Gerresheimer AG

Ladies and gentlemen, welcome to the Gareth Heimer AG's Q2 and first half 2024 results conference call. I am Shari, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, I will hand over to Mr. Guido Picard, Vice President, Corporate Investment Relations. Please go ahead.

Thank you, operator. Please note that the recording will be made available on our website sometime after this call. With that, I hand over to our CEO, Dietmar Siemssen, to run you through the highlights of the quarter together with our CFO, Dr. Bernd Metzner. Dietmar?

Yeah, thank you so much. And welcome, everybody. And thank you for joining us this morning. As you heard, Bernd Metzner, our CFO, and I will now run you through the highlights of our second quarter 2024. As always, we will then be happy to take your questions. You have seen this chart several times during the last update calls. With our containment solutions, we bring the drug safely protected to the patient. Our drug delivery systems enable the drug to be safely administered and with our connected devices and digital solutions for therapy support, we help to improve the health outcome for patients worldwide. Why do we bring and keep bringing this slide up? Our Q2 results underline the strategic strength of this broad portfolio. It ranges from standard products and systems to highly sophisticated customized solutions. The ability to meet our customers' needs to capitalize on global megatrends, to industrialize and to scale production globally is and will be a prerequisite for a strong competitive position and sustainable, profitable growth. This and that is why we are the strategic partner of choice for the pharma and biotech industry. And that is why we were able to secure these long-term contracts for which we are currently expanding our production capacities worldwide. Taking strong advantage of our broad portfolio is often underestimated. Resilience. This is particularly important. to keep in mind regarding our Q2 and six-month results. Yes, we are affected by the destocking in the market, mainly in our wine business, in our primary packaging glass division, and this impacts our results. Will this slow down our growth in the mid and long term? No, it will not. We still believe destocking effects to be temporary, and we are getting signals from the markets that the destocking begins to fade out. And we were able to offset this effect with a strong performance in our plastic and device division, and medical devices such as inhalers, pens, and auto-injectors, but also in plastic drug containers, the later being the much underestimated business, which I will come back to you in a moment. That's what I mean when I say that our broad portfolio makes us resilient. It enables us to offset market fluctuations in a particular business area. And you can see this on our results. Our performance was in line with the previous year's results. We were able to compensate destocking effects in primary packaging glass with a continued good performance in plastic and devices, including a notable margin expansion of 200 basic points. The decrease in adjusted earnings per share solely due to the dilutive effect of last year's capital increase that took place in April 23. Yes, we plan to see better results, but the main reason for the lower revenues is the dystopia. Important message here is that the underlying growth momentum is intact. With the destocking effects gradually decreasing and the ramp up of new lines and projects kicking in, we expect a strong second half 2024. We are on track for sustainable profitable growth and we confirm our guidance. Equally important in the first half of 2024, we have continued to lay the foundation for strong value creation in the years ahead. A very important milestone This regard on our growth path was the signing of the contract to acquire Formioli Pharma. We have shared our key priorities for 2024 in the last counts. We will accelerate our sustainable profitable growth by consistently increasing the share of high value systems and solutions and medical devices for injectables, in particular for large molecule biologics in our product portfolio. We will execute our ongoing growth projects and add global capacities for long-term contracts, including contracts for drug delivery devices such as pens, order injectors, and syringes for GLP-1 applications. We will further expand our product portfolio with highly innovative systems and solutions, including our own IP solutions, connected devices, and platform solutions for digital therapy support. In our Q1 call, we gave you an update on our ongoing capacity expansion projects. Today, I want to shed some light on how we plan to expand our portfolio and especially how we want to increase the share of high-value solutions in our plastic business. The basic principle of our garrison strategy is to combine a strong foundation business, solid growth, solid margins, and strong cash generation with growth drivers that generate over-proportional top and bottom line growth. This combination is key to ensuring consistent and sustainable profitable growth. The, you might say, old Gerritsheimer, before we actually initiated our Formula G strategy process, focused mainly on a commodity and pure volume business. By complementing our portfolio with new and innovative solutions and by focusing on customer centricity and operational excellence, we have significantly strengthened