Release Date: September 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gerresheimer AG (GRRMY, Financial) achieved an organic revenue growth of 2.6% in Q3 2024.
- The company's adjusted EBITDA grew by 3.5%, indicating profitable growth.
- Plastic and devices segment showed strong performance with an 8% organic revenue growth and 11% adjusted EBITDA growth.
- The company is experiencing strong growth in product solutions for large molecule biologics, such as GLP-1.
- Gerresheimer AG (GRRMY) expects a stronger Q4 2024 as new production lines ramp up and destocking effects fade.
Negative Points
- Gerresheimer AG (GRRMY) had to revise its growth guidance for 2024 and 2025 due to slower-than-expected market recovery.
- Primary packaging glass segment experienced a 3% organic revenue decline due to ongoing destocking.
- Hurricane Helene caused significant flooding at the Morganton vial plant, halting production for several weeks.
- The company anticipates a softer growth rebound in the vial market, impacting 2025 results.
- Gerresheimer AG (GRRMY) faces challenges with slower demand in molded glass products for the food and beverage industry.
Q & A Highlights
Q: What drove the decision to revise the 2025 sales growth outlook, and is it primarily due to the vial market?
A: The revision is mainly driven by the vial market, where the rebound effect is slower and softer than expected. Other factors include the impact of Hurricane Helene on the Morganton plant and softer demand in molded glass products for the food and beverage industry. (Dietmar Siemssen, CEO)
Q: Can you provide details on the impact of the flooding in Morganton and its effect on sales and EBITDA margin?
A: The flooding caused by Hurricane Helene has halted production at the Morganton vial plant for several weeks. The updated guidance covers the potential shortfall, but it's too early to quantify the exact impact. (Dietmar Siemssen, CEO)
Q: How does the recent performance of Bormioli Pharma affect your leverage expectations post-acquisition?
A: Despite Bormioli's softer performance, it does not affect the acquisition business case. We expect leverage to remain below 3.5x EBITDA in 2025. (Bernd Metzner, CFO)
Q: What percentage of your business is under long-term contracts, and how do lead times compare now versus earlier this year?
A: Approximately one-third of our business is under long-term contracts, another third under medium-term contracts, and the rest based on short-term order intakes. Lead times, especially for tubular glass, have shortened, aiding customer stock optimization. (Bernd Metzner, CFO)
Q: How confident are you in achieving the revised guidance for FY25, given past guidance adjustments?
A: We have adopted a more prudent approach to ensure delivery on our guidance. The primary issue affecting our current outlook is the delay in the tubular glass business recovery. (Dietmar Siemssen, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
