Gerresheimer Aktie

Good morning, everyone, and welcome to our presentation of our preliminary Q3 2025 results. With us today are our CEO, Dietmar Siemssen; and our new CFO, Wolf Lehmann, who will lead you through our Q3 development and the financials. The slide deck is available on our website. At the end of the presentation, we will be available for Q&A. But now let's start and I hand over to Dietmar Siemssen. Dietmar?

Yes. Thank you Guido. And welcome, everybody, and thank you for joining us for this call. Yes, you have all seen the news, and they are not positive. We unfortunately had to revise our guidance for 2025. Yes, Q3 came in lower than expected. The organic revenues were 1.2% below the previous year's quarter, and the adjusted EBITDA was 9.4% below. The adjusted EBITDA margin was 18.8% and thus 1.7% lower than in the previous year's period. We won't be able to compensate this until the end of the year, even though we expect Q4 to be stronger than the third quarter. And we did not expect this development.

It is disappointing to say at least, and we clearly have to increase our measures to get back on track. We will -- and also Wolf will elaborate on this later. Our performance in the first 9 months of this financial year is clearly below our expectations, and we can't sugarcoat this. Yes, there have been a number of markets -- there have been a number of market influences, but the development in total is disappointing.

On a reported base, our revenues grew in the first 9 months by 14.6%. Our EBITDA grew by 7.2%, both increases due to the first-time consolidation of Bormioli Pharma. On an organic basis, however, revenues declined by 1.8% and adjusted EBITDA by 7.5% compared to the previous year's pro forma figures. We had expected an earlier market recovery of the cosmetic and also the oral liquid market. Instead, the weakness of the markets prevail. Overall, operative performance in Q3 lagged clearly behind. On a positive note, our focus on being more selective with CapEx is beginning to pay off. We recorded positive free cash flow of EUR 21 million in the third quarter, and we expect a stronger fourth quarter in comparison to Q3 2025 with the ramp-up of new lines for drug delivery systems.

The disappointing operative performance in the first 9 months and Q3 is particular -- or in particular, does not change the strategic rationale behind our growth investments or the Bormioli Pharma acquisition. We are still convinced that broadening our portfolio with new high-value solutions, particularly for the growing biologic market has been the right strategic decision.

The Bormioli Pharma acquisition brought Gerresheimer to a new level in terms of revenues and EBITDA and is strengthening our market position. It was also a prerequisite for building a strong moulded glass powerhouse and being able to take the next steps to separate it and initiate a sales process afterwards.

But looking at the pure numbers, we understand we need to act, and we already have by initiating measures to reduce costs and improve our performance, as you can see from our restructuring costs in our third quarter report. We will leave no stone unturned to recover our margins and get back on a profitable growth path.

And with this, I will now hand over to our new CFO, Wolf Lehmann, for a closer look on our financials. Wolf?

Thank you, Dietmar. Following up on the revenue and EBITDA driver year-over-year on Q3 in more detail. We show the numbers in the prior year pro forma adjusted for the Bormioli Pharma acquisition. Numbers are not adjusted for FX. On revenue left side, year-over-year, the anticipated market recovery after the first half and growth did not happen. Instead, net, we're down EUR 18 million from EUR 579 million to EUR 561 million, with a mixed picture between the segments. Plastics & Devices slightly up EUR 3 million and Primary Packaging Glass down EUR 20 million.

Let me turn to the segments. Within Plastics & Devices, net up EUR 3 million is a mixed bag. Medical devices, we grew around EUR 13 million, slower growth and not as much as we would have liked, but at least initial growth in devices such as auto-injectors. This is partly offset through plastics packaging down EUR 5 million, driven by continued less oral liquid containment demand. And in addition, negative EUR 6 million from foreign exchange, mainly the unfavorable U.S. dollar to euro exchange rates impacting our U.S. business.

On the Primary Packaging Glass segment, PPG side, revenue is down EUR 20 million, mainly driven by around EUR 13 million decline in moulded glass with again, disappointing weak cosmetics and oral liquid markets. Also around EUR 2 million decline in tubular glass. Here, standard products are down, yet higher-value products up. Finally also negative around EUR 5 million from foreign exchange, again, mainly U.S. dollar to euro exchange.

On EBITDA, in the middle chart, year-over-year, EBITDA is down EUR 14 million from EUR 117 million to EUR 103 million. Now EBITDA down EUR 14 million on a revenue down EUR 18 million, obviously, is a high unfavorable fall-through. Let me explain the main drivers. On Plastics & Devices, EBITDA is down EUR 7 million on sales up EUR 3 million.

Main impacts are medical devices did have growth in revenue, up EUR 13 million, as explained, but EBITDA is down EUR 4 million since especially our new assets like at our Peachtree site in the U.S. are partly up, partly still in ramp-up, but underutilized or insufficiently loaded to cover all the additional costs as we invested ahead of demand.

Plastics packaging is down EUR 1 million year-over-year, which is simply less volume falling through. The rest is some impact from FX of around negative EUR 1 million.

Turning to EBITDA of Primary Packaging Glass. EBITDA is down EUR 8 million on sales down EUR 20 million. Also in PPG, the sales to EBITDA fall-through dynamics vary. Moulded Glass is down EUR 9 million in EBITDA on EUR 13 million less sales, a high fall-through. This is, a, the volume effect, but also, b, our site at Lohr, Germany coming back into production after the significant furnace renewal and step-by-step gaining back productivity.

Tubular glass shows a very different picture. As on lower sales, we get around EUR 2 million higher EBITDA. Amongst others, our focus on high-value product growth comes through.

On adjusted earnings per share on the right-hand side. This will be easier to follow, quite frankly, when we publish the full and final financials tomorrow, Friday morning. Still already as a heads-up, the decline from EUR 1.20 to EUR 0.77 adjusted EBITDA is negatively impacted by the EBITDA falling through after taxes to EPS and in addition, higher depreciation and certainly higher interest expense, mainly stemming from the financing of the Bormioli Pharma acquisition. This explains the main drivers in third quarter. Very similar dynamics are impacting our 9 months results year-over-year.

Please turn to the next page, Page 7. Overall, revenue is down year-over-year by EUR 47 million, EUR 1, 728 million to EUR 1,681. EBITDA is down EUR 27 million, EUR 341 million to EUR 314 million. So overall, a high fall-through of EUR 27 million EBITDA versus EUR 47 million revenue.

In the interest of time, I'll focus on the fall-through, sales to EBITDA. Plastics & Devices, similar to Q3, positive sales growth on the left of EUR 15 million, yet a negative year-over-year EBITDA growth of EUR 18 million. Medical devices with sales up EUR 36 million, driven by our growth projects, example in pens and auto-injectors, yet delivering no EBITDA growth yet as new assets are still underutilized.

Plastics packaging, sales down EUR 12 million year-over-year due to the mentioned Oral Liquids market downside, is falling through to EBITDA with a high around EUR 8 million impact. These partly highly automated plants producing our high-value Plastics Packaging parts are sensitive to a suboptimal capacity loading level.

On Primary Packaging Glass, PPG, moulded glass is as explained for third quarter, mostly sales decline of EUR 44 million from cosmetics, oral liquids, et cetera, falling through to be expected around EUR 11 million EBITDA. Tubular glass, the sales decrease of EUR 11 million (sic) [ EUR 10 million ] does not show up in EBITDA, mostly due to less standard and more high-value growth focused like ready-to-fill vials.

On the right, adjusted earnings per share. Similar, we can explain more on Friday, tomorrow, after providing the final and fulsome financials. Some heads up again as in Q3. EBITDA decline falls through after tax and impact from higher depreciation and interest, mainly driven by the Bormioli Pharma acquisition.

In summary, before we talk guidance, 2 to 3 main issues: one, more market decline and continued longer market softness versus expectations; and two, growth projects starting to deliver, but clearly slower and this leads to three, suboptimal capacity utilization levels with new assets post or still in the middle of ramp-up and similar post renewal of old assets like the glass furnace renewal mentioned. And those issues do clearly impact profitability levels.

We first talk guidance on the next page, and then we share some thoughts on initiatives to deal with the issues. Guidance. Our revised guidance is clearly impacted by the much lower-than-expected Q3. The guidance is done on an organic growth level, meaning prior year pro forma, including Bormioli Pharma and normalized for foreign exchange.

Our last or old guidance is from July. We estimated flat 0% to 2% growth for the full year, around 20% margin and a low double-digit decline adjusted EPS. Thus, on the lower end, no growth, versus our EUR 2.4 billion sales in 2024 or midpoint 1% equal to around EUR 24 million growth year-over-year. This was after delivering a first half of around EUR 25 million decline year-over-year.

Thus, we estimated and targeted against the midpoint offsetting EUR 25 million year-over-year first half decline with EUR 50 million growth in the second half to yield net 1% growth for the full year midpoint to yield the midpoint requiring both, a, market demand recovering cosmetic on the glass side, oral liquids both on the glass and plastic side; and, b, growth projects, new assets being loaded with demand quickly.

Thus midpoint, we expected round numbers, EUR 50 million second half growth, roughly half and half, EUR 25 million in Q3 year-over-year and EUR 25 million in Q4 year-over-year to come out at the midpoint.

Now we have one more quarter behind us, the third quarter. And in hindsight, we overestimated both the market recovery and also ramping up and loading our new asset with customer demand. So looking at Q3, Q3 did not bring around EUR 25 million growth year-over-year, but rather close to EUR 10 million decline year-over-year. Thus round numbers, we are against the midpoint last guidance around EUR 35 million behind, down EUR 10 million versus expected up EUR 25 million.

