Gerresheimer AG
XETRA:GXI
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
70.15
110.3
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Gerresheimer AG
You don't have any saved screeners yet
Hi, everybody. It's me again. Nice to have you on this call today as we release our Q2 numbers. With me today here in Dusseldorf are, as usual, our CEO, Dietmar Siemssen; as well as our CFO, Dr. Bernd Metzner.
As usual, we are presenting a set of slides accompanying the management's notes followed by our Q&A session. Please note this call is being webcast live and will be filed on our website, too. And 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 conference call.
And now it's my pleasure to turn the call over to Dietmar. Dietmar, please go ahead.
Yes. Thank you, Carolin. Welcome everybody, also, from my side, and thank you for joining us this morning. Yes, as you heard, Bernd Metzner, our CFO, and I will now run you through the highlights of our second quarter '23. As always, we will then be happy to take your questions.
Yes, Q2 was another demonstration of our ability to deliver against our targets. Another strong quarter in the series of good and continuously improved results we presented in the last few years. We achieved double-digit growth in both revenues and adjusted EBITDA in the second quarter.
Our revenue expanded by 12.8%, our adjusted EBITDA even further by 21.8%, a clear indication that we are continuously strengthening our profitability. All growth projects are on track and being implemented according to plan. Our order book is filled with attractive orders, which will drive our growth in the future.
Second quarter also underlines our full year guidance, which we hereby confirm. The gross proceeds of EUR 272 million of our 10% capital increase in April, by the way, the first capital increase since 2007, give us the leeway and flexibility to seize market opportunities for additional growth in the coming years. The fact that the capital increase was several times oversubscribed underscores that our investors support our long-term strategy.
Thank you very much for the trust you have placed in us. We will continue to deliver on our promises. Since the beginning of 2023, opportunities for further growth have opened up on the market, and we intend to use them to the full extent. We are able to seize these opportunities and win new contracts. Of course, we transformed Gerresheimer. Our focus on excellence, innovation and leadership in every aspect of our business is paying off.
We clearly improved our competitiveness, opened access to new customers and businesses. There is a particular window of opportunity for winning a highly attractive long-term contracts with regard to certain biologics, including GLP-1s and other large molecule applications.
And we are very pleased that these opportunities are now becoming more concrete as so soon after the mentioned capital increase. We will allocate the proceeds of the capital increase first and foremost to strengthen our unique portfolio of high-value solutions for biologics, and cell and gene therapies.
The importance of biologics in the pharma market is constantly growing. According to the German association of research-based pharmaceutical companies, VFA, 59% of new drugs authorized in Germany in 2022 were biologics.
The later also accounted for 50% of FDA authorizations in the U.S. market in the past year. We currently estimate that we will use roughly 2/3 of the proceeds of the capital increase for GLP-1-related growth projects. This includes, for example, capacity expansions for syringe systems, auto-injectors and pens.
1/3 will be used for expanding capacities and refining our solution portfolio for future biologic and cell and gene therapy applications. That includes drug delivery systems and containment solutions tailored to the specific requirements of protecting and administrating such highly sensitive drugs.
Our growth investment will also be a key driver for our margin expansion, shifting our product mix toward a higher share of high-value solutions and especially solutions for biologics will boost our profitable growth in the years ahead. These solutions have substantial added value for our customers and a far superior margin profile. This means that our growth is increasingly focused on more profitable business segments.
Our global footprint is a prerequisite for serving our existing and also our new customers worldwide. This slide provides an overview of the facilities we have around the world to address market opportunities, especially in large molecule applications. And there are a number of capacity expansions already ongoing.
For example, in Peachtree and Morganton in the U.S. for pens, auto-injection devices or high-value containment glass solutions. We also expand our capacities in Queretaro, Mexico; Skopje, North Macedonia; Horsovsky Tyn, Czech Republic; or Bunde and Pfreimd in Germany. Focus here are primarily syringes, pens and auto-injectors.
