Gerresheimer AG

XETRA:GXI

Earnings Call Transcript 2021-Q2

[Carolin Nadilo, Corporate Director of Investor Relations]

Hi, everybody. Welcome, and thank you for joining us today for our Q2 conference call. With me today are again Dietmar Siemssen, our CEO; and Dr. Bernd Metzner, our CFO. As usual, we are presenting a set of slides accompanying the management's notes. The half year financial report and the presentation as well as the press release are posted on our Investor Relations website. Please note, this call is being webcast live and will be filed on our website, too. Before we start, I have to remind you that the presentations and discussions are conducted subject to the disclaimer. We will not read the disclaimer, but propose taken it as read into the records for the purpose of this call. Now it's my pleasure to hand over to Dietmar. Please, Dietmar, go ahead.

[Dietmar Siemssen]

Yes. Thank you, Carolin. And good afternoon, ladies and gentlemen. Of course, good morning to those of you joining us from overseas, welcome to our Q2 conference call. The second quarter of the running fiscal year, we have proven our strength and accelerated our growth. The implemented measures for growth alongside our strategy, formula G, are now bearing fruits. We are seeing clear success. We are on track for sustainable growth and are delivering to our promises. Let us start with the key takeaways of the second quarter. In the second quarter, we showed organic growth of 7.5% on group level and 7.1% in our core business. With that, we are on good track to deliver our guidance. We have reached 5.2% organic revenue growth for the first half of the running year. This is actually the best first half of our company's history in regard to organic revenue growth. And it is time that we get used to these and hopefully even better figures in the future. Let us take a look at the bottom line. The organic adjusted EBITDA margin reached 22.8%, a good result on the back of increasing raw material and also energy costs. Adjusted earnings per share increased on FX-neutral base by 19.1%. Our high-value solutions are key growth drivers and showed again impressive growth rates and increased by roughly 40%, especially in the areas of ready-to-fill products like syringes or vials and biological solutions, we showed very good results. Dear, ladies and gentlemen, as we are already in the middle of the third quarter, we are looking confident into the second half of the year and into Q3 in particular to confirm our guidance for the fiscal year '21 and also for the midterm. Why are we so confident to further accelerate the growth? It is all about innovative solutions. Our broad portfolio and capabilities enable our customers to be more successful and to offer a better solution to their patients. Transforming our Gerresheimer into a solution provider and innovation leader, we want to make this tangible for you by showing some of our progress made in implementing the strategy, formula G. With the implementation of our strategy, our future growth path is driven by innovation, and I'm talking innovation in all areas of the business. Today, we will deep dive into 3 focus areas: one, Gx Biological Solution. Gx Biological Solution underlines our cross-divisional approach and the importance of working as one Gerresheimer. The biological solution unit is a boost of growth in a dynamic growth market. Second point is digital solution. We leverage innovation through digital solution, identifying and anticipating new business opportunities of the future. And third, we focus on sustainability. We secure competitive advantages and long-term relationships through joint sustainable initiatives. Let me start with a deep dive into the Gx Biological Solutions. Chart #6 represents some of our current product portfolio, which we are steadily enhancing through innovation. Important for me to underline is that our base and volume business is rock solid as we are actually able to prove right now during the global COVID-19 pandemic. Thus, we are fully committed to this volume business and will enhance our product portfolio further by innovating solution or innovation solutions. Innovation becomes visible in 2 key areas at Gerresheimer. On the one hand, we are expanding the value chain by taking over additional production steps or services for our customers, often in areas they don't define as their core business. For example, the washing and sterilization process or the decoration of high-end cosmetic products. With our joint approach as one Gerresheimer, we are looking for new combined solutions that means that we will innovate in a cross divisional way, establishing combined solutions of glass and plastic and offer our solutions with our global sales approach. On the other side, we move into