So our last guidance on revenue take the slower growth into consideration. The midpoint or negative 3% is around EUR 70 million year-over-year decline. Half of this already happened and the other portion we estimate in Q4, assuming very little recovery on the market side and growth projects delivering, but clearly slower. Or another triangulation we can provide is the midpoint or negative 3% year-over-year on EUR 2.4 billion sales requires fourth quarter to come in around roughly EUR 50 million higher versus the last quarter versus Q3. That's around EUR 50 million quarter-over-quarter growth.

Again, this is assuming very little market recovery and slower progress on the growth projects and maybe also a touch of more conservative planning, still to be seen. On adjusted EBITDA guidance, the first 9 months, we are at 18.8% adjusted EBITDA margin. We are estimating to be around 18.5% to 19%, so very similar to the current profitability levels. On adjusted earnings per share, it is handing down the EBITDA guidance adjustment post taxes to earnings per share, which gets us rather into the mid-double-digit decline versus low double digit.

So before I turn to our last initiatives or latest initiatives to counteract some of the issues we faced, please note that midterm guidance -- we are not providing any new midterm guidance for 2026 and beyond as we are still in the middle of our budget planning for next year for 2026. Thus, it does not make sense to cover midterm guidance right now.

Let's go to the next page, please, and cover leadership team changes to accelerate our initiatives. Starting from the right, Norbert Topp joined us in August. He is in charge of carving out the combined Moulded Glass operations. Gerresheimer legacy and Bormioli Pharma, integrating the 2 businesses and carving it out. Consequently, we would like to sell Moulded Glass. Moulded Glass will be a new segment within Gerresheimer. We take the opportunity, and we plan to transfer to a new segmentation for the start of the new year.

Achim Schalk joins us in November and will play a vital role in this new segmentation. We just went through the financials still in the old segmentation, yet we know many of you brought forward to take the opportunity towards a revised segmentation. Thus, we're working on this for the start of our new year from 1st of December onwards.

Finally, myself as a new CFO, next to finance, I can help to accelerate our transformation, addressing key issues mentioned around growth, cost as well as cash when explaining our financial results. In operational excellence, the example given with focus -- focuses on, a, sourcing efficiently, where we rather have a decentralized approach currently; and, b, cost of nonquality where we still have quite some room against best-in-class. In commercial excellence, a, we drive price rigor and segment the portfolio thoroughly by customer, product, region to improve profitability; b, we chase volume to fill existing capacity to improve utilization.

Referring footprint consolidation, we drive a classic grow, fix, close or sell approach. We also consider external help, both particularly in commercial and sourcing to start with. Timing-wise, this is not just a quarter or 2. This will be a focus for us for the next 2 years at least to start with to improve our run rate step by step. Organizationally, we implement the transformation office reporting to the CFO, myself, to have a focal point and Board level and resolve bottlenecks. Also, we ensure to approach the highest paybacks first. Thank you. Back to Dietmar.

Yes. Thank you so much, Wolf. A rough start for you, but I think we are driving the right initiatives as we speak. So before we open our round for you -- or for your questions, let me summarize the key takeaways one more time. Q3 and the first 9 months were clearly below our expectations. We expect a stronger Q4, in particular, due to ramp-ups of new production lines for drug delivery systems, yet this will not fully compensate for the development in the 2025 financial year to date.

We, therefore, needed to revise our guidance and expect an organic revenue decline between minus 4% and minus 2% and an adjusted EBITDA margin around 18.5% to 19%. The adjusted earnings per share will decrease by a mid-double-digit percentage. We will have a new leadership team in place going forward with Wolf Lehmann as our new CFO and Achim Schalk as a new member of the Management Board starting November.

Hans-Norbert Topp now heads up the business unit Moulded Glass and drives the separation forward. Starting with the 2026 financial year, we will implement a new segmentation with Moulded Glass being a separate division. And most importantly, we take severe actions. We are now implementing a comprehensive transformation program with a transformation office driving all measures and reporting directly to the CFO.

With this, I hand back to [ Guido ].

Thank you very much, Wolf. Thank you very much, Dietmar. We will now begin the question and answer session. [Operator Instructions]. The first question comes from Ed Hall, Stifel.

Sort of any loss of market share to SGD Pharma. Any dual source dynamics you see in the market and how this would affect.

We haven't understood the part of your question. Can you repeat that, please, the initial part?

Sorry. Can you hear that better now?

Yes, very good.

Perfect. Sorry about that. So just first question, could you quantify any loss of market share that you see to SGD Pharma or other competitors, any dual source dynamics that are happening in the market and how this should persist into next year?

Second question would be on sort of what caused the positive free cash flow from a weaker EBITDA. Is there any one-offs in here that have caused this? And then finally, just on the margin guide, 18.5% to 19%. Q4 is seasonally higher than sort of Q3. So I was wondering what's caused this range? And what's the downside risk to EBITDA in Q4?

Market share, I think we are pretty confident that the market is down at present, but there's no loss of market share neither to SGD or any other player.

Great. And then on cash flow, yes, the cash flow in the third quarter was positive at EUR 21 million. There's no one-offs in there. This resulted in a leverage of 4.15. I think it's important to stress that we are fully compliant with our debt covenants. And referring guidance down -- potential downside in the fourth quarter to EBITDA, I think that's why we provide the range. We feel comfortable in that range, as explained, EBITDA or EBITDA margin. As I mentioned, we are forecasting between 18.5% to 19% EBITDA for the full year. We are 9 months into the game, we are at 18.8%. So we're staying in that range. So we're not forecasting a major improvement in profitability for the fourth quarter, but rather coming in around the same profitability levels. And again, that range reflects either up or downside against those forecasts, okay?

That was very clear. And maybe just go back to the first question. So you're saying that you haven't seen any loss in market share. But I was just wondering if you could just comment on the extent of which you see the market declining or staying at this sort of suppressed level.

Yes, Ed, you have to say that because [indiscernible] SGD. The point is the areas where we actually lose at present is the cosmetic. Here, we also do not see shifts in the market share. We see our clear competitors that, by the way, is not SGD in cosmetic are having the same challenges are facing the same challenges as we. So the market is really down. We see in this area, if you want to see something positive, at least that the market is not going down further.

It's a kind of stabilization at this moment, where the recovery that we've been waiting for in the second half of the year, obviously, is not visible before the beginning of '26 as we see it at the moment. Because the pharma business is not so -- is not -- also noted not so bad. It's primarily the -- and you hear it again and again, it's the cosmetic and it's the oral liquids, the classic areas where you have this coughing syrups [ ibuprofen ] and so on. And as bad as it sounds, we are looking at the flu season now coming. And it's first time, I think in my life, I'm happy if I hear people coughing because it might push the sales and we see this more positive now.

And Ed, if I may, first, if you run across your colleague, Michael Hoffman, please tell me my best regards. I think I worked for many, many years with him.

Secondly, back to cash flow, just in full transparency. So yes, EUR 21 million of positive cash flow, and there is no one-offs in there, yes. But I think for us, quite frankly, you've seen our first half. It's too early to call in victory here. Cash rigor, CapEx rigor stays absolutely at the forefront for the business. Too early to call in victory again, and this still -- is still absolutely a focus in the fourth quarter, will be a focus for us for next year. Quite in simple terms, we just have to deliver more with less point. And that is absolutely a change that we're driving and we're laser focused on.

Next questioner is Olivier Calvet.

I hope you can hear me...

Yes.

Yes, both, good to hear you again, but pretty tough timing for you. I have a couple of questions. Firstly, on the news flow 2 weeks ago, could you perhaps confirm that the bid and hold transactions that are subject of the current BaFin audit were at the customer request? And any further color on your stance relative to that audit timing to a resolution perhaps and any first step?

Sure, Olivier. Yes. Also, thank you. It's great to hear you again, Olivier. Now referring to the BaFin audit. Number one, look, we fully support the audit of the BaFin. In order to most effectively do this and understand, we would like to understand the rationale for the audit, and we have requested access to the files. This access has not been granted nor do we have yet an answer whether and when access will be granted.

One topic, as you mentioned, of interest is still involved. Bill and hold follows strict rules and regulations to ensure accurate accounting. We are fully aware of those rules and regulations and believe we follow those also at year-end 2022. At year-end 2024, we accounted for a low double-digit euro million amount of bill and hold or you're talking less than 2% of annual revenue. Those are the facts, and we'll keep you up to date on any material developments. And we're working on putting a landing page up to facilitate communication.

That's helpful. Just sorry, you said one topic. Is there others or...

No, I think this is the topic that is currently mentioned, right? And again, we want to fully support the audit. And for us to do that most effectively, we would like to understand the rationale for this audit. And as such, we have requested access to the files and then we can understand better.

Okay. Then second question would be on free cash flow in particular. So essentially -- and maybe I missed this in the prepared a bit, but you're pointing towards the -- still pointing towards the negative EUR 100 million or so for this year? And also any thoughts on required maintenance CapEx you have next year would be helpful as well.

All right. Let me see whether I understood it correctly. So Olivier, in the -- I think what I commented on based on Ed's question was the free cash flow in the third quarter. The free cash flow in the third quarter, and you will see it better tomorrow when we file the full financials is around EUR 21 million free cash flow in the third quarter. And you know that we were not positive full free cash flow in the first half of the year. So that is positive.