Our growth projects are on track, and you will see their impact on our P&L statement in the years to come. The rollout of our Formula G strategy transformed Gerresheimer. We are no longer a sole provider of high-volume commodity products. We have systematically expanded our portfolio to become a provider of high-quality and high-value systems and solutions.
Today, we are the strategic partner of choice for the global pharma and biotech industry. Our broad portfolio of products and solutions and our innovations ensure that the drug reaches the patient safely and they support safe and painless administration.
From bottles for syrups, or vials for vaccines, dropper bottles, tablet containers, ampoules, cartridges, syringes, pens, auto-injectors and inhalers, through the complex medical devices and system solutions such as medication pumps. Going forward, we will further expand our digital solutions that support and optimize treatment.
For example, with regard to adherence and patient monitoring. Our portfolio and our innovations improve the quality of life and health of millions and millions of patients out there. This has put us in a superb position to exploit the chances that will come our way.
Our broad product portfolio means we are capable of optimally responding to trends in the pharma and biotech markets because we provide the right systems, solutions and services. Biologics and in particular, the new GLP-1 applications offer very attractive growth potential. But our growth in the years to come will not depend on 1 single application or trend.
Thank you very much. And with this, I will hand over to our CFO, Bernd Metzner, for a deep dive into the detailed figures of the second quarter. Bernd, it's 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 of 2023. Once again, we showed a strong quarter with continued double-digit organic growth in both revenues and earnings.
As you can see, we are firmly on track with delivering on our margin expansion and EPS growth plans. Reported revenues increased from EUR 445 million in Q2 2022 by 12.4% to EUR 500 million in Q2 2023. We had an FX headwind of around EUR 2 million, mainly resulting from a stronger U.S. dollar.
The organic revenue increase amounted to 12.8%. FX adjusted EBITDA increased from EUR 90 million to EUR 109 million in Q2 2023, representing an organic growth rate of 21.8%. Adjusted EPS increased organically from EUR 1.34 by 3.7% to EUR 1.39. This increase considers already the dilutive effect of the pro rata recognition of additional shares after the capital increase in April this year.
Let's continue with a deep dive into the divisions. For Plastics & Devices reported revenues in Q2 2023 grew from EUR 228 million by [ 16.4% ] to EUR 265 million. There was an FX benefit of around EUR 1 million. Hence, the organic revenue increase amounted to 16.7%.
In Q2 2023, all business units in Plastics & Devices contributed to the strong growth. Plastic Containment Solutions benefited from higher customer demand across wide areas of the business, and we saw a particularly strong revenue acceleration in the Medical Device business, reflecting strong demand, especially for pens.
The adjusted EBITDA increased from EUR 53 million in Q2 2022 by 31.7% to EUR 69 million in Q2 '23. Excluding FX effects, we delivered a very strong organic growth of 33.4% and most importantly, the margin has significantly improved by 330 basis points to 26.6% organically.
The bottom line benefited from both product mix effects and economics of scale. Looking into the second half of 2023, we would like to remind you on the pass-through effects of resin prices, which are not part, as you know, of our guidance. As you also know, we regularly pass through changes in resin prices to our customers with a certain delay in both directions.
If resin prices continue to decline over the next 2 quarters, we will see the impact on the top line, but without any net impact on the bottom line. A continued decline of resin prices would therefore be beneficial for our margin.
Now to Primary Packaging Glass division. This division showed another strong quarter in terms of both organic growth and margin expansion. Reported revenues increased from EUR 216 million by 8.6% to EUR 234 million. There was an FX headwind of around EUR 1 million, translating into an organic revenue growth rate of 9.2%. So another strong quarter even with lower COVID-19-related revenue contribution.
Demand for RTF and the Elite vials remains high. The underlying market continues to grow. We have increased our capacity for Elite Glass vials in particular and are confident of benefiting from the global trend towards higher quality vials.
