 19 per cent forecast earlier in the year.

The company also said that having completed the installation of a third ready-to-fill (RTF) syringe manufacturing line, it plans to reduce its capital spending for the year from €105m to €90m.

Gerresheimer’s move was not unexpected. On July 7, DZ Bank told Reuters that: “In our view the risk that the guidance for 2009 will be downgraded with the results presentation has further increased.

“Firstly, the economic situation as a whole has not recovered, which is likely to put further pressure, among other things, on sales in cosmetics. Secondly, we do not expect destocking to have diminished accordingly.”