And with closing the third quarter, we achieved a leverage of 4.15x. And my comment was 4.15 -- 4.5x leverage. And as such, we're fully compliant with all debt covenants Nevertheless, what I mentioned to Ed also was it's too early to plan victory over here. We have to stay laser-focused on cash, and we are doing that, whether it's on CapEx rigor or whether it's just -- cash is absolutely [indiscernible].

And on your question on base CapEx, growth CapEx, et cetera, look, this is now my sixth week in the company. I think roughly, you're talking about -- annually about EUR 100 million or so of base CapEx. And I think going forward, we'll probably do a good job in explaining those differences base growth, et cetera, because, again, we're absolutely focused...

Okay. Just on the free cash flow again for '25, I think your predecessor was pointing towards a negative EUR 100 million or so for full year '25 [indiscernible] EUR 121 for first 2 months...

I don't know at the top of my head, Olivier, let me -- it's a good question. Let me come back to that tomorrow.

Okay. And then finally, just on the financial flexibility, there was a renegotiation of the acquisition debt right before you joined. Can you tell us more on the -- how you're comfortable with covenant levels and so on because, obviously, you're at elevated leverage levels.

Yes. So as I mentioned, Olivier, good question. As I mentioned, we closed the third quarter, and we have now a leverage of 4.15x. With that we have the headroom that we need. We're fully compliant with our debt covenants...

The next questioner is Oliver Metzger from ODDO BHF. Oliver, I think we lost you. Can you come back in please? In order to don't have to wait. Next questioner is David Adlington from JPMorgan.

Adlington, can you hear me?

Yes.

Perfect. Great.

Yes, coming back to the balance sheet again. So I think the 4.15x is on historic. I think on our math, you're close to 4.5x with the new guidance. Maybe just in terms of -- you mentioned in the presentation that the reset covenants you're happy with. Maybe you could just disclose what those covenants are?

And secondly, connected to that, with respect to the sale of Moulded Glass, just wondered if you have any thoughts on potential timing there and how that will help you with your indebtedness?

Thank you, David. So I can only repeat again, yes, you're right, 4.15x is the current leverage ratio based on third quarter results. And with that, we're fully compliant with our debt covenants. We haven't disclosed yet all the details around the latest covenants. But yes, due to the covenant reset, we have sufficient headroom, and we're comfortable with that.

Then your second question was the Moulded Glass. Yes, look, at the end of the day, the rationale for separation of Moulded Glass is that with the acquisition of Bormioli Pharma, we're bringing 2 parts of the business together, legacy Gerresheimer Glass as well as Bormioli Pharma glass into one and separating that. We think that makes sense. And then we have a consolidated focus on the Moulded Glass business, especially now on the new leadership of Norbert Topp.

And then we take it from there. As you know, we're committed to the separation. We also would like to sell the company, and we take it from there. The impact on leverage obviously depends on the sale price, and that would be speculation right now, okay? We'll take it from there.

We are having Olivier back your line.

Do you hear me now?

Yes, very good now.

So 3 questions I have. The first one is on moulded glass about the turnaround or to a better. So there are still weakness in Cosmetics and Oral Liquids. So is it really that you now look for the annualization of these headwinds? Or do you see any fundamentals which could be better apart from the flu season?

Second question, can you also give a brief update about the Plastics and Device dynamics? And lastly, how should we think about next year? I know it's too early to give a guidance right now, but some dynamics will spill over into '26, which basically you already sold technical automotive glass, how long does the pattern will last in your view?

It's a difficult discussion. But in the end, it comes back to the 2 topics we mentioned. It's the oral liquid and the cosmetic. Cosmetic or moulded Glass [indiscernible] positive light, also the light at the tunnel but different than we expected a strong recovery in especially the fourth quarter, we believe that this will only take place in -- over the loop of '26.

For the oral liquid market, this hits both the moulded Glass side, classic bottles we deliver for coughing syrups, but it also now affecting us in the area of Bormioli Pharma where we have the closures for this. And this is also stabilization of the market, also first indications that it might get better and we are here more optimistic that the market comes back a bit earlier than in the area of the cosmetic. But honestly spoken, after the hitbacks I had to swallow here in the third and fourth quarter, I'm a bit conservative now on my expectation of recovery. Nevertheless, Oral Liquid will come back better. We have to see the flu season now, how it recovers, the cosmetic, we have to see over the loop of '26.

And maybe Olivier, I can add a little to it. So your question was how long will the headwind last? It's a good question. What we experienced in this year so far was that it took longer than we initially expected and it still continues. Quite frankly, taking a different approach now, we're not waiting. What we're now doing is, and that's what Dietmar and I tried to explain is we're taking -- we're not waiting for that recovery. And for that reason, we do a transformation.

That transformation is also one-to-one, also happening at moulded Glass under the lead of Norbert Topp. So we do the same rigor for moulded Glass, operational excellence, commercial excellence, cash rigor, the full program, and that will ultimately improve the results and a market recovery in our growth efforts will come on top or complement that. But again, most importantly is now the focus is on complementing growth efforts with cost rigor, cash rigor, et cetera, full transformation as explained.

Next question is coming from Anna Snopkowski of KeyBanc.

Can you hear me okay?

Yes, very good.

Maybe just first on the biologic market. What percent of revenue in 3Q was biologics? And how did this market develop in the quarter? And then on the GLP-1 side, you've mentioned in the past the possibility of over EUR 200 million in GLP-1s for the year. Do you still view this as a possibility? And would this mainly be on the medical device side? And then lastly, just on capacity expansions. Could we get an update there? Which sites are still ramping? And overall, what's the revenue-generating capacity in these sites?

Yes, I can take the first one. Actually, I do not know exactly for the quarter the share of the biologic, but maybe the answer of your question answers the following is where we are growing is all in the -- primarily in the large molecule biologic area. And that probably also answers your question regarding of the GLP-1. Key drivers of the growth is actually in the area of GLP-1.

As you know, we have a wide portfolio of GLP-1, which goes in plastic containment, syringes, devices of various forms, pens, autoinjectors. That's actually the areas that are strongly growing. And thus coming back to the question of do we believe that we can reach the EUR 200 million in GLP-1 in 2025? The answer is yes. When you see the slide, we are also in some areas. You see the tubular glass. We are not growing in tubular glass third quarter at the moment, but we see the margins getting better. Why is this pipeline is under pressure in the volume. We clearly are growing into the very different high value [indiscernible] that's biologics. All the growth in devices at present is biologics.

Perfect. And then just around the capacity expansions, maybe which sites are still ramping going into the fourth quarter?

That's right. We also have further capacity start of productions that we will see in the fourth quarter that will also drive some of the positive things in the fourth quarter. But what we've tried to explain it will not be enough to compensate the first 3 quarters, but the ramps up are ongoing. Not all will fully contribute in the fourth quarter that will come -- that will ramp up over the loop of '26, but these things are ongoing and that affects syringes, especially here [indiscernible] facility, but it also affects pens in Europe and all the injectors in the U.S.

And also -- and Anna to the fact we post for tomorrow's call, the final results also will provide an update on the latest bigger projects. So have a look at that too if you can.

Okay. Thank you very much. As we have no more questions in the queue, we would end today's call and wish you a good day. Thank you very much.

Thank you.

Thank you.

Good morning, ladies and gentlemen, and welcome to the Gerresheimer conference regarding the publication of the Q2 2025 results. [Operator Instructions]

Now I hand over to Guido Pickert, VP of Investor Relations at Gerresheimer. Mr. Pickert?

Thank you very much. Welcome, everyone, to our Q2 H1 2025 results earnings call. Our CEO, Dietmar Siemssen, will lead you through the business development and the guidance. Our CFO, Dr. Bernd Metzner, will lead you through the financials.

And to start with, I'll hand over to our CEO, Dietmar Siemssen. Dietmar?

Yes. Thank you, Guido, and good morning, everybody. Thank you for joining in. We had already given you a Q2 trading update on June 2, the day we issued our ad hoc announcement adjusting our guidance for 2025. So you already had a big picture about the development in the second quarter. Today, we will elaborate on the actual second quarter numbers and put some more color on the main growth drivers for the second half of the year.

On a reported level, you see once again a significant increase in revenues and earnings in Q2 2025 compared to the same period last year, thanks to the consolidation of Bormioli Pharma. The acquisition of Bormioli Pharma has taken us to a completely new level in terms of revenue and adjusted EBITDA. Reported revenues grew by 19.6% to EUR 691 million (sic) [ EUR 601 million ], the adjusted EBITDA by 10.8% to EUR 119 million.

We also returned to revenue growth on an organic level in the second quarter as announced, but at a slower pace than previously expected. Revenues grew in Q2 2025 compared to the previous year pro forma figures of Gerresheimer and Bormioli Pharma, and they came in at 1.9%.

The lower fixed cost absorption weighted on our adjusted EBITDA development and thus our margins. The adjusted EBITDA decline thus by 4.1%. In Q2, we were able to realize the shifted revenues from the syringe business. Our Plastics & Devices Division delivered a robust growth as we had expected, and the order book developed positively, supporting a stronger second half of the year. However, the weakness in the cosmetic market prevailed and affected, in particular, our moulded glass business. This was compounded by a significant decline in demand for containment solutions for oral liquid medications, affecting our results in both primary packaging plastic as well as moulded glass.