On an as-reported basis for the adjusted EBITDA increased from EUR 43 million to EUR 49 million in Q2 2023. Excluding the FX headwind, we achieved an organic growth rate of 18.5%. Our sustainable here-to-stay price increases are taking hold.
Advanced Technologies performed according to plan. This EUR 2 million in Q2 2023 as reported revenues are on par with the previous year's level and adjusted EBITDA was minus EUR 3 million. We maintained our sharp focus in R&D in this division.
Advanced Technology, we continue to strive to establish Gerresheimer as an innovative original equipment manufacturer for smart and connected devices in the health care industry. The project for the development of a micro pump for the treatment of chronic heart failure disease is running according schedule, and we are working closely with new customers on further innovative projects.
This slide shows the reconciliation from EBITDA to adjusted EPS. Worth highlighting the organic adjusted EPS growth of 3.7% despite the increase in the share count in conjunction with the capital raise in April 2023. Besides the strong adjusted EBITDA contribution of EUR 107 million, I would like to highlight 4 items.
First, earnings quality is very strong. No material adjustment exceptional to arrive to EUR 107 million adjusted EBITDA. Second, part of the adjusted depreciation and amortization is a non-recurring write-off in our machinery portfolio of EUR 3 million, which won't repeat going forward.
Third, as expected, the financial result was impacted by higher interest rates on the back of the Euribor increase. Fourth and last, but not least, one note on the calculation of adjusted EPS in light of the capital increase of [ 3.14 ] million new shares on April 19, 2023. In line with standard practice, we calculated the number of shares on a day-by-day basis to reflect the capital raise.
So for Q2 2023, the adjusted EPS attributed to the shareholders of Gerresheimer AG is based on 32.8 million shares in the average instead of 31.4 million shares.
Let's turn now to cash flow and net financial debt. The free cash flow of minus EUR 40 million was EUR 5 million better than in the prior year quarter despite significantly higher CapEx spend and a higher net interest as well as additional non-recurring tax payments.
A reminder to help you understand the movements in our net working capital. Typically, for a seasonal business like ours, we strongly increased net working capital in the first half of the year. In Q2, we grew net working capital by EUR 21 million. The 2 drivers we mentioned quarter-on-quarter. First, business growth of around 10% quarter-on-quarter led to additional receivables. Second, and not underestimated, lower prices for energy reduces payables correspondingly.
As usual, in our business, we forecast a significant reduction in net working capital for the second half of the year, which could even result in an overall capital release for working capital on a full year basis. In Q2, our net CapEx increased by EUR 29 million to EUR 75 million as we continue to invest in global injectables capacity and further ramp up contract manufacturing projects, including several projects related to GLP-1.
Net financial debt decreased as we temporarily used the funds from the capital increase to reduce drawings on our revolving credit facilities. So adjusted EBITDA leverage came down to 2.4x in Q2 2023. Looking at the full year, we expect a strong cash performance in the second half of the year as usual.
Generally, our free cash flow performance strongly influenced by the execution of our investment program and profitable growth. We will rigorously execute on our ongoing projects and expect to win new attractive businesses in light in highly attractive niches, such as GLP-1 and biologics. With this, I hand back to Dietmar.
Dietmar?
Yes. Thank you, Bernd. As you heard it, a pretty strong second quarter, a pretty strong first half year. And based on the strong performance of the first 6 months, we reaffirm our full year guidance with a double-digit growth in revenues and adjusted EBITDA of at least 10%.
We also confirm our earnings per share guidance, which already reflected rising interest rates. It's worth pointing out that after the capital increase, we now have a higher number of shares, you heard this. So the calculation base for our earnings per share guidance has changed since we first announced, but we are still able to confirm it.
Our midterm outlook remains strong and positive as well, with organic revenue growth of at least 10% and adjusted EBITDA margins of 23% to 25%, resulting in organic growth in adjusted earnings per share logic wise of at least 10%. I'm wrapping up with a view on the second half of 2023.
