Gerresheimer’s decision to concentrate on the pharmaceutical and life science sectors and sell-off non-core divisions appears to be paying dividends judging by a 14 per cent jump in third quarter operating profit.
Revenue for the three months ended August 31 reached €268m ($364m) up just over 7 per cent on the comparable quarter last year and ahead of the €264m forecast by analysts.
While a €33m write down associated with the ongoing sale of its Technical Plastics division resulted in a loss of €23m for the period, on an adjusted basis Gerresheimer’s net income more than doubled to €16.5m.
Technical Plastics is the third division that Gerresheimer has sought to divest after Consumer Healthcare group that was sold to Krallman in June and its Aluminium Packaging unit, which was hived off earlier in the year.
Analysts at Dresdner Kleinwort said that they viewed the “loss related to the planned disposal…activity as very cautious approach and expect therefore no further one-offs in connection to the divestment.”
Commenting at the third quarter results announcement company CEO Axel Herberg reiterated his belief that restructuring in such a way is key to the firm’s future prosperity.
He explained that: “By focusing on the markets of pharma and life science we have again realised above average growth for the quarter.” adding that the firm is “bucking the current negative trend in the global economy.”
Medical plastics lead the way
Gerresheimer’s plastic systems operations, which include its medical plastics unit, made the largest turnover contribution for the quarter at €88m, some 6 per cent higher than last year.
The performance of this division has undoubtedly benefited from the integration of the firm’s recent acquisitions, Zaragosa SA and Plasticos Sao Paulo, in Spain and Brazil respectively.
Overall however the strongest growth was demonstrated by Gerresheimer’s tubular glass operations. Turnover from this unit grew 14 per cent to €77m, largely due to demand for the firm’s ready-to-fill syringe (RTF) systems and pharmaceutical vials in the US and Chinese markets.
Growth was also seen in Gerresheimer’s moulded glassware operations, demand for pharmaceutical vials in the US and Europe increased sales 5 per cent to $84m. Sales to the cosmetics industry also made a significant contribution to revenue expansion.
Strong performance was achieved by the firm’s life sciences division, which contributed €23m up around 10 per cent on the comparable period in 2007.
For the full year, Gerresheimer expects revenue to grow by around ten per cent supported, according to Herberg, by “the sustained high level of demand for [the firm’s] products and the stable growth in…core markets.”
Commenting on the forecast Dresdner Kleinwort said that, given the ongoing strong demand for RTF syringes and the firm’s full utilisation of production capacity, it expects Gerresheimer to introduce a fourth production line at a new location, possibly the US, in the near future.