The first half year altogether was clearly below our expectations. The second half will be stronger. We will continue to grow profitably in the course of 2025, but less -- or much less dynamically than previously anticipated. The return to normal operations in Morganton following the repair of the flood damage and in Lohr following the replacement of the furnace will contribute to our growth in the second half 2025. The biggest growth drivers in the second half of the year will be the ramp-up of new lines for the successful implementation of our growth projects, and I will elaborate on this in a minute.

Also systems and solutions for biologics and the expanded portfolio for high-value solutions will clearly contribute to our growth in the second half of the year and also the improvement of the margins.

The integration of Bormioli Pharma is progressing, and we are realizing the planned synergies. Some of you -- I can assure you that despite the unexpected market headwinds we are currently facing, acquiring Bormioli Pharma was exactly the right strategy move. It brought Gerresheimer to a different and new level, strengthened our market position and opened new strategic options. We are establishing our Moulded Glass Powerhouse and adding new integrated high-value plastic solutions to our portfolio.

Our strategic review of whether, and if so, when a spin-off of the combined moulded glass business might make sense is ongoing. We expect results in the second half of the year. Without the acquisition of Bormioli Pharma, we would not be talking about a strategic review.

2025 will be a consolidation and integration year for Gerresheimer. However, we have significantly strengthened our foundation, which will enable us to return to growth that is notably stronger than that of the overall market. What did we do when we were confronted with the disappointing developments in the second quarter? Yes, we adjusted our guidance for 2025, and the Annual General Meeting signed off on our proposal to cut the dividend to EUR 0.04, instead of EUR 1.25 per share. Thank you for this support here.

We know that this was unexpected, but we believe that in view of the lower-than-expected EBITDA contribution, it was the right measure to maintain the company's financial flexibility. There are also several measures already underway to optimize processes, streamline our organization and cut costs.

Our capital structure is robust. The bridge financing of the purchase price has been already extended by a further 12 months, and we have ample headrooms with unused credit lines. Our growth strategy remains valid, and our long-term positive outlook remains unchanged. Our transformation into a system solution provider has made us a key partner for the global pharma and biotech industry. This positioning is a key to sustainable profitable growth.

We are already today growing strongly in system and solution for large molecule biologic including, for example, GLP-1. We have a broad portfolio of high-value solutions that improve and will further improve our profitability. With the acquisition of Bormioli Pharma, we have expanded our product portfolio and created the basis for new integrated high-value solutions.

Given the weak first half of the year, the most pressing question, of course, is how we will achieve the necessary growth in the second half of the year to reach our guidance for 2025. We have shown you this slide already with our Q1 results. The key growth drivers in the second half of 2025 will be the return to normal operations, new ramp-ups and a continued shift to high-value products.

The return to operations refers to our plants in Lohr, Germany after the furnace exchange and, of course, Morganton in the United States after the flooding in the fall 2024. The ramp-up of new production lines for medical devices refers to Skopje, North Macedonia and Peachtree, Georgia, United States.

The last 2 pictures you see on this slide are examples for the continuous shift to high-value products. Our plant in Bunde, as an example for high-value syringes mainly driven by the demand for solutions for large molecule biologics. And of course, our plant in Queretaro, Mexico as an example for ready-to-fill vials and cartridges.

All of these growth drivers on this slide will contribute to our revenues and earnings in the second half of 2025 and beyond. We picked 3 examples: Lohr, Peachtree and Queretaro to make this a bit more tangible.

So Lohr, we gave you a status update on the project in our plant in Lohr when we presented our Q1 figures. We were able to successfully complete the furnace exchange in May 2025 and have restarted the flint glass production, contributing to our growth in the second half of the year. The new furnace is, by the way, the world's first oxy hybrid furnace in this size, has a higher capacity and can be operated with up to 50% electricity. This will enable us to reduce our carbon emissions by up to 40% compared to a furnace with conventional technology.

The project also included infrastructure measures for the power supply, the expansion of production buildings, new production facilities and a new environmental friendly cooling system.

With the total investment volume of around EUR 100 million, the project in Lohr is one of the Gerresheimer's largest investments in moulded glass in recent years, if not ever. Investment in the latest technology are extremely important to future-proof our production and ensuring our long-term competitiveness. Instead of just going for the bare minimum of maintenance CapEx in Lohr, we consciously invested in top-notch energy-efficient technology, including new lines to support our high-quality standards as well as customized solutions for our customers.

Peachtree, the second example of a significant growth driver for the second half of 2025 and, of course, the following years is the ramp-up of our new production lines in our plant in Peachtree, Georgia. At our Peachtree City site, we produce medical devices such as inhalers, components for infusion sets, micro injectors, test cards for microbiologic tests and also auto injectors, which can be used in diabetes and obesity therapy, among other things.

The growth project in Peachtree has been a 2-stage expansion. For the first expansion stage, we have built new facilities literally right next to the existing plant. The smaller buildings on the left of the upper picture are the original Peachtree 1 -- you can call it, Peachtree 1 plant. The large holes to the right are the first expansion stage. Construction is finished, and the ramp-up of the production in new hole has already started in Q2 and will be a strong contributor to our growth in the second half of 2025.

The second expansion stage, Peachtree 2, is a completely new facility, roughly 2.5 kilometers -- or miles from the original plant. The qualification of the new lines in Peachtree 2 will start in Q3, late Q3. First contributions from commercial productions are expected in fourth quarter 2025, more to come in 2026 and beyond.

We have built the Peachtree 1 and 2 expansions based on long-term customer contracts. That means that the CapEx spend on the expansion has not -- was not based on hope that we would be able to utilize production capacity at some point in the future, but on actual contractual order intake.

Considering the current development and tariff discussions in the United States, our principle to produce in the region for the region pays off once more, although the decision was made before and independently of these discussions.

Queretaro in Mexico is one of our production facilities for tubular glass products such as vials, ampoules, cartridges, and we have recently expanded the facility to become our hub in the Americas for our syringe production. In Queretaro, we are currently setting up the first production line for EZ-fill Smart, the next-generation packaging platform for ready-to-fill vials.

EZ-fill Smart is an advanced version of the platform solution for ready-to-fill vials that offers several advantages, including environmental friendly sterilization, vaporized hydrogen peroxide. Until now ethylene oxide has mostly been used for sterilization. When used with our Gerresheimer Elite vials, EZ-fill Smart significantly reduces the total cost of ownership of the -- and the risk involved in the fill-and-finish processes, which is a significant important aspect, especially for expensive innovative biologics for our customers.

Commercial production will start in the second half of the year, contributing to our growth and margin expansion in 2025. We are continuously increasing our share of high-value vials, including ready-to-fill Elite vials, building on a strong market position in bulk. Revenues from ready-to-fill vials have now been growing several quarters in a row. EZ-fill Smart has the potential to accelerate the market's transition to ready-to-fill vials.

At the end of 2023, ground was broken for the planned expansion in Queretaro, Mexico. Now the first new syringe-forming lines are being ramped up as part of or preparation for the qualification process. In the midterm, we will increase our production capacity for ready-to-fill syringes in the North American market by several hundred million syringes annually.

The prefillable glass syringe manufactured here are the -- are suitable for injectable biologics, among other things. These include GLP-1-based drugs for the treatment, for example, of obesity. In total, we have invested around USD 100 million in the expansion of the plant and the respective equipment for long-term customer orders, and it will start to pay off already in Q4 2025.

Thank you for attending at the moment. Thank you very much, and this will -- with this, I will hand over to our CFO, Bernd Metzner, for a deep dive into our financials of the second quarter. Bernd, it's on you.

Thank you, Dietmar, and welcome everybody also from my side. Let's dive into the analysis of the key financials for the second quarter 2025.

On a pro forma basis, revenues grew from EUR 596 million to EUR 601 million. This led us to organic revenue growth by 1.9%. In our Plastics & Devices division, especially the growth in syringes and medical devices compensated for weaker development in our plastics business linked to oral liquids.

In Primary Packaging Glass, moulded glass developed weaker, especially in the end market of cosmetics, while our Tubular Glass Business grew, driven by continued solid demand for ready-to-fill products, our high-value vials.

Adjusted EBITDA went from EUR 125 million to EUR 119 million on a pro forma basis. This led us to an organic adjusted EBITDA decline by 4.1%. Organically, adjusted EBITDA margin declined by 120 basis points to 19.9%, which is a touch better than we expected 5 weeks ago with around 19%.

Adjusted EPS went from EUR 1.24 to EUR 0.90. This led us to an FX-neutral adjusted EPS decline by 27.9%, which I will explain on a more granular level later.

Let's move on to the divisional development in Q2 2025. Plastics & Devices pro forma revenues went from EUR 332 million to EUR 354 million. This led us to an organic revenue growth of 8%. Growth was driven by the phasing effect in our syringes business as well as continued growth of our medical devices business compensating for weaker demand in our plastics business regarding oral liquids.

Pro forma adjusted EBITDA declined from EUR 92 million -- EUR 91 million to EUR 88 million, so from EUR 91 million to EUR 88 million. Organically, adjusted EBITDA declined by 2.4%, and the according margin went from 27.4% to 24.8%. The decline is impacted by lower revenues related to plastic closure systems with very high contribution margins and where the lower fixed cost absorption hit us especially. Furthermore, we had an outlier EBITDA margin last year.

Primary Packaging Glass pro forma revenues went from EUR 264 million to EUR 248 million. This led us to an organic revenue decline of 5.1%, as the weakness in our moulded glass business could not be fully compensated with a strong development in Tubular Glass. In the most recent quarters, we anticipated that Tubular Glass will recover in the course of the current fiscal year, and Q2 speaks a clear language.