We are well on track to deliver on our guidance. You probably know by now that our forecast reliability is high. We can also expect our adjusted EBITDA margin to improve in comparison to the previous year. We are very well positioned in the market with our broad solution portfolio, with our extensive know-how and experience. So we are all set and ready to exploit our competitive advantage and win new biologic orders, including new additional GLP-1 orders.
With this, thank you so much. We are happy to take your questions.
Yes. Dear all -- thank you for the presentations. [Operator Instructions] And the first question comes from Oliver Reinberg from Kepler Cheuvreux.
Three, if I may. The first, I was wondering if you can provide some more color on the GLP-1 potential? I mean a couple of questions here. First, can you share any kind of insights or estimates what you believe is the outsourcing share of the need here for syringes, auto-injectors and pens in the overall industry?
And do you have any kind of guesstimate what your kind of market share is in the outsourced part for GLP-1? And finally, probably just an update in terms of where you stand with potential new contracts in that kind of space.
Second question, just on High Value Solutions. My understanding is that growth has been rather a bit flattish here in the first half. I guess this may be related to certain changes in the production in terms of relocating capacities to higher-margin areas. But can you just provide any kind of color how you expect High Value solutions growth to continue going forward?
And the third and last question, just on inflation. I think in the Q4 call, you talked about there will be minor support from here to stay inflation. Now we're probably still having around 5% in the first half. So can you provide some kind of color? Is there anything more to come in the second half? And in the light of the fading gas prices, any kind of chance or risk that some of is kind of here to stay, price increases may go the other direction?
Yes, I think I'll take the first and the second question. The inflation topic about the -- maybe it's bad. Yes. I hope I can help you a bit on the GLP-1. Fact is that we are winning all kinds of platforms and businesses around the GLP-1 that, by the way, is not only driven in auto-injectors, syringes and pens, but also in solid. So there is growth in all aspects of the business. The market shares are difficult to judge.
There's no doubt in both auto-injectors and pens, we're actually taking a solid share without me being able to really give a market share in the early phase. We have to see who the real winners will be in the market. We benefit from both because we actually serve in all key suppliers.
In solid, that's easier because we will definitely take the biggest share in the market, definitely. But we are growing in all the world, in pens, auto-injectors, syringes strongly and this business are extremely attractive. There's no doubt about this.
The question was where do you stand in winning new contracts? We are very well underway. We've been able to win new contracts, as you know, we disclosed this with the beginning of the year, but we are now also far developed in additional projects, that's what we indicated with the capital increase, and it's very good to see that so short after the capital increase, we are close to winning these very important platforms.
The second question was around high-value solutions here. I think you should not over interpret individual quarter. We are very well underway with all the high-value products, you might see a little bit weakness in the first, second quarter. That is not related to real sales. It's really a switch in the production for high-value syringes, especially that we are switching and reduce the capacity in a certain way, you will definitely see this coming back very strongly in the second quarter -- in the second half year of this year. So I think we are very well on the way with the high-value products. It's nothing to worry.
Yes. Oliver, then I would take your third question regarding the inflation. Just to start with, what we have seen in the last 2 years now is that we have a very strong market position, and we are really able to pushing through the inflation to our customers. This is something what we have experienced. And in a certain way, once a while, we have also phasing effects, [ clearly ].
For example, when you look at 2022, we have seen in our P&L, the inflation of around 8%, 9% actually inflation, and we were able to pass it on to the customers in a certain way, certain catch-up effects we have seen from these price increases than in the first half of this year, obviously.
And this inflation is continuing, not on this level, obviously, but you have still a mid-single-digit inflation rate. And therefore, there's no reason why we should adjust our prices south given this environment where we are in.
Next question comes from Chris Gretler from Crédit Suisse. Chris, if you are already talking we cannot hear you.
Can you hear me? Hello?
Yes. Hello. Now we can hear you.