smart products, defining digital business models and developing smart and connected devices. As announced, we are developing Gx SensAIR, a platform for an on-body pump, which allows the application of large molecule formulations. This is a major step forward and a milestone in the work of Gx Biological Solutions. We are serving our biological customers alongside their whole development and production life cycle of their products, starting with standard vial or cartridge over a ready-to-fill syringe and a small batch production, for instance, or to an injection device and a pump. In an early phase, we offer small batch volumes and can later extend the large volume production. We accompany the customer from the very early beginning with highest quality availability and maximum reliability. This is what creates long-term and sustainable customer relationships and partnerships. SensAIR is one innovative example, improve that we are already today working on the earning potentials of tomorrow, anticipating global megatrends in pharma and health care, such as the growing trend for more self-medication, on-body pumps like SensAIR will improve the life of our patients worldwide. This is what Gerresheimer stands for, innovating for a better life every day.Global megatrends in pharma and health care offer new business opportunities and digital solutions will be the door opener for new business models. One example for a pharma megatrend, the global health care cost, they will continue to increase. Already today, about 30% of the global health care costs, that means about, for example, USD 700 million in the U.S. alone are caused by the lack of therapy adherence and patient monitoring. Through smart, digital and connected solutions, we increased the success of the therapeutics and help to reduce global health care costs. This is the innovation we are working on. And this is no future talk. It's something we're working on today. We implemented a digital innovation hub. Experts are forming a dedicated team with a particular focus on different disease fields. This is a key element implementing our digitalization strategy. A deep understanding of critical diseases, impacts for patients and their doctors and the implications for global health care systems. This aspect is essential to find and offer the right solution for and to our customers. Let's have a closer look at respimetrix being one very good example for digital solutions. Respimetrix is our first smart inhaler, connecting patients with their doctors or disease managers through platform services. Mobile application allows the safe monitoring of the correct inhalation and the analysis of health care data. By that, we will increase adherence and patient compliance, and we will reduce emergencies and hospitalization through reliable prediction of disease processes. On our path to transform this into a growth company, Gerresheimer into a growth company as innovation leader and solution provider, we will continuously increase our capability in technology and data and analytics with an irrevocable focus on customers and patient needs. The third deep dive is about sustainability and our progress in the implementation of our sustainability strategy in the second quarter. We are clearly committed to our sustainability future. This is reflected in our ambitious sustainability goals, alongside our 3 strategic sustainable pillars: GxPure, GxCircular and GxCare. We describe environmental, economic and social targets. For us, sustainability is a core pillar and a core strategic direction of our strategy, formula G. We see significant growth opportunities arising from joint sustainability initiatives, clearly aiming for innovation leadership and excellence. CO2 reduction is key in our sustainability strategy. And it is key for us to win new business. We invest into hybrid furnaces with a next-generation technology, replacing gas with green electricity, thus reducing our carbon footprint significantly. Additionally, we look into the usage of hydrogen for further CO2 reduction. We attract customers by reducing the carbon footprint of older glass and will extend our leading market position in this innovative segment in pharma and more and more in cosmetics as well. In the second quarter, for example, we also signed the United Nations Global Compact. We joined the world's largest sustainability initiatives. Together with more than 9,500 other companies, we are committed to support the 10 sustainability targets with regard to human rights, labor, environment and also anticorruption. Through our sustainability strategy, we support our customers in reaching their own sustainability targets. With that, I thank you for the moment. I'll hand over to Bernd to elaborate on the financials. Thank you. Bernd, please go ahead.