Our vials business was growing in Q2. We had a better product mix, which was supportive for the margin development. In particular, the margin accretive ready-to-fill vials recorded for the third consecutive quarter a very, very strong top line development.

Regarding the development of moulded glass, I will provide further information on the next slide. Pro forma adjusted EBITDA remained at the previous year's level at EUR 45 million. This led us to a very slight organic adjusted EBITDA decline of 1.1%. Consequently, organic adjusted EBITDA margin increased from 17.5% by 70 basis points to 18.2%.

Advanced Technologies, the operating performance was unchanged compared to the previous year's level. We are on track to start marketing of our on-body drug device in October 2025 and are conducting further feasibility studies with leading pharma companies for own IP-based drug delivery devices.

Let us now move on to the development of our Moulded Glass Powerhouse in the quarter in detail. Pro forma revenues went from EUR 185 million to EUR 167 million. This led us to a decline in organic revenues of 9.3%. The reason for the decline is predominantly based on a continued weakness in cosmetics. In addition, the development was also negatively driven by a decline in demand for containment solutions for oral liquid medications. Pro forma adjusted EBITDA margin went from around 19% to around 18%, driven by operating leverage.

Net CapEx stood at EUR 27 million, which is about EUR 6 million higher than last year's pro forma net CapEx figure due to the current furnace overall projects. A reminder, for moulded glass, CapEx in 2025 is mainly driven by furnace overall projects in Lohr and Momignies as well as investments into state-of-the-art furnace technologies.

The next slide shows the reconciliation of the reported to the adjusted financials for Q2 2025. Revenues increased organically by 1.9%, and the adjusted EBITDA declined by 4.1%, as discussed in all details earlier. Adjusted depreciation increased year-over-year due to the increased CapEx spend in the recent past as well as the consolidation of Bormioli.

For full year 2025, we expect the nominal growth rate to accelerate hand-in-hand, with growth projects being executed in new capacities going online. We expect to end between EUR 210 million to EUR 220 million for adjusted depreciation.

Regarding income taxes, the adjusted tax rate in Q2 2025 was 33.5% compared to 24.5% in Q2 2024. The tax rate in Q2 is not representative for the second half of the year. For the second half of 2025, we expect a lower tax rate compared to that of the first half.

FX-neutral adjusted net income after noncontrolling interest decreased by 27.9% compared to Q2 2024.

Coming now to the important cash flow development in the second quarter. This is the highest operating and free cash flow since 2020 for a single second quarter of a year. The adjusted EBITDA increased from EUR 107 million to EUR 119 million. Regarding net working capital, the buildup was only EUR 15 million in Q2 and was supported by cash effect factoring in the amount of around EUR 16 million compared to around EUR 8 million in Q2 2024.

The increase in net interest paid reflects the higher net debt level. Others improved due to insurance compensation received related to the flooding of our Morganton factory in the second half of 2024. Cash out related to net CapEx stood at EUR 60 million. Around 40% of this amount was allocated to moulded glass.

The remaining amount of approximately EUR 35 million relates to Gerresheimer, excluding moulded glass. The majority of these EUR 35 million went into growth CapEx such as our biological expansion projects related to GLP-1. With these investments, we are laying the foundation for sustainable, profitable growth. As usual, we expect a strong improvement in free cash flow for the second half of the year compared to the first half. For the total year, we expect to end the year with a free cash flow of not more negative than minus EUR 100 million.

Coming now to our financial position in detail. Our leverage for Q2 2025 stands at 4.03x, and we currently focus on deleveraging. Our liquidity currently stands at EUR 736 million and consists of our cash position of EUR 177 million and the undrawn revolving credit facility of EUR 558. Our net financial debt increased from EUR 1.033 million to EUR 1.943 million and was driven by the payment of the purchase price for Bormioli.

Looking at our liquidity and maturity profile of our net financial debt. End of May 2025, we extended our Bormioli acquisition bridge to September 2027. Until then, there's no need for additional external funding. We are focused on improving our free cash flow, as mentioned by Dietmar before, and strive for the full year 2026 to achieve a positive figure.

With this, I hand back to Dietmar. Dietmar?

Yes, yes. Thank you, Bernd. Yes, you see this, this is not an easy year for our Gerresheimer. And in some of the markets, we are really facing cold headwinds. Due to ongoing uncertainties in the cosmetic and oral liquid markets, we are widening the range of our expected organic revenue growth for the 2025 financial year to 0% to 2%. The organic adjusted EBITDA margin is expected to be around 20%. The adjusted earnings per share will decline in the low double-digit percentage range compared to the previous year.

We also said that we would give you an update on our midterm guidance together with our Q2 results. Development in the first half of 2025 has forced us to take an even closer look at our processes, structures and costs and to put an even stronger focus on free cash flow. We decided to have a clear goal here, and the clear goal is to be cash flow positive in 2026 and with this to accelerate the deleveraging.

This influences our investment planning. Going forward, we decided to be even more selective with our investment project, accepting a slightly slower growth pace while maintaining our margin goals. This now leads to expected organic revenue growth of 6% to 9% and margin expansion to 23% to 25% in the midterm. We expect the adjusted earnings per share to grow at a level of at least 10% plus.

How do we get to midterm growth significantly above the overall market growth? Three main growth drivers will support us to achieve our midterm revenue guidance. The solid base growth in our classic portfolio, our high-value solutions, including ready-to-fill vials, cartridges and syringes and new integrated systems and, to an even larger extent, medical devices for biologics. This includes pens and auto-injectors as well as our own IP solutions, such as our Inbeneo auto-injector or our on-body drug delivery devices.

The next opportunity to check will be our third quarter results for our fiscal year 2025, which will be published on October 10. Please note that going forward, we will adjust the time of our conference call from 10 a.m. to 3 p.m. Central European Time to that -- or in order to better accommodate our U.S. investors and enable them to follow the call live.

With this, I'm at the end of my short presentation. Thank you very much. We will now take your questions.

[Operator Instructions] And first up is Ed Hall from Stifel.

I just have a couple. The first one would be on your new facilities, and thank you for sharing some light there. I guess, the question would be on utilization rates that you run these facilities at. How long does it take to ramp up this facility? I guess, what I'm trying to get at is what utilization rate could we think of before these facilities start to be margin accretive. I know this is dependent on products, but a broad level would be really appreciated.

And then I guess the second question would just be on sort of the notes to your financial statements. I saw you're making amendment to sort of different lease liabilities and current and noncurrent assets. I'm just curious if you could just talk through these changes, why you're making these changes and what these changes are. That would be really helpful.

It was hard to understand you. I understood the first question was around the ramp-up of the furnace and whether it's margin accretive.

Yes. I think I'm more focused on Morganton and Peachtree, let's say. But yes, Peachtree.

Okay. That's easy. I can go through them. The new furnace in Lohr is clearly ramping up from June on and will, of course, very clearly add to the growth in the second quarter, and also the margins are good because we are actually expanding our capabilities in high-end food and beverage formats here.

Then Peachtree is very, clearly, it's a ramp-up of the auto-injector that takes place over the second half and has contributed already now in the last months. And it's very positive. The next-level Peachtree is Peachtree 2. That will add to the sales and profits in late fourth quarter because we are in the ramp-up at the moment. The most added value, we'll actually see from '26 on, but they are both sales, top line and bottom line accretive.

And you are referring to Morganton. Morganton, very clearly after the flooding was down, and we restarted production from May. And they are now steadily ramping up and adding to the party. I hope this answers your question.

And the second one?

The second one was thanks for asking about the notes in our half year financial report. The changes here in the current and noncurrent assets have various reasons. The key bulk is basically linked to our PPA for Bormioli. So actually, the accounting for the purchase price for the acquisition of Bormioli, and they have -- and you think also that we have disclosed here the bridge as noncurrent assets are concerned. So that's very much linked to the PPA of Bormioli and the acquisition. I hope it helps for the time being.

And next up is David Adlington from JPMorgan.

Maybe the first one just on the mid revenue guidance. Do I understand there's not a compound growth in the whole period? Maybe you could just talk us through how you're thinking about the cadence of growth period. You mentioned that the reduced revenue guidance was down to your decision to lower investment. You have not changed your underlying market assumptions with respect to growth.

Second question, just wondered if we could get an update in terms of where we are in terms of potential divestment in moulded glass business. Finally, do we have a date for the Capital Markets Day, please?

Yes. I'm actually happy to take the first question. I hope I got it right. It's about our midterm guidance. We have to clearly see -- yes, we are even more selective in the CapEx, but you should not forget that a lot of the CapEx that we put into the ground in the last years is the CapEx that will contribute to the growth in the next years.

So even though you don't see this at the moment, as a matter of fact, these investments already show growth, and they will ramp -- as they ramp up over this year and '26 will clearly contribute to the business. And I think we mentioned them several times. We are talking large volume auto-injectors, pens. We are talking syringes, high-end syringes. We are talking high-value tubular glass solutions, like cartridges, vials. And this will actually pay off. The -- that was one.

The next was moulded glass revenue, yes. I think there's no major change. We will probably accelerate our strategic review on the moulded glass business. We believe that we will be at a stage to inform the capital market after the summer -- in the capital market after the summer. Probably in fall, we will define -- finally define the Capital Markets Day. And here at the Capital Markets Day, we are actually eager to not only present you the result of the strategic review, but also probably also the next segmentation -- the new segmentation of the Gerresheimer.

