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1. Company Snapshot

1.a. Company Description

Gerresheimer AG, together with its subsidiaries, manufactures and sells packaging products, and drug delivery-devices and solutions worldwide.It operates through Plastics & Devices, Primary Packaging Glass, and Advanced Technologies divisions.The Plastics & Devices division offers drug delivery systems, including inhalers, insulin pen systems, prefillable syringes, and diagnostic systems for the pharma, biotech, diagnostics, and medical technology industries; containers and closures, PET bottles, eye droppers, nasal sprays, nebulizers, applicators, and accessories for solid, liquid, and ophthalmic applications; and bottles and containers for nutritional supplements.


The Primary Packaging Glass division offers glass primary packaging for pharma and cosmetics industries, such as infusion, dropper, and syrup bottles; injection vials, ampoules, and cartridges; miniature bottles and glass containers for liquid food, spices, and spirits; and packaging solutions for fragrances, deodorants, skin care, and wellness products, as well as beauty and pharmaceutical products.The Advanced Technologies division develops smart drug delivery systems, such as micro pumps, which are used to self-administer medication for Parkinson's disease or heart failure to pharmaceutical and biotech customers.The company was founded in 1864 and is headquartered in Düsseldorf, Germany.

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1.b. Last Insights on GXI

Gerresheimer's recent performance has been negatively impacted by regulatory scrutiny and analyst downgrades. The company's earnings announcement was met with skepticism, and an investigation by Germany's financial regulator into suspected accounting rule violations led to a significant decline in shares. Analysts have reassessed the company's fair value, citing ongoing market uncertainties and higher risk perceptions, resulting in a decreased consensus price target from €37.84 to €34.62. Additionally, an activist investor has called for a shake-up in Gerresheimer's packaging business.

1.c. Company Highlights

2. Gerresheimer's Q1 2025 Earnings Reflect Integration Progress and Strategic Growth Initiatives

Gerresheimer's Q1 2025 earnings underscore the company's strategic progress, driven by the integration of Bormioli Pharma and a focus on high-value solutions. Reported revenues climbed 11.6% year-over-year to €520 million, with adjusted EBITDA rising 13.1% to €92 million. However, organic revenue and EBITDA declined by 6.5% and 9.3%, respectively, due to phasing effects in the syringe business and softer demand in molded glass cosmetics. CFO Bernd Metzner highlighted margin improvements in certain areas, despite these short-term challenges.

Publication Date: Apr -15

📋 Highlights
  • Revenue and Profitability Growth: Reported revenues increased by 11.6% to €520 million, with adjusted EBITDA rising 13.1% to €92 million, driven by the Bormioli Pharma acquisition.
  • Organic Growth Challenges: Organic revenue and adjusted EBITDA declined by 6.5% and 9.3%, respectively, due to phasing effects in the syringe business and softer demand in molded glass cosmetics.
  • Strategic Investments and Integration: The integration of Bormioli Pharma and new production lines in Skopje and Peachtree City are central to growth, with Lohr's hybrid furnace reducing carbon emissions by 40%.
  • Free Cash Flow and Debt: Free cash flow was negative at €141 million in Q1 due to heavy CapEx investments, with net debt rising to €1.93 billion and leverage at 3.97x, targeting a reduction to mid-3x by year-end.
  • Future Outlook and Growth Drivers: The company expects a return to organic growth starting Q2, supported by a strong order book and investments in high-value products, with 2025 guidance including 3-5% organic revenue growth and 22% adjusted EBITDA margin.

Bormioli Integration and Operational Restart

The integration of Bormioli Pharma remains a cornerstone of Gerresheimer's strategy, expanding its product portfolio and enhancing capabilities. The company is also restarting operations in Lohr and Morganton, with Lohr's new hybrid furnace reducing carbon emissions by 40%. These efforts are critical for stabilizing operations and positioning the company for future growth.

Focus on High-Value Products and Sustainability

Gerresheimer is prioritizing high-value products such as ready-to-fill vials and syringes, with the EZ-fill Smart platform expected to reduce costs and environmental impact. The company is advancing in biologics, with Q1 revenues reaching €66 million, up from €62 million in Q1 2024. This focus on innovation and sustainability aligns with industry trends and customer demands.

Free Cash Flow and Capital Investments

Heavy CapEx investments, particularly in furnace overhauls, impacted short-term cash flow, resulting in a negative free cash flow of €141 million for Q1. Management expects free cash flow to improve significantly by year-end, supported by EBITDA growth and working capital releases.

Valuation and Outlook

Gerresheimer's current valuation metrics provide insight into its market position. The stock trades at a PE Ratio TTM of 16.34 and an EV/EBITDA TTM of 7.32, reflecting expectations for future growth. The company is well-positioned to achieve its 2025 guidance, with organic revenue growth expected to return in Q2, driven by a strong order book and key growth drivers.

Q&A Highlights and Strategic Initiatives

Gerresheimer's Q1 results reflect the challenges of integration and operational restarts, but the company's strategic focus on high-value solutions and sustainability positions it well for long-term growth. With a strong order book and improving margins, Gerresheimer is poised to meet its 2025 guidance and deliver value to shareholders.