Okay. Very good. I have a few questions. First, on the resin price impact. Did this already impact margin in Q2? And if so, by what magnitude, would be the first question?
Okay, we answer them step by step, easy -- that's an easy question. That we see the resin prices going down a bit. You don't see this yet in the -- in the first quarters because there was no impact. We have to see how this works out in the second half, then there might be an impact here, especially in the areas where we have indexed based and the contracts. But this is like Bernd said, it's relatively neutral for us in the EBITDA. It's a normal procedure in the business.
Okay. Good. And then I just wanted to come back to the RTF syringe business. I think you mentioned on your Q1 call that there was a bit of phasing effect that should have profited or benefited in Q2. I understand this has not yet been the case. So that business has continued to be slow and now we should expect this kind of uplift to take place in Q2. Is this correct understanding?
Yes, there's no doubt. It's true. We are not completely [ read ] with all the changes in the operations, but we actually switched a couple of especially glass-forming machines for the syringes and you will definitely see in the second quarter a strong ramp-up of high-value syringes here.
Second half, I guess. And then maybe in the past, you were so kind to provide us with GLP-1 related sales. Could you maybe do that again for the quarter? And if possible, kind of is there an opportunity to do this for contract manufacturing and high-value solution kind of specifically if that's not too much ask?
Yes. And this -- Bernd might talk about this in this second half, it's not real big value because the GLP-1 story is to come in '24, '25 and the following years. But we still do some sales special in the second quarter -- yes.
But will remind in the end for the total year, we would expect, and this is obviously higher towards the second half of the year, That's around EUR 20 million, EUR 25 million, we would make GLP-1 related revenues. And that's basically the thing. What we always provide is [indiscernible] We don't guide for the specific product line items going forward.
But obviously,[indiscernible] we can always analyze and -- to go through. That's basically our policy because otherwise, we get totally -- we have [ the other KPIs ] out in the market that we were really reluctant on this.
Yes, We should always not forget that a lot of the growth that we see now but also in the next years, we really appreciate the GLP-1 opportunities with this great business. But the growth that we see at the moment comes from various other large molecule applications that we benefit from. And it's -- I appreciate this because it's good to have the GLP-1 story, but it's also good to see that the growth is not depending on 1 story alone.
Yes. Okay. And maybe the last question, just on your own auto-injector development. I think you mentioned on the slide that the design is done and it's ready for customer projects. Did you already sign some leads on that?
That's -- the question is good, but I'm really discrete here because it's a bit too early to talk about this. We are careful. But yes, you are right. It's a great auto-injector, and we have very interesting discussion with various customers.
Okay. So we stay tuned.
Sorry for the little bit political answer, but here, I can't go into the details.
I can understand. I was just trying not to see.
Well done.
Our next question comes from Falko Friedrichs from Deutsche Bank.
I will take them 1 by 1 as well, if that's okay. My first question is at the beginning of the year, you mentioned that you are expecting double-digit organic sales growth plus margin expansion in every quarter this year. Is this statement still valid for Q3 and Q4 of this year?
Falko just to reconfirm what we have said. So ultimately, what we said [ we want to grow ] double-digit sales and EBITDA and increase our margins. And what we see is that also profitable growth will continue in the second half of the year, absolutely.
And is there any significant phasing between Q3 and Q4? Or could both quarters be in the double-digit territory?
Both quarters can be in the double-digit territory. That's also quite clear, but we don't provide guidance now for specific quarters, as usual, as you know, Falko. But again, we are continuing our profitable growth path, and we're confirming our guidance for the full year.
Okay. Great. My second question is many other industries are seeing destocking this year. Do you expect any more meaningful destocking for your business over the next few quarters?
Actually, we saw a certain destocking effects actually in the first quarter. But already in the second quarter, I think we are pretty on a normal business -- back on the normal business.
Okay. So there's no...
You probably don't saw, you didn't see this in the figures, Falko, but we saw it in certain areas, but other businesses are really running very strongly, and that's clearly over [indiscernible]
Okay. So there is no major destocking expected in the second half now?