Maybe I could just come back to my first question. 6% to 9% revenue growth over the next sort of 4 years, should we be thinking about the cadence of that? Is that going to be front half loaded because of the recent CapEx coming through, back half loaded because that's going to take some time to see the markets recover?

We are convinced that we will achieve this 6% to 9% over the loop of the planning period, but it will be not necessary to believe that we will only achieve this at the end of the planning period.

The next question comes from Oliver Metzger from ODDO BHF.

First one, it's on your slightly adjusted organic growth guidance. Potentially, I have missed that. But can you tell us what has changed versus the beginning of June? Is it just of becoming even a notch more conservative? Or has anything fundamental changed?

And second one is on moulded glass. So about the turnaround, is it really that you see the annualization of the cosmetics weakness, that basically growth will not be as negative as it is? Or do you see already any fundamental turning to the better? And the last one, very quickly on clarifying your FGD. You mentioned that the plastic closure business was weaker than expected. Is it correct that this business relates to Bormioli?

Do you want to take the first one?

I'll take the first one. Oliver, thanks for asking regarding the widening the range of our guidance short term for organic growth. This is basically very much linked to the fact that we have a certain back-end loadedness in the second half of the year. So Q4 will be definitely stronger than Q3 and due to the ongoing uncertainties in the cosmetic and oral liquid markets, actually, and given that we have a relatively -- the visibility is not so high in these businesses, and we sold for prudence. and we are better off to widening the range of the expected organic revenue growth for -- from 1% to 2% to 0% to 2%. That's basically the background of it, Oliver.

And maybe to the second or third question, they are all linked together. In the end, I will be -- I have to be very open. And why are we suffering in this cosmetic market and oral liquid market? Cosmetic is relatively clear because of Asia. It's a temporary thing and will be over.

The question is what happens here with this oral liquid market? We actually always had an exposure to the oral liquid market, but it was not never relevant to really focus on this because the oral liquid market is a very, very stable, resilient market. This market is now, at present, really facing similar to the injectables last year, a correction, a destocking similar to the vials last year, in injectables just 1 year delayed.

Our exposure to the oral liquid market was always there in the legacy Gerresheimer, if you might call it, in plastic bottles, yes, moulded glass bottles. But with the acquisition of Bormioli, we actually increased our exposure to oral liquid market because they have, on the one side, multi-glass solutions. On the other side, that is pretty new to us in Plastic Packaging. They are doing most of the closures.

So long answer to your questions, is this related to Bormioli, the answer is the plastic packaging, it's correct because our exposure to oral liquids in the past, primary plastic was pretty low and is now significantly increased because it's one facility of the Bormioli's that is very highly automated, very profitable, producing the closure systems, and they are with the weakness -- softness of this market at present affected. I hope this answers your questions. It was a long answer, but hope it helps.

And next up is Olivier Calvet from UBS.

I've got 2 large picture questions and then a couple of nitty-gritties. So the first one, just there's been a series of high-profile GLP-1 readouts year-to-date. You said you had a look. As part of the midterm guide review that your structures and your pulls and pushes. Could you help us understand whether this has changed anything on your ramp from 2026?

The second question was just beyond capital allocation and dividend payout. So it's helpful to see you guide now for positive free cash flow in 2026. But obviously, you are reviewing moulded glass right now, which has deteriorated year-to-date. The acquisition drove your leverage up. You scrapped the dividend last month as a precaution as you said.

So given where leverage is at, should you pay a dividend next year? Or should we think of the dividend as something where you still see financial flexibility, depending on where you are on group leverage? That's the second question.

And then just in terms of the nitty-gritties, I had one question just on the insurance compensation you received from -- for Morganton in second quarter and whether that was in your initial free cash flow guide. Secondly, you gave the revenue at Q1 for biologics. I was just wondering if you could do the same for the second quarter. And then thirdly, you gave the pro forma revenue for P&D and PPG by quarter, which is super helpful. I'm just wondering if you had that as well for moulded glass for Q3, Q4 last year, because we have that already for Q1, Q2, but not for Q3, Q4. So it would be helpful to explain what you're saying for the second half of this year.

Yes. Maybe I start with the question, which I understood. And maybe when we missed something, please let us know. As I start with the dividend, we -- regarding the dividend, basically, and we keep this kind of routine, we decide about the dividend next year when we finalize our financial result, and the decision is basically taken by the Board of Management, obviously, and then also by the Supervisory Board. And we have not yet a decision on this topic. So we cannot further comment on this topic. So it will be decided next year, February, end of February.

Regarding the increase of the compensation, second question, which I take is the insurance compensation, yes, it was already included in our cash flow. And one thing, Olivier, what you need to understand, we had really a damage. So we really lost a lot of money, and that was the reason why we actually get this compensation for.

And we have an insurance. And therefore, we get compensated for that. What should we not forgetting, we have a certain threshold where you need to pay on your own. And this is, obviously, ultimately, such a damage. It hurt us, obviously. But indeed, we had, I think, in Q2, if I'm -- close to EUR 20 million compensation of the insurance here.

Now I hand over regarding the midterm guidance topic. Dietmar, I would hand over to you, and then I make number crunching for the other questions, yes.

Yes. I have to repeat the question because it was hard to understand. It was obviously around midterm guidance, whether the ramp-up of the new lines actually affect this. Honestly spoke, the ramp-ups are in plan. There was a smaller softness in the ramp-ups that actually visible '25. For '26, '27, '28, we are fully in plan. And the ramp-ups are one of the reasons why the midterm guidance seems to be strong for you, but we are pretty confident that they will come. It's by the way not only -- because you always talk about GLP-1, it's not only GLP-1, but other lines that are ramping up.

Sorry. Just to confirm, acoustically, you said so small softness in 2025, but then getting better in '26, '27, '28.

Actually -- it's actually not even softness. Sometimes, if you -- these ramp-ups are very steep. And if there is a 1 or 2 months delay by customer, by us, by whatever, then you, of course, see this. But the ramp-ups are in plan now. The qualification is fully ongoing. And I'm confident for 2026 and the following years, of course, yes.

One question was related to biologics. We have around EUR 100 million biologic revenues in the second quarter 2025. This kind of ballpark, just as a refresh, Q2 2024, it was EUR 75 million. So you really see what Dietmar mentioned before that, really, the growth is coming from -- especially biologics. And also in thereof, obviously, GLP-1 is the main contributor for this kind of growth.

And the point is that you have to see this, yes. There is -- they really are facing headwinds in some of the markets, and the result of this is that we are negatively growing. The compensation that we are growing at all comes actually very clearly from the growth areas, from the areas we invested in, from the high-value, from the new devices, from the ramp-ups of the line. And they clearly show the results, but it's just not enough to compensate for the negative growth in the areas where we are facing the headwinds. That's the point.

Yes. And then just a moulded glass bit, I know last year was -- that was the last question. Last year was very towage loaded. If I look at your EUR 735 million pro forma moulded glass disclosure and what you've posted in H1, right, that implies around close to EUR 380 million of revenue in moulded glass in H2. I was just wondering about the split between Q3, Q4. I don't know if you have that.

I mean, you are talking about the moulded glass business, including just to be precise Bormioli and Gerresheimer. Okay. Maybe it wasn't handed over to you because you are in the weeds. Basically, EUR 100 million for moulded glass, it's including Bormioli. Okay, pro forma, it's actually EUR 179 million, is this correct, and EUR 195 million for Q4. So EUR 179 million Q3 pro forma moulded glass, including Bormioli, Gerresheimer and Q4 EUR 195 million last year.

And the next question comes from Falko Friedrichs from Deutsche Bank.

My first question is whether you could quantify how big this oral liquid container business is for you and also how much longer you think the destocking in that business could last.

Then secondly, on your cosmetics business, do you see any signs that this is in any shape or form improving somewhat, so that it could be a little better in the second half?

And then lastly, on CapEx. Now that you said you're going to reprioritize a little bit, could you give us an idea how much CapEx should be as a percent of sales this year and then also for the next few years?

Yes. Maybe I start with the oral liquids. I would say we are on the oral liquids in the ballpark of 8% to 10% of sales for total, including now Plastic Packaging and moulded glass.

And what was the next?

Was regarding...

Cosmetic, yes. In oral liquid, we're covered. Also here, we are back-end loaded. It's one of the reasons why we expanded the bandwidth of the guidance because exactly these areas of oral liquids and cosmetics are the areas with a very low visibility, and we are back-end loaded in the fourth quarter. So we became more prudent here.

The recovery of the oral liquid, we see first indications, and we hope that the fourth quarter with the flu season and so on will get stronger again. And also the destocking is coming to a certain slow down or even finalized. For cosmetic, we expect a recovery over the loop of 2026.

Maybe to tackle your -- Falko, maybe to take your CapEx question. Just to start with, as you know, we don't guide specifically for CapEx midterm. The reason -- actually, the reason for this is that we just want to have also opportunities, and that's basically why we are not precisely on the CapEx guidance.

However, having this said, it's crystal clear that this year, 2025, including Bormioli not spend more CapEx than what we have spent last year. Last year, it was around EUR 350 million. So we will be basically at max at this level this year, if not lower even. And for the next year, as mentioned by Dietmar, we have a clear idea that we will also not be beyond EUR 350 million, but below EUR 350 million to make sure that we will have a positive free cash flow 2026, and we are strongly committed for that.

That helps a lot. And then one quick clarification question. What -- which year do you use as the starting point for this new medium-term guidance? Is 2025 the base from which you want to grow 6% to 9% as a CAGR? Or is it 2024?

I didn't get.