[Bernd Metzner, CFO & Member of the Management Board]

Thank you, Dietmar, and welcome, everybody, also from my side. Before we go into the analysis of our Q2 2021 figures, I want to briefly summarize our achievements. First, the second quarter was strong, reaching more than 7% organic revenue growth, marking the strongest first half in Gerresheimer's history with regards to organic revenue growth. We are well on track regarding our full year 2021 revenue growth guidance. Second, our revenues were particularly boosted by our key growth drivers. High-value solutions grew again by 40% and biological solutions by around 50%. And very important, this growth is reflecting a continuing trend, which will persist. Third, we achieved a strong organic adjusted EBITDA margin of 22.8% in Q2 in line with our guidance of 22% to 23% EBITDA margin for the full year. All in all, after the good start into the year, we managed to accelerate our organic revenue growth rate. And even more important, we expect this positive momentum at least to continue in the second half of the financial year 2021. Now let's dive into the analysis of the key financials for the second quarter 2021. Reported revenues in Q2 2021 increased to EUR 377 million, translating into growth of 3.9% compared to Q2 2020. Adjusted for FX of around EUR 12 million, we achieved strong organic growth of 7.1% year-over-year in our core business at 7.5% and 7.5% for the group. This is an impressive accomplishment in light of tough comps. Both divisions, Plastic & Devices and Primary Packaging Glass contributed to the strong achievement, doubling the organic growth rate we achieved in the last quarter. Now let's turn to earnings. In our core business, we managed to reach an organic growth rate of 3.1 percentage points year-over-year for the adjusted EBITDA, with a corresponding organic margin of 22.8%. This is a strong achievement taking into account somehow higher input costs as well as tough comps in Q2 2020. For the group, the reported adjusted EBITDA reached EUR 82 million. This includes FX headwinds of EUR 3 million compared to previous year. For the first half, we achieved an organic adjusted EBITDA margin of 21.2%, which is on par to previous year's level of 21.4%. Bottom line, the adjusted net income increased by 8.5% to EUR 40 million or EUR 1.28 per share. Adjusted for FX, the annual growth rate of the adjusted EPS amounted to 19.1%. Now let's have a closer look into the divisions. Plastic & Devices. Revenues in Q2 amounted to EUR 202 million and were on par with Q2 2020. Adjusted for negative FX effects of EUR 7 million, organic revenue growth was strong and reached 4.4%. Please keep in mind that we had a very high organic growth rate of 9% in Q2 2020. This was especially driven by last year's COVID-19-related boost in the demand for plastic packaging and inhalers. Our RTF syringes business again showed double-digit revenue growth, and we also achieved a strong development in Primary Plastic Packaging, including Centor. The adjusted EBITDA at Plastics & Devices reached EUR 53 million in the second quarter. Given EUR 2 million FX headwind, the FX-adjusted EBITDA was in line with last year's Q2, a quarter, which faced significant tailwind by the aforementioned COVID-19-related boost with a favorable product mix. Against this background, we achieved a strong organic adjusted EBITDA margin of 26.2%, much better than our 24.9% if you take our Q2 2019 as a reference point for the EBITDA margin in Plastics & Devices. Now let's go to Primary Packaging Glass. The Primary Packaging Glass division reached an impressive organic revenue growth of 10.3%, fueled by mid-teen growth in our Tubular Glass Business. The reported revenues in Q2 2021 amounted to EUR 174 million. Due to FX effects, we lost almost EUR 5 million compared to Q2 2020. The strong performance in our Tubular Glass Business once again benefited from high demand in high-value solutions. Our high-value solutions increased by 40% in Q2 2021 compared to Q2 2020, mainly driven by biologic solutions, Elite and RTF. The adjusted EBITDA reached EUR 38 million in Q2 2021. Adjusted for FX effects, the organic adjusted EBITDA growth amounted to 7.8% year-over-year. This growth rate was achieved despite increasing energy costs amounting to a couple of million. The organic adjusted EBITDA margin amounted to 22.3%. Now let's turn to Advanced Technologies. Revenues amounted to EUR 2 million in Q2 2021 and were in line with our expectations. Further, adjusted EBITDA loss in Q2 totaled minus EUR 3 million, also as planned. Please note that GAAP is not part of our full year 2021 and midterm guidance. On the next slide, we show our group figures, including Advanced Technologies and the reconciliation from the reported to the adjusted figures for Q2 2021. Reported group revenues in Q2 came in at EUR 377 million. Adjusted for FX, we achieved a strong organic revenue growth of 7.5% year-over-year. The adjusted EBITDA showed an organic growth rate of 3.9% year-over-year, which brings the adjusted EBITDA to EUR 82 million. Our main adjustments at the EBITDA level was for exceptional items mainly related to COVID-19 onetime costs associated to quarantine appreciation payments to our employees or protection measures. Finally, I would like to conclude the review of the reconciliation slide with a comment on the reduction of our tax rate. In the second quarter 2021, we were able to bring down our tax expenses, both in absolute and relative terms. The underlying tax rate in Q2 amounted to 24.1%, which represents a decline of more than 2.5 percentage points compared to the second quarter last year. The same is true for the first half. We were able to reduce the tax rate by 1.8 percentage points to 25.4%. This achievement shows that we are well on track to reducing the tax rate to 25% in the medium term. Let's turn to the cash flow. Given the high volatility of the free cash flow in a single isolated quarter, a quarter is regularly not representative for the underlying performance. This was especially true for the second quarter 2021, with a free cash flow of minus EUR 26 million. This, as usual, a strong second half of the financial year, depending on the execution of our CapEx plan, we expect a positive free cash flow for the full year 2021. Just for the recollection, in the second half of 2020, we generated almost EUR 100 million free cash flow. Let me now explain the 3 drivers of our cash flow performance. First, working capital. The largest impact comes from the net working capital increase and the data amounted to almost EUR 40 million in Q2 2021. This is a pure phasing effect. In Q1 2021, we were at EUR 40 million better than in Q1 2020. Now we are EUR 40 million worst. Be assured, next quarter, we will be better again. Second, taxes. The tax bill in Q2 2021 reflects a more normalized level than our tax payment last year. Last year, we had a tax benefit, which reduced our payments one time. Third, CapEx program. We are executing on our unique business opportunities. As you know, we are sizing attractive business opportunities to accelerate our profitable growth performance. So we are investing, for example, into the capacity extension for injectables and building up the capacity to accommodate the announced and attractive auto-injector contract. All in all, the net financial debt stands at EUR 1 billion. The leverage amounts to 3.3x compared to 3.2x last year. As a reminder, the financial covenant for our revolving credit facility stands unchanged at 3.75x. This covenant gives us solid financial headroom. To sum it up, we have doubled the organic growth rate compared to the good start into Q1 2021. We expect the positive momentum at least to continue in the second half of the financial year 2021. Our structural growth and profitability drivers, namely high-value solutions and biologic solutions, are sustainable and will further contribute to profitable growth. With this positive outlook, I now hand back to Dietmar. Dietmar?