Yes.
Okay. Great. My last question is on the GLP-1s. You said in your prepared remarks that roughly 2/3 of the raised money should be used for these GLP-1 projects. That equates an amount of around EUR 180 million roundabout of additional investments for GLP-1s. And that is relatively similar to the EUR 150 million you are currently investing.
So is it fair for us to assume that this should then double your sales potential of currently EUR 200 million to EUR 300 million per year with GLP-1s going forward?
Yes. It's a bit early because, of course, these are estimates, but that's definitely the platforms we are discussing. I think we can only go into detail when we really have signed the contracts with the customers. But your rough calculation, I would not say that it's wrong.
All right, then we have Oliver Metzger from ODDO BHF.
The first one is on your EBITDA guidance, which you have reiterated. So despite with, I'd say, very positive [ 23% ] organic growth in H1, you still choose to keep it more as a floor. In April, you talked about an update to the guidance we should expect in July on EPS level, you do it basically indirectly via the new number of shares. And similarly, I hear you saying, okay, you are quite confident for the second half.
So I really wanted to understand why haven't you chosen to not to increase the guidance to say to level -- so at least mid-teens. So is it more really a safety cushion view perspective you have chosen or why are you so confident? It means even from a different perspective, I get questions, what's going on in the second half? So that's be great to understand more of your augmentation.
The second question is about the remaining 1/3 of a capital increase proceeds, which you want to use for future biologics and cell gene therapies. So is it correct to assume that this will also, let's say, for the next 12, 18 months reduce debt, and we will see some investments afterwards or what can you comment on the phasing? And my last question is on Plastics & Devices. Can you comment on the magnitude of a [ syringe phasing effect ], where would plastic devices growth have been without this effect?
Can you repeat the third question, Oliver, because we didn't get this.
Sorry, in plastic and devices. I think there was still an effect from the [ syringe phasing effect ]. So can you comment where the growth of plastic devices would have been without this effect?
Let's complete the last one, third one is complicated. I give it to Bernd. So let me come to the first one. Yes, when you look at how we started in 2019 to transform our Gerresheimer. It was a time where we went -- we were happy to do low single digit. And now I love the questions coming from my investors that tell me if you guide 10%-plus in sales and more than 10%-plus then in EBITDA growth, that's extremely conservative.
I would say we've achieved a lot for the company. We have a very first half year that was pretty strong. We are continuously guiding double-digit growth, both top and bottom line, and everyone that is doing the math can see that the bottom line will grow stronger than the top line.
I think we are well, well underway. The order books are filling nicely, and it's also time that the reputation of the company moves in the direction that we over deliver. That's why we decided to keep the guidance that is, from my point of view, still strong, and it is strong. I don't know whether you want to comment on it.
No, nothing all said, is clear.
Then the next question to the 1/3 of investments. I have to repeat this. We are in intense discussions with the customers, especially after the capital increase for further opportunities to grow. We have not signed all the contracts. That's why this 2/3, 1/3 is a rough guideline. But it's important to understand that we are not just growing on GLP-1 opportunities. But broad portfolio of opportunities, especially in high-value and large molecules, and that's definitely something we are discussing.
And this 1/3 is definitely at least the investments that we will bring in large molecule applications outside of the GLP-1. I think this is very good. It's all pretty strong and profitable business, and that is very helpful because it will positively impact the margin profile of the company in the future.
Topic with the debts here, is a topic -- it's a question of when do we redesign the orders and when we do the investments, what does it take? And it's too early to talk about this at the moment.
Exactly, I think ultimately, 12 to 24 months, we will deploy our CapEx investments for [ according to you can plan ] for this in your cash flow statement actually or your [ plans there ]. Maybe I take up your, Oliver, your third question regarding P&D syringes, what would have been if we would have had a normal syringe Q2? And in the end, just to come a little bit back to also what Chris said on the -- what the Dietmar answered regarding syringes.