It's not. Definitely not 2024.

The CAGR, I mean, it's a midterm guidance, within the planning period, we will achieve -- we are seeing that we achieve these figures that we are guiding for.

The logic comes based on 2025 and not 2024.

Which in the end does not make a big difference, that's the truth, as frustrating as it is, but the growth in 2025 will not be so strong. So the figures '24, '25 will not be significant.

Don't remind us on this topic.

Next up is Curtis Moiles from BNP Paribas Exane.

First one, I just wanted to get a little bit more color on the RTF files, which sounded to be pretty strong so far this year. Can you talk a little bit more about what you're expecting through the rest of the year there? Is it going to be continued strong growth? And will we see a meaningful impact here on margins from this favorable mix?

And then secondly, talking about the net leverage, currently around 4x. Do you have any kind of -- I know you're focused more on deleveraging here. Do you have any kind of idea or thoughts on the time line of the target level that you want to be at in the short to midterm? Any kind of comments there would be helpful.

I'll take the first one, it's an easy one. Or do you want to?

Go on, please.

Because it's an easy answer. The RTF files are growing actually double digit, clearly contributing, and you will see -- if you look at the glass side, you also see an improvement of the margin. And a driver of this margin improvement is actually coming from the high-value glass side.

And just to take your question regarding the leverage. Today, we are at 4.0. You know that our free cash flow -- we have a second half of the year, which is always contributing positive free cash flow. And based on this, we will be sure that our leverage will be not at a max at 4.0 end of this year, lower even slightly than 4.0 end of this year 2025.

And it's obvious, we don't think that this kind of leverage is healthy. And we want to bring this leverage down, and we have a leverage target of around 2.5, 3.0. And this remains our -- let's say, our guide -- our logic where we want to strive also going forward.

And coming to the next question, it is [indiscernible] from Reuters.

In regards to your review of the moulded glass spin-off, I was wondering if there's anything specifically that would make you keep it and not sell it. What are you looking for in terms of that?

We are evaluating the different options and will come to a conclusion as promised over the loop of the next month.

Okay. So there's no details you can give in terms of what exactly you're evaluating.

That's correct.

There are no further questions.

Well, thank you very much for joining in, to everyone. This ends our call today, our Q2 H1 earnings call. We -- as mentioned by Dietmar, the next call will be on October 10 -- Friday, October 10, schedule for our Q3 2025 earnings release. Please note again that we will then hold our conference call at 3 p.m. in the afternoon to better allow our U.S. investors to participate on our earnings call. Thank you.

With that, we'll end our call. Thank you, and bye-bye.

Thank you.

Thank you.

Thank you, operator. Hello, everyone, and thanks for joining today's call. Our CEO, Dietmar Siemssen, will run you through the recent developments having led to the necessity to amend our 2025 guidance. Both our CEO and our CFO, Dr. Bernd Metzner, will then be available for questions. Dietmar?

Yes. Thank you, and welcome, everybody, and thank you for joining us for this call on pretty short notice. Unfortunately, this is a call outside of our regular reporting routine. You have seen our ad hoc announcement and the corporate news we issued today. We needed to revise our guidance for our financial year 2025. We know that this raises a number of questions from your side, which is why we decided to give you more background on this call and the opportunity to also raise questions.

Why was this adjustment necessary? Although we recorded a significant jump in sales and earnings in the first quarter of 2025 due to the first-time consolidation of Bormioli Pharma, sales and earnings declined organically compared with the pro forma results of the same period of the previous year. This was due to subdued demand in the cosmetic market and the deferment of revenues in the syringe business from the first quarter to the second quarter of 2025.

In the course of the second quarter, we were able to realize the deferred revenues from the syringe business. Our Plastics & Device division delivered a robust growth we had expected and the order book developed positively, supporting a stronger second half of the year. However, subdued demand in the cosmetic market prevailed and affected, in particular, our molded glass business. This was compounded by a significant decline in demand for containment solutions for oral liquid medications affecting our results in both primary packaging plastic as well as molded glass.

Overall, we will return to organic growth in the second quarter as announced, but at a slower pace than previously expected. The lower fixed cost absorption weighs on our margins. Based on preliminary figures, we expect a low single-digit organic growth revenue and an adjusted EBITDA margin of around 19% in the second quarter of 2025. After careful analysis of the figures, we have, therefore, come to the conclusion that we need to adjust our growth expectations for the 2025 financial year.

For the 2025 financial year, we now expect organic revenues growth of 1% to 2% compared to the previous year and an adjusted EBITDA margin of around 20%. The adjusted earnings per share will decline in the low double-digit percentage range compared to previous year. We will provide you with a full update on the Q2 and H1 results for 2025, as well as also the midterm guidance on July 10, 2025, as scheduled.

We continue to expect a significant stronger second half of the year, but this will not be able to fully compensate for the weak growth momentum in the first half of the year. We will continue to grow profitable in 2025 as a whole, but less dynamically than previously anticipated.

The return to normal operations in Morganton following the repair of the flood damage and in Lohr, following the replacement of the furnace, will contribute to our growth in the second half of 2025. The biggest growth drivers in the second half, though, will be the ramp-up of new lines from the successful implementation of our growth projects, system solutions for biologics and the expanded portfolio of high-value solutions. This will also improve our margin again in the second half of 2025.

The integration of Bormioli Pharma is progressing, and we are realizing the planned synergies. Our strategy review of whether end -- if so, when a spin-off of the molded glass business might make sense is ongoing. We expect results in the second half of the year. In light of the adjusted guidance, we have decided to put a new dividend proposal to the vote at the Annual General Meeting on Thursday. The new proposal limits the dividend to be paid out for the 2024 financial year to a minimum of 4% of the share capital. Instead of EUR 1.25, we are proposing EUR 0.04 per share. In the current situation, we believe this is the right measure to maintain the company's financial flexibility.

Our capital structure is robust. We have just extended the bridge financing of the purchase price by a further 12 months. Our growth strategy remains valid and our long-term positive outlook remains intact. Our transformation into a system solution provider has made us a key partner for the global pharma and biotech industry. This positioning is the key to sustainable profitable growth. We are growing strongly in the area of systems and solutions for large molecule biologics, including GLP-1.

We have a broad portfolio of high-value solutions that improve our profitability. With the acquisition of Bormioli Pharma, we have expanded our product portfolio and created the base for new integrated high-value solutions. Gerresheimer is a strong, resilient company that is able to size market opportunities and consequently pursue its growth course, even when the going gets tough.

Thank you. We will now be happy to take your questions.

[Operator Instructions] And the next question comes from the line of Oliver Reinberg from Kepler Cheuvreux.

Three, if I may. Firstly, I just want to unpack a bit the kind of growth outlook. Can you just provide some kind of more color on the assumptions that you have now applied? In particular, I guess, GLP-1 expectation sounds to be unchanged, which probably 4% growth alone. So can you just talk about what do you expect for P&D and PPG in terms of growth expectation for the full year? And any color on the magnitude of the cosmetics decline, just to try to get a better feeling for the underlying drivers here? And probably can you also provide a bit of color on the visibility that you have for the business at the moment?

The second question would be on the drop-through. I guess if I take the old and the new midpoint of your guidance, it assumes that the top line and EBITDA guidance has been cut by EUR 60 million. So can you just talk about why there's such a significant drop-through?

And then thirdly, if I may, just you confirm that the outcome of the strategic review is still expected in the second half. Why are we not going to see any kind of delay given the softness in cosmetics, please?

Thank you, Oliver, for your question. Just to talk about briefly about the drop-through rate, and I'm sure Dietmar will tackle the growth outlook for this year. The drop-through rate is basically coming, especially you basically calculate on your own, maybe we are losing EUR 50 million, EUR 60 million revenues. And indeed, we lost almost EUR 45 million. If you really decompose the whole thing, we have higher drop-through rates because a lot is affected by molded glass, where we have this kind of drop in revenues.

So basically, you can assume a contribution margin of around 50%. It's fair. Then we had also idle costs in the -- in our setup, given that we had this kind of shortfalls for revenues, and also lower fixed cost absorption. That's basically the key reason for the, let's say, practically higher drop-through rate based on the drop-through rate plus idle cost and our fixed cost absorption. We didn't get your third question acoustically, Oliver.

Yes. So the third question was just like on the strategic review for the molded glass powerhouse. I just -- my understanding from your prepared remarks was that the outcome is still expected in the second half. I was just wondering if there's not any kind of delay, if there's now kind of more pronounced softness in cosmetics, please?

I think this is pretty independent. We are -- as you know, we are integrating the Bormioli. We did the closing in December. We're now integrating the business and simultaneously to the integration of the business, we are working on what we call setup of this powerhouse molded glass as a stand-alone solution, and these things are independent. So we are confident that over the summer, into the fall, we will be ready with what we call the strategic review and have a clear result and conclusion to this.

Maybe just to tackle your first question regarding the growth outlook, Oliver, we don't talk about the specific divisions, and we don't give guidance for that. So allow me that for all divisions in the second half of the year segments, we see really a very solid growth. And also, we expect that PPG actually comes back to a growth mode for the second half of this year.

Yes, we expect the cosmetic market to still be soft in the second half of the year, but the other criteria that will help, we should not forget that the furnace repair in Lohr is completed and is now delivering since June, the volume again, which is very positive. We have, on top of this independent from the glass side, also new launches that were planned for the second half from the very beginning, and they will now add and contribute to the sales growth in the second half. So there's no doubt the second half, as always explained, will be significantly stronger than the first half, but the first half was clearly weaker than expected, and the second half will not be able to compensate for the delay or softness of the markets in the first half of the year.