3. NewsRoom

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Gerresheimer AG: Change in the Supervisory Board

Nov -21

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Looking at the Narrative for Gerresheimer After Analyst Downgrades and Shifting Expectations

Nov -11

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Gerresheimer's (ETR:GXI) Soft Earnings Are Actually Better Than They Appear

Oct -18

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Pharma Manufacturer Gerresheimer’s Stock Plummets Amid Accounting Probe

Sep -24

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Gerresheimer shares tank as financial regulator suspects accounting flaws

Sep -24

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Activist investor calls for shake-up in Gerresheimer packaging

Aug -22

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Gerresheimer AG: Achim Schalk to Join the Gerresheimer Management Board

Aug -12

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Danish drugmakers jump as Eli Lilly's weight-loss pill data disappoints

Aug -07

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.48%)

6. Segments

Plastics and Devices

Expected Growth: 8%

Gerresheimer AG's Plastics and Devices segment growth is driven by increasing demand for high-value devices, such as insulin pens and inhalers, and growing adoption of plastic packaging for pharmaceuticals. Additionally, the company's focus on innovation, expansion into emerging markets, and strategic partnerships contribute to its 8% growth rate.

Primary Packaging Glass

Expected Growth: 9%

Strong demand for sustainable and premium packaging, increasing adoption of glass packaging in the pharma and cosmetics industries, and Gerresheimer's strategic expansion into emerging markets drive the 9% growth of Primary Packaging Glass. Additionally, the company's focus on innovation, quality, and customer relationships further supports this growth.

Advanced Technologies

Expected Growth: 11%

Gerresheimer AG's Advanced Technologies segment growth is driven by increasing demand for innovative medical devices, rising adoption of digital healthcare solutions, and growing need for pharmaceutical packaging and drug delivery systems. Additionally, strategic partnerships, investments in R&D, and expansion into emerging markets contribute to the 11% growth.

7. Detailed Products

Pharmaceutical Primary Packaging

Gerresheimer AG offers a wide range of pharmaceutical primary packaging products, including vials, cartridges, and syringes, designed to protect and preserve sensitive pharmaceutical products.

Medical Plastic Systems

Gerresheimer AG provides medical plastic systems, including inhalers, insulin pens, and other medical devices, designed for safe and efficient delivery of medications.

Moulded Glass

Gerresheimer AG offers moulded glass products, including vials, cartridges, and syringes, designed for pharmaceutical and biotechnological applications.

Syringes and Cartridges

Gerresheimer AG provides syringes and cartridges designed for safe and efficient injection of medications, including prefilled syringes and cartridges.

Tubular Glass

Gerresheimer AG offers tubular glass products, including ampoules, vials, and cartridges, designed for pharmaceutical and biotechnological applications.

Device Technology

Gerresheimer AG provides device technology solutions, including inhalers, insulin pens, and other medical devices, designed for safe and efficient delivery of medications.

8. Gerresheimer AG's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Gerresheimer AG is medium due to the presence of alternative packaging solutions, but the company's focus on innovative and specialized products reduces the likelihood of substitution.

Bargaining Power Of Customers

The bargaining power of customers is low due to the company's strong relationships with its clients and the customized nature of its products, which reduces the ability of customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the company's dependence on a few key suppliers for raw materials, but the company's large scale of operations and long-term contracts mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the pharmaceutical packaging industry, including the need for significant capital investment and regulatory compliance.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the pharmaceutical packaging industry, leading to a competitive pricing environment and a focus on innovation and differentiation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.87%
Debt Cost 6.75%
Equity Weight 58.13%
Equity Cost 8.48%
WACC 7.76%
Leverage 72.03%

11. Quality Control: Gerresheimer AG passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Ypsomed

A-Score: 3.9/10

Value: 2.9

Growth: 8.2

Quality: 5.7

Yield: 0.6

Momentum: 2.0

Volatility: 4.0

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Tecan

A-Score: 3.6/10

Value: 4.4

Growth: 4.1

Quality: 5.7

Yield: 2.5

Momentum: 0.0

Volatility: 4.7

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Elekta

A-Score: 3.5/10

Value: 4.3

Growth: 4.0

Quality: 3.1

Yield: 6.9

Momentum: 0.5

Volatility: 2.3

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Gerresheimer

A-Score: 3.3/10

Value: 8.8

Growth: 4.6

Quality: 4.1

Yield: 1.2

Momentum: 0.0

Volatility: 1.3

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Carl Zeiss Meditec

A-Score: 3.3/10

Value: 3.9

Growth: 5.0

Quality: 5.9

Yield: 1.9

Momentum: 1.0

Volatility: 2.3

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Amplifon

A-Score: 3.2/10

Value: 4.3

Growth: 5.4

Quality: 4.8

Yield: 2.5

Momentum: 0.0

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

25.86$

Current Price

25.86$

Potential

-0.00%

Expected Cash-Flows