It's really like this that Q2 was relatively weak. It now gets better regarding syringes and the best is yet to come. This was actually a summary for the syringe business as we see it. And if we would have had a normal quarter, I think the growth rate would have been not and look at it, yes, showing 7%, but it would be maybe 1, 2 percentage points better than what we have seen today. And what we have seen today is 16.7% organic growth.
Okay. Great. One very quick follow-up. So basically, if you say your investments will be in the next 12 to 24 months. Can you give us a more precise view for financial expenses or on the other hand, financial income for H2, so should we expect a considerable amount of interest income for the next 6 months?
The thing is not that we will generate financial income, actually, we will reduce our financial expenses, we don't invest our -- as we don't have here, a treasury, which is now trying to [indiscernible] funds or so. We are reducing our debt, what we have, and we are reducing actually an interest rate or interest payments of around 4, 5 percentage points, and this is how we are using the funds, actually to reduce our financial gross debt.
Next question comes from Alexander Galitsa from Hauck Aufhäuser.
Yes, I have a couple of questions. First one is on the Plastics & Devices Q2 margin. You've shown a typically strong margin in this division. Yet, I see that the gross margin for the group has not really changed much. So I understand that there is some effect stemming from the contract manufacturing for GLPs. Could you just provide any color as to how much this contributed? Do you expect it to reoccur? Just to get an idea of how we should put this strong margin in Q2 in what context that would be helpful.
Maybe Alex, just to start regarding the contribution margin. Thanks for this question. And it's always worth and good looking at it. In the end of the day, what you -- our gross margin, if you really see it [ lean ] was actually improving. What you don't see immediately is that we have around this depreciation when I talked about the EUR 3 million depreciation what we had is not recurring.
If you take this out, then you would have seen also in the second quarter a certain increase as far as our gross margin was concerned in the second quarter. And the another topic regarding the margin for Q2 regarding P&D Obviously, it was really in a certain way, a product mix effect, what we have there.
And this is actually also contributing to our profitable growth in this area. Dietmar mentioned this before that in the end, we are always looking at GLP-1 and so on. But ultimately, ultimately, the core or containment -- plastic containers are really running very good and very strong and very profitable. This is once a while overlooked, but precisely in the second quarter, we can make a clear exclamation mark to say that it's worthwhile looking at our normal container business because it's very strong.
I wanted to add this, what you see in all business is Plastic & Devices, but it's also in the other areas of the business you see, which is clear core of the strategy of Gerresheimer, improving the product mix and with the more product mix into more and more high-value products, you actually see a better EBITDA, surprise, surprise.
You see this all over the businesses, and that's the effect that you actually see. And it's not a sole, how we are winning GLP-1 and they are profitable. It's actually throughout the whole business, where you have an increased amount of higher-value products and it's valid for all business segments and even regions and that's what we benefit from today, but especially also in the years to come.
Okay. May I just slip in another question?
Sure.
So another question is on the GLPs in particular that we know that major companies that currently have injectable versions. They're also looking into -- some of them are very close already to submitting the solid form, the oral application of this drug. I was just wondering, given that this is a significant part of your CapEx program as of today, which will take sometime over the next 2 years to really be established in those investments. How do you think of this solid version introduction? How does it implicate your investment case for GLPs injectables?
Can you potentially redirect capacities later down the road to other products if the demand in injectables will fail maybe to materialize to the extent that is planned right now? How do you see this risk, so to speak?
Actually, I don't see this as a risk. It's now new in the media. The oral application for a [ depositor ] of obesity. But it was always a part of the calculations of our customers. The volumes for both injectables and solids are based on these calculations. And we actually love solid solutions because we will be more or less sole or main supplier to all the solid applications. That's one of the things that we are actually ramping up in our facility in Berlin, Ohio.