Perfect. And can you just confirm that the outlook for GLP-1 sales is unchanged for the full year, please?

That's correct.

Next question comes from the line of Oliver Metzger from ODDO BHF.

The first one, can you make a comment for the Moulded Glass segment as a whole, how it has performed in Q2? Second, it's pretty early and right now, we are just talking about the first day of Q3, but it would be great to hear your expectations for Q3, how you expect the phasing? And the last one has more a strategy corrector but can you confirm that you don't have potential covenants as the declining EBITDA leads to higher leverage ratios? That's from my side.

Yes, I can start with the Moulded question. No doubt, Q2 as Q1 was pretty soft in Moulded glass. There were key drivers for this. Some was clearly mentioned that's the cosmetic market. We, on top of this suffer also in Moulded Glass, of this what we call the oral liquids, what are these oral liquids, that's classic coughing syrups that at the moment are softer in the market.

On top of this, of course, that is not unplanned was that the Lohr furnace, the largest furnace of Lohr, was completely down in the first 6 months of the year due to rebuilding and it's now restarted and it's in glass again, as we call it, since weeks, and it's now delivering the first ramp-ups and contribution into the second half of the year, but not in the second quarter. Second one was, I think, order intake or what.

No, that was the Q3. I think how is the -- I think the question was how you see Q3 and what are the expectations here?

Yes.

Q3 will be stronger than Q2, which is not difficult. We see positive indications coming from the order intake, plus the fact that we have launches of new lines that were planned like this in the second half of the year that are going up. So Q3 will be steadily stronger again. Maybe just to Oliver to the covenant.

The covenant, I tackle this. Basically, thanks a lot, Oliver, for this question. Yes, there are basically 2 elements to this question. First, liquidity; second, leverage and covenant. Regarding liquidity, I think it's important to mention that we have unused credit lines in the amount of around EUR 550 million to EUR 600 million for the end of Q2. And therefore, we have sufficient liquidity buffer. And before, Dietmar mentioned that we were able to extend our Bormioli acquisition bridge to September 2027, a couple of days ago. So until then, and that's important, there's no need for additional external funding of our operations.

Second element to it is the leverage. As you know, our leverage is temporarily elevated, and we see this also in Q2. We might be around 4.1 or something like this in this ballpark, which is why we have decided to issue a reduced dividend reducing our cash outflow. We will not breach our bank covenants. That's clear, and we have a clear eye on this topic also for Q3, obviously, as well.

The next question comes from the line of David Adlington from JPMorgan.

Maybe just to start off with, you mentioned the slowdown in cough/cold. I just wondered if you had any insights into why that was because I think it was actually quite a hard cough/cold season. And then secondly, what changed so much in the last 6 or 7 weeks since you reported the Q1 results? And then finally, I think you pointed towards giving new midterm guidance at Q2. Are you still planning to host a Capital Markets Day later this year?

I think I'll start with the last one with the Capital Markets Day, yes. We are still planning Capital Markets Day. As indicated, we have to do this when we have the new structure ready. So it's by end of the summer into the fall. We are looking for the date right now, but that's clearly the case. And in this Capital Markets Day, we want to give a better outlook on the new segmentation of the business, the integration of Bormioli, the outlook of the business. And I think that's what we are planning.

Maybe to tackle your second question, David, this was about what changed in the last 6 weeks. Yes, when we reported our Q1 numbers, we basically have identified already and highlighted that we said we have topics about Plastic Packaging and Moulded Glass, and this area was there's unfavorable market conditions in these 2 areas, unfortunately, were really persisting also in the second quarter. And therefore, we really took a more cautious view based on these 2 elements as we have elaborated.

And then just the reasons for weakness in all liquids?

The weakness in oral liquids is actually hitting us in both Plastic Packaging and in Moulded. In Plastic Packaging, actually, it's closures, especially closures from one facility in Rivanazzano that actually are also used for molded glass bottles, but not necessarily from Gerresheimer but competitors. And this market is pretty soft at the moment as this coughing syrups and the whole syrups don't have a strong market. And the flu season in spring was pretty soft so there was no demand for the syrups. And that's one of the topics because this will not come back before the end of the year when the next flu season comes in.

The next question comes from the line of Falko Friedrichs from Deutsche Bank.

My first question is on your organic growth guidance for this year. So you've just confirmed that the GLP-1 sales are fine, but that's giving you 4% group growth. So is it a fair assumption that your Plastics & Devices segment, excluding GLP-1 sales, should be declining in 2025? And why is that the case? Secondly is your syringes problem, is that resolved, the problem you had in the first quarter? Is that business fully back to normal? Or is that also one of the reasons why you've reduced your outlook? And then last but not least, would you consider raising equity over the next few months in order to bring your leverage down?

Yes, Plastics & Devices, you have to do the math. But in the end, we are growing in the GLP-1 areas. We have to see also in Plastic & Devices, some of these ramp-ups only start in the second half of the year. With the fact that the oral liquids affect the closures in plastic packaging, there is no positive growth in this segment at present. So maybe the assumption we are not growing much outside of the GLP-1 in Plastic & Devices, that's probably true. The syringe is faster answered because in principle, that's the phasing topic from quarter 1 to quarter 2 is in principle completed and was visible also in quarter 2.

Maybe just to tackle the question regarding the equity raise, important one. No, we don't plan for this. And we don't plan for an equity raise, especially given the share price where we are, and it's also not needed based on our plan.

The next question comes from the line of Curtis Moiles from BNP Paribas Exane.

I just have a couple here. So the first one is the softness in the oral liquids. I just wanted to go back to that very quickly. It sounds like your commentary is indicating this is kind of a one quarter topic. I just wanted to confirm, is that kind of what you have in mind? Or could this also be through the second half of the year a little bit? And then the second question, I just wanted to touch base on the cadence of revenue in Q3 and Q4. Is it still fair to assume that you probably see a quarter-on-quarter acceleration in the second half as well for both revenue and margins?

I can take the first one, Bernd. The softness on the oral liquids affects both Plastics and Moulded Glass. And as I indicated before, it is something that will also be a burden in the second half of the year because it will probably only come back in the next flu season and the winter. And it's one of the reasons why we actually are sitting here now with taking down of the guidance.

Maybe just tackle your second question regarding revenue growth quarter-on-quarter. Actually, we don't -- I would not go now into too much detail. But clearly, if you look at the second half of this year, this will definitely grow in comparison to the first half of this year, there's no doubt. And as you know, our fourth quarter is always the strongest, and this will be also the case this year.

The next question comes from the line of Ed Hall from Stifel.

A couple of questions from my end. Firstly, just high level on the midterm guide change. How do you see the underlying sort of trends change versus the original trends when you first issued the guidance? Any high-level comments there would be really appreciated. Second question would just be on sort of free cash flow change. Obviously, with the cut to EBITDA margin, how do you envisage the free cash flow change for this year and then for next year? And then finally, just on the interest rates of the debt currently, what is the percentage of fixed versus variable? And how has this changed after the extension of the loan?

I take the tricky one, the first one, midterm guidance. Actually, the things we are discussing here and that are affecting '25 are primarily short term. What we will do is we will look into the figures based also on the financial CapEx topics over the loop of the next weeks and then update you on the real Q2 results and the midterm guidance in the July call in -- with the Q2 reporting as planned.

I will tackle your question regarding the free cash flow. Yes, indeed, ultimately, obviously, also the EBITDA decline affects our cash flow, our expected cash flow, unfortunately. We will provide a comprehensive update on our Q2 and first half year '25 results, including cash flow developments, obviously, on the 10th of July. That said, we do not expect our cash flow to enter negative triple-digit million euro territory. So it should be negative, but below or less than EUR 100 million negative. That's basically where we see the situation. And all the details we will need to work out in the next couple of days and weeks before our July release.

One thing is important, Dietmar just mentioned it, we have to look also at our CapEx program and to see what we -- where we are have handpicked in this area and is something what we need to do in the next couple of weeks. There was a question about the variable. So in the average, we have interest in magnitude 4% to 5% on our net debt in the average. So everything included leasing interest, that's the ballpark. And another thing is around 50% is variable, 50% is fixed.

The next question comes from the line of John Rolfe from Crescent Rock Quest Capital.

I'm sorry, the question answered.

Okay. Then we proceed with the next question, a follow-up question coming from the line of David Adlington from JPMorgan.

Just wondering sort of post the Bormioli acquisition, it does look like some of the areas of softness in terms of fixtures on the molded glass side do appear to be connected to Bormioli. How confident are you that they didn't supply excess amounts of stock into the channel before the purchase?

Can you repeat the question? It was some bad line at the moment, sorry.

Yes. So I hope that's better. In terms of the Bormioli acquisition, it looks like quite a lot of the softness is coming from closures and molded glass, which I assume is in part at least down to Bormioli. Do you think there are any issues with them overselling into the channel prior to the acquisition?

It's difficult to say. I mean we have access to the Bormioli in full scope since December. What we see though is a softness in this oral liquid market, which was -- which also led to certain stock at the customers. It's affecting the Bormioli, but we also see this in the, call it, legacy molded glass business for Gerresheimer. That's a point, yes.

There are no further persons with questions in the queue at this time. We, therefore, now conclude today's call. We're happy to organize follow-up calls, as you know, should you have any questions. Thank you. Bye-bye.

Yes. Thank you.

Thank you.