[Dietmar Siemssen]

Thank you, Bernd. Yes. Let me also sum it up a bit and look into the future. We are looking into a strong second half of the year. We will keep the momentum for growth, with further large contribution from high-value solutions. We see also growth from our capacity increase in syringes and vials as well as positive impulses from cosmetics. The growth drivers defined at the beginning of the year are developing as expected. To sum this up, we confirm our full year guidance and stick to our plan to deliver mid-single-digit organic revenue growth and the adjusted EBITDA margin of 22% to 23%. In the midterm, we confirm to guide for high single-digit organic growth, with an adjusted EBITDA margin of around 23-plus percent. The third guidance KPI is on adjusted EPS, where we confirm to strive for growth of at least 10% per year. Ladies and gentlemen, we at Gerresheimer are on a mission. We are transforming our Gerresheimer into a growth company as an innovation leader and solution provider. With an intense focus on profitable, sustainable growth, we will consistently prove that the transformation is happening, and we will bring evidence to our long-term guidance for high single-digit revenue growth from '22 onwards. With that, I hand back to Carolin and look forward to your questions. Thank you.

[Carolin Nadilo, Corporate Director of Investor Relations]

[Operator Instructions] The first question comes from David Adlington from JPMorgan.

[David James Adlington]

Two, please. Just firstly, just wondered the sales growth benefits from price rises you take to the price rise on your pass-through pricing on the cost inflation. Just wondering how that impacted the second quarter and how we should be thinking of that being a tailwind into the second half and into next year. And the flip side of that is how much of the cost increase impacted you through this second quarter and for the rest of the year, please?

[Dietmar Siemssen]

Yes, I can take -- I didn't get the second part of the question, actually, but I take the first part easily. I think it's probably 1%, 1.5% of the growth that is driven by cost inflation. And the cost inflation that we are handing over into price increases.