And I see this relatively independent from the injectable applications that are for different cases. We are -- we have well secured contracts with our customers, and that is actually protecting also the CapEx that we are putting into the various application solutions, whether it's pens, auto-injectors and syringes. And to your later question, if there would be a theoretical hypothetical risk on one or other volume, yes, we would be able to switch.
That makes sense. And just 1 follow-up on the solid GLPs. In terms of the, I guess, attractiveness of the business, if you compare injectables and the oral versions, would you say 1 is more attractive, the injectables in terms of value for Gerresheimer or is it really similar?
Yes, you have to go into detail of these applications, yes. The solid treatment will be a slightly different 1 than the injectable treatment, different patients, different time of the disease development, both have their need and necessity. There's no doubt the liquid applications are for us, connected with higher sales, and that's why they are more attractive. It's no doubt, if you sell a solid pillbox, the sales is less than an auto-injector or a syringe.
All right. And then we have David Adlington from JPMorgan in the line.
Apologies, I did drop at the line. So apologies if this is repeated at all, but maybe you could just pull out what pricing contributed to the growth in the quarter, real pricing and pass-through pricing? And then just in terms of the COVID impact in terms of the headwind you faced in the second quarter, I just wondered what the PPG revenue growth would have been without that headwind.
Yes. Thanks, David, for the question. We were waiting for that -- we had, as you know, an organic growth of 12.8% and almost 2/3, you can say, was basically driven by volume/mix and the rest was here to stay, as we said, price increase main basically. And regarding the COVID impact, so we -- as you know, we were never real [ with winner ]. And so therefore, we never had a significant turnover here if you look at the total business of our company.
So therefore, we have maybe a lower double -- very double-digit million euro amount as COVID-19 sales in the second quarter, but very low double-digit million euro amount.
Now we have Victoria Lambert from Berenberg in the line. Victoria, I hope you can hear us, please ask your questions.
Just 1 for you, please. Outside of GLP-1, could we get a better understanding of the growth opportunity for injectable? Is this linked to certain therapeutic areas? What about your exposure to biosimilars such as HUMIRA in the U.S., which is seeing a big ramp up from biosimilars this year?
Yes, thank you for this question. And that's a definitely question I like and I appreciate because we are focusing too much on the GLP-1 because it's a very important area for us to grow, but you have to see the total growth of Gerresheimer is much broader than only 1 large molecule application here for the GLP-1.
We actually are strongly growing in various applications in large molecule, especially also in the U.S., and that is actually for bios, but also for biosimilars. We have the full portfolio. We have the right solutions. So whenever you hear us talk about high-value solutions like ready-to-use vials, Elite vials, the syringe solutions, the pumps. Here, we have the right solutions, and we've been able to win not only new platforms, but especially also new customers over the loop of the last 24 months, very successful, and we're further working on that.
So when we spoke about this capital money from the capital increase and we speak about that 1/3 of this CapEx might be used for these applications. That's exactly the businesses we are talking about.
All right. Then we have a follow-up question of Falko Friedrichs from Deutsche Bank.
The first one is, can you potentially share the percent of your contracts that are indexed to these raw material price movements, both in glass and plastics? And then secondly, sorry to go back to the GLP-1s. But could you share which specific products you would supply for the oral GLP-1 version?
Yes. The contract links to index, I can't even tell you. It's in some of the areas, prescription drug containers, maybe it's roughly 50%. But it's not key relevant whether they are index-binded or not in the contracts because that's the ones that are not. It's a different business in the plastic packaging area. You usually where it's not -- you still adjust the prices either monthly or 3 monthly base than on individual negotiations. That's what we shown since years.
It's -- that's what I meant with normal business. And the second question was regarding the solid containers for GLP-1, I think it's an attractive business. It's growing the share. I didn't totally get the question.
So just in terms...
Falko, can you repeat the question?
Yes, yes, sure. So just in terms of sort of which specific products would you supply? Is it standard packaging containers? Or would this be sort of a more higher valued solution?
So these are classic containers, plastic packaging