our existing business and opened the door for new high growth markets and customers. We have done our homework and have built that strong foundation. We now benefit from a resilient and strong-based business. This business grows stable in the mid-single-digit range and delivers solid margins and reliable cash flows. It includes, for example, bulk oils, bottles or cartridges, plastic containers, and, of course, also selected medical devices. On top of that, we systematically identify drivers for over-proportional growth. Products and solutions which allow us to grow faster than the market overall and to expand our margins. Because these solutions offer significantly added value for our customers, our high-value solutions. Growth drivers are, for example, our ready-to-fill products, including our easy-fill smart platform. Dedicated solutions for sensitive biologics. High-value syringes. metal, or especially tungsten-free for biologics, or silicon oil-free for ophthalmic applications. Own IP solutions, like our auto-injector GX-inBeneo or our GX Sense Air on-body drug delivery pump device for large molecule biologics. And digital solutions, like traceability or connected devices, which enable digital therapy support. The new Gersheimer now has a solid foundation of base business bolstered with high-value solutions growth accelerators, and we are continuously expanding our high-value solutions offering. The planned acquisition of BOMI Olifama is a perfect fit for this strategy, as it complements our portfolio, both in the base business as well as in the high-value solution business. In our call, Right after the announcement of the planned acquisition, we talked about the complementary portfolio in both glass and plastic in general, and especially how this acquisition will form a molded glass powerhouse with a diversified portfolio for pharma, cosmetics, as well as food and beverage. Today, I would like to show you how this transaction will strengthen our pharma plastic business, marked here in yellow. And in particular, I'm going to talk about high-value plastic solutions. With these acquisitions, we are taking a leap forward towards positioning ourselves as a system and solution provider for high-value solutions in both glass and plastics. Formuli's portfolio, regional footprint, and customer base are highly complementary to Gerasim. And this is also clearly visible in our plastic business. We will significantly broaden our plastic portfolio and especially our containment solutions with this transaction. The combined portfolio will enable us to provide a broader range of solutions for pharma plastics and containment solutions and even stronger one-stop shop for our pharma customers. Bormioli's pharma plastic portfolio is also highly accretive to our high-value solutions offerings, as it includes, for example, additional attractive IP solutions. High-value solutions, growth drivers with significant added value for our customers, are normally associated with containment solutions and drug delivery devices for injectables. But the plastic portfolio also offers high added value for our customers through system integration. For example, bottle closure solutions resulting in higher margin for garrison. Today, we already have a wide range of integrated plastic containment systems in our portfolio. The container plus closure, including own IP solutions. These are high value solutions in plastics, a very attractive system. Formioli's portfolio will allow us to significantly broaden our offering, including also a SAS OS. Formioli's closure options will enable us to create new systems through system integration, new high-value solutions, containment solutions consisting of a glass or plastic container, and the respective closure. What is the added value of the customer of buying complete systems instead of a container and, for example, a closure separate. Customers have just one source for the complete solution, one point of contact, one supply chain instead of two. They will also buy a fully qualified system with ensured functionality and tested container closure integrity instead of having to make sure internally that the selected closure option fits the container. Customers can tap into our primary packaging plastic product database to speed up their time to market with extensive technical documentation for their integrated systems, including documentation for fully customized solutions. That means considerably less effort, internal testing and documentation, and a smooth regulatory registration and approval process. That is why one and one equals more than two. A fully integrated system consisting, for example, of a PET or glass bottle and a closure of choice when becomes a high-value then becomes a high-value solution. The same goes for all other drug containers with various closure options, from desiccant closure to tamper-evident, child-resistant, or senior-friendly closures to droppers, sprayers, or nebulizes. Expanding our portfolio with innovative products and high-value solutions will help us to accelerate our growth of the top and bottom line. This will be visible mid-term and drive our strong development in the future. The Bomiuli acquisition is surely another important cornerstone for our mid- and long-term growth strategy. Thank you very much for the moment. And with this, I will hand over to our CFO, Bernd Metzner, for a deep dive into our figures of the second quarter 2024.