[Bernd Metzner, CFO & Member of the Management Board]

Basically, and then, David, for the second part, what is left over, it's really a couple of millions, which basically we cannot compensate via higher -- per the price increase. But what is important, it's a pure temporary effect. So the reality is that in the end, you are able with our strong market position, and this you see and this is backed also in the history of our company that we are able really to hand over the cost inflation to our customers. And therefore, for the next year, actually, we think that we can compensate for 100% of the inflation, if there might be inflation impact from this perspective. I hope it helps you, David.

[David James Adlington]

It does. Maybe in terms of your -- when you gave guidance at the start of the year, how much did you bake into the revenue guidance for that -- from that inflation?

[Bernd Metzner, CFO & Member of the Management Board]

Basically, one other in the end, this is 1 percentage point of growth, which is now fueled into this kind of price increases, which we have not planned for. That's something like this 1 percentage point for the full year.

[Operator]

Next question comes from Veronika Dubajova from Goldman Sachs.

[Veronika Dubajova, Equity Analyst]

I have two, please. First one is just on your confidence of further growth acceleration as we move into the second half of the year, both I guess -- it's sort of a two-part question, both in the second half holistically and then as you think about phasing 3Q versus 4Q. And then my second question, and apologies, both of these are very financial, but the free cash flow, I was wondering, Bernd, whether you can give a slightly more detailed bridge on how you get to stronger free cash flow generation, in particular, when it relates to the various working capital elements and what your expectations are for where they should end up in the second half of the year.

[Dietmar Siemssen]

Yes, Veronika, I'd take -- I'm happy to take the first question, the further growth. Yes, I think in the second half of the year, you will see further the high-value products to proceed and very good. We have on top of this, there's a couple of launches we've planned earlier that are now taking place in summer, and we will benefit from then. And then there is a couple of course, areas where we set up new equipment, new capacities, and they are steadily now coming in place and they will also support us in the second half of 2021. Example is the ready-to-fill line, for example, in Bunde for the syringes that is now set up and it will steadily ramp up over the loop of the next 6 months until it's then finally bringing the full capacity by end of '21. But we see -- we will definitely also see the volumes here before. And for the syringes, whatever you produce at the moment, you can easily sell. It's really -- the market is much stronger in demand than it is in capacity.

[Bernd Metzner, CFO & Member of the Management Board]

Maybe just to take up your second question. Veronika, thanks for that. In the first -- basically, the trick is working capital for the second half of the year, for the first 6 months, we actually invested in addition around EUR 80 million in net working capital. And we think that we will have a release here of around EUR 70 million, EUR 65 million for the second half of the year maybe with EUR 15 million buildup of working capital, which is almost in line with our organic growth. It's basically the trick. And here, you really get the release from and obviously contributing our strong EBITDA, what we see for the next half of the year. That's basically the key of the answer. And obviously, 12% CapEx of sales is the assumption underlying.

[Operator]

Next question comes from Chris Gretler from Credit Suisse.

[Christoph Gretler, Managing Director in Equity Research]

Actually, I have a few questions and first, on the high-value solution. If I remember right, at the Capital Markets Day, that was indicated around 15% of sales of pharma sales. So if it grew at 40%, it's largely kind of the large majority of [indiscernible] over organic growth. Is this about correct? And the rest, like contract manufacturing, et cetera, is not growing much, would be the fair analysis?

[Dietmar Siemssen]

That would be a bit too much, but there's no doubt. The high-value products are strongest contribution. Everyone is talking about the COVID vials. We should not forget that in the second quarter, for example, just by Elite Glass, we did twice the sales of the COVID sales. So the high-value solutions are definitely performing strongly. In Q2, it was a very special quarter for the contract manufacturing as the 2020 2nd quarter was extremely strong because we benefited from the COVID strong demand in inhalers and diagnostic systems. But also here, in principle, we are well underway. And there will be quite some contribution coming with the second half of the year because we have a couple of launches that will support us in the principal from August on.

[Christoph Gretler, Managing Director in Equity Research]

Okay. And then just on the growth project, not kind enough that you broke out at the time, could you -- I think you already kind of indicated that actually RTF line in Bunde is on track. And also auto-injector in -- maybe could you give us a broader update on the growth projects and how they track relative to expectation, particularly? And if there is no any extensions to come that you're working on maybe?

[Dietmar Siemssen]

The growth projects are, of course, fully ongoing. And we should not forget, our Gerresheimer or the company we are talking about is a company that actually in the last years, never grew properly. And we are now -- we were disappointed in the first quarter, showing 3-point -- what was 3.2%? It was actually one of the best first quarters we've shown. We have now in the first half year, 5.2%. It's very strong value for the old Gerresheimer. It's still not where we want to bring the company in the new Gerresheimer, and we will get used to these figures. But the growth -- so what I mean with this is the growth projects are clearly showing the first fruits. And it's -- like I spoke about in my speech, it's a combination, of course, of high-value products on the one side, but also new innovational products and also very basic capacity increases that we -- with a better sales structure, better customer focus on customer, better excellence levels are more successful selling to our customers. There's no doubt, not everything here moves as fast as I want, that's why it takes some time. But the order books are filling very nicely this year, and it gives us a lot of confidence into the guidance we actually gave into the future. So I always talk about this growth path we are bringing the Gerresheimer on, to be honest. This is not future we are there now. I don't know if you want to add something, Bernd, here?

[Bernd Metzner, CFO & Member of the Management Board]

Yes. Maybe Christoph, it's like -- that's why you remember very well when we -- last year were in the Capital Markets Day, it was after our budget process. We basically predicted midterm that we have a growth, a CAGR growth midterm for high-value solutions of around 20 percentage points, something like this until 2025, 2026. We will basically be making our new plan, midterm plan. And based on the experience, which we have now with this kind of strong growth contribution of high-value products, we probably have to adjust for the better, but it's basically where we stand. It's too early to talk about because we have to revise our plan, but the input data, which we have are very confirmative and encouraging.

[Christoph Gretler, Managing Director in Equity Research]

Okay. And then my final question would be on respimetrix. Actually, do you have any lead customer on that? And what's actually the time line to get that technology to the market?

[Dietmar Siemssen]

There's a couple of things I can't disclose, but actually, the respimetrix, our smart inhaler is working -- is developing very promising. Actually, it's one of the project, which we really like because it's actually ahead of the time plan. And it is not unlikely -- I have to say this very careful. It's not unlikely that we might see first sales also from this new product in the end of '23.

[Carolin Nadilo, Corporate Director of Investor Relations]

Now we have Odysseas Manesiotis from Berenberg.

[Odysseas Manesiotis, Analyst]

So I have 3 questions. Firstly, for the last several years, I mean your second half margins have been an average of 300 basis points higher than the first half. So with this in mind and considering that you had 21% core business margins this half, what has changed to, let's say, necessitate a change of messaging in your full year 2022, 2023 percent margin guidance, given that you might be suggesting the lower here? Second question, you did describe strong double-digit growth in the syringes part of your plastics business, but your overall growth, there was about 4%. What is pulling you back here? And when will the auto-injector contract manufacturing contracts, you mentioned in the CMD will start kicking in, if this is something you can provide color? And thirdly, so profitability for the Glass division seems to be growing a bit backwards compared to the last half despite some favorable growth and mix effects you had from your high-value solutions. Do you have a margin outlook for this division for 2021? And is there anything also pulling you back here given the mix benefits? I'm sorry if the questions are too much.

[Bernd Metzner, CFO & Member of the Management Board]

Thanks a lot for the questions. I will take up the first question regarding the margin. Just to start with, we don't have a crystal ball, and therefore, it's very difficult to predict now how the inflation will go -- continue. But what I just want to tell you, we have a margin range for the full year of 22 to 23 percentage points and somehow it depends whether we are going into the direction of 23 or whether we are going into the direction of 22, depends somehow also about the development of input costs. That's actually the situation as we see because as mentioned before, you have, in a certain way, temporary effect you see, energy prices, for example, and CO2 certificates are increasing. But I can assure you that we will have in the second half of the year, definitely a much stronger margin than in the first half of the year as you are used to this that the second half of the year is somehow stronger than the first half of the year. Dietmar?

[Dietmar Siemssen]

Yes, I would have answered it shorter. There's no change in the guidance and that's what we expect. But through the second, yes, you are right, double digit in the syringes and 4.4% in the Plastic & Device divisions gives you the impression that the other areas are not growing, that's not completely right. As what I said before, there is a tough comparison because the second quarter 2020 was a 9-point-something percent growth quarter, very strong with some tailwinds coming out of inhalers and the diagnostic units that helped us a lot. But actually, the plastic packaging is also developing nicely at the moment. And the contract manufacturing looks in the second quarter, flattish. This will look quite different already in the third and fourth quarter back on the fact that we will also benefit from the auto-injector that you are referring to that is principally launching in August or now. And the third question to the profit of glass that goes in the wrong direction is something I can't confirm. Yes. That's why -- Bernd?

[Bernd Metzner, CFO & Member of the Management Board]

Can you repeat the question again because I was concentrated on the first -- to answer the first one. Can you repeat the question regarding glass again?

[Odysseas Manesiotis, Analyst]

Yes, of course. So I mean, you -- for the quarter speaking, you did mention a much higher growth compared to this division for your high-value solutions in particular. But I don't think we saw a respective change in the margins as in we didn't see a big lift in the margins, so to say, or end, to be honest. So is there anything pulling your margins back here? Are you having the mix effect that you expected here?

[Dietmar Siemssen]

There's no change in the margin, the run margin is developing nicely.

[Bernd Metzner, CFO & Member of the Management Board]

Basically, if I look at the numbers, FX adjusted, you have 22.8% EBITDA margin in the second quarter of last year. Now we have one of 22.3 percentage points. And if you really zoom into, you could debate that certain energy prices, we could not pass on to the increase we could not pass on to the customers, but it's really only a temporary effect, as mentioned before. So really nothing to keep note of and visibility that our margin will improving also in the next couple of quarters. So all good in this side, yes.

[Carolin Nadilo, Corporate Director of Investor Relations]

Jan Koch from Deutsche Bank.

[Jan Koch, Research Analyst]

This is Jan Koch on behalf of Falko. Firstly, you just mentioned the COVID vials. Could you provide an update on your current order book and your expectations for the next few years? Do you expect another increase in demand for potential booster shots? And in terms of pricing, have you noticed or do you expect any pressure here? And then secondly, on your cosmetic business, how is this business currently progressing as this business was a headwind in 2020 and should now turn into a tailwind this year? What can we expect from it in 2021?

[Dietmar Siemssen]

Jan Koch, thank you for your question. Maybe to the COVID vials, rough status, we've permanently built up additional capacities. I was reluctant in the beginning, no doubt about this because I was afraid that we wouldn't be able to use the machines after 2 years. But that is different because we changed their strategy, and we clearly see a long-term demand not only for COVID vials, but as soon as the COVID demand runs out, we will switch this into most likely high-value products like ready-to-fill vials. And such, we have built the lines in a way that we can either use them today or easily upgrade them to high-value products, and that's the right strategy. For the COVID vials, we are shipping constantly to our customers serving the markets. We have, in the first half of the year, sold probably a bit more than 300 million units, and you can, in principle, proceed with this along the year 2021. This means also for the second half in the similar ballpark. We have actually received, you're right, demands in -- quite some sizable demands for '23 for COVID vials, which indicates to me that the -- but also our key customers do not see that the whole thing is over. But we are happy to serve this market. It's a good business. But as I said before, we should not forget that the key driver of the growth not comes from the COVID vials, but also from other areas. You also spoke about the price pressure. It's something we get a reasonable price for the COVID vials. We are not using the situation to get especially high prices because I don't think that would be fair and it would not be appreciated by our customers. But it's a reasonably normal price level that we are receiving for these products. The bigger value you have with the COVID vials is significantly improved access to the customers. We have really significantly upgraded the performance of Gerresheimer in the last -- that it be 18 months, during the COVID pandemic because we have different access to the top players, of the customers where you -- and in these meetings are not only talking COVID vials, but especially also the full portfolio, and that has really boosted the things that we anyhow planned without -- within this strategy. The cosmetic business, I could answer very short, yes, to your question because, yes, we are seeing cosmetic steadily coming back with the headwinds we received last year. We're now seeing, of course, positive impacts and it's coming back, the cosmetic business. And as I, in an earlier call, indicated, we are in principle from our market position today stronger than we were before. We have upgraded some of our facilities, a strong sustainability strategy, increased capacities in decoration that really puts us in a different position. And cosmetic is something we will probably see quite some positive news, not only in the second half but also in the next years from now.

[Carolin Nadilo, Corporate Director of Investor Relations]

Then we have Daniel Wendorff from Commerzbank.

[Daniel Wendorff, Team Head of Healthcare & Chemicals]

Three, if I may. First one is, can you talk about how the Centor business performed in Q2? My second question would be basically a clarification question on the time lines for your different input costs over what time you can pass them on to customers? I think there were differences between the different input costs. Can you clarify this? And then last question refers to the support program by the German government for building up corona vaccine manufacturing capacity, including required products such as vials. And has this come into effect yet? Have you applied for grants here? How is this adding to your P&L, if at all and when?

[Bernd Metzner, CFO & Member of the Management Board]

Maybe -- Daniel, thanks for the further question. Just to take on your first -- or your second question regarding the import costs, how we are managing this towards our customers. We actually have two topics: one is raw material, the other is energy. And regarding raw material, more or less, you are able significantly to translate this immediately based on contractual agreements to the customers. This is one piece. Then you have the other area, this is the energy and especially if you have input cost increases in the energy, also here it's a temporary effect. But last -- especially in the area of molded glass, it lasts actually 6 months until you really can pass this on to the customers. It's basically -- this is basically the key concept. So in the end, you have maybe a onetime effect, but not lasting. And I think this is the key message. Other regarding Centor. Bottom line is in line with previous year. You see, however, some sales increases because of the topic just mentioned. Resin price goes up, you're passing a significant chunk to our customers, and this basically also increased the sales and as mentioned by Dietmar before, 1 to 1.5 percentage points overall for the company where we can basically attribute to this kind of effect.

[Dietmar Siemssen]

I can take the third one, the support program of the government. The point is there is -- there will obviously be a support program coming from the government. If there is a program, we will definitely apply for it and go for it, and this is, in principle, status I can give to you.

[Daniel Wendorff, Team Head of Healthcare & Chemicals]

Okay. So there has not been any decision taken basically here?

[Dietmar Siemssen]

No.

[Carolin Nadilo, Corporate Director of Investor Relations]

Then we have a follow-up from Veronika Dubajova from Goldman Sachs.

[Veronika Dubajova, Equity Analyst]

Just sort of a big picture question and to slightly challenge you. Obviously, you've seen some nice benefits from pricing this quarter that were a bit unexpected. And I think the growth rate is good, but if we strip out that pricing benefit, it doesn't seem to have accelerated meaningfully versus last year. So I guess kind of bigger question, what is not going to plan? And how confident are you still when you think about not just the second half of the year, but as I'm thinking about '22 and '23, where you do have this high single-digit growth ambition? Stripping out the pricing benefit from the first half, you're still only at about 4% to 5%. It seems quite a big acceleration you'd have to deliver as you move into the next 12 to 18 months. So just to challenge you a little bit on that, if you can help us understand? And I guess along those lines, kind of what the path looks like to get to that high single-digit growth rate?

[Dietmar Siemssen]

Yes. Thank you for the challenge, but I'm cool here. This challenge is easy to answer. In the first quarter, actually, we didn't see any price increases because here, we didn't see them. It was in the second quarter. And the 7.5% we showed, if you take this 1%, 1.5% price increase off, you're still at a solid level of 6%. So I don't think that there's anything that goes wrong. We are very well underway. We have planned a stronger second half this year from the very beginning because we knew about the additional and new launches in the second half of the year, and that gives me a relatively solid confidence into the growth guidance that we gave for this year.

[Carolin Nadilo, Corporate Director of Investor Relations]

Are there any further questions? As this is not the case, we would like to say thank you for joining us today. All the best. Stay healthy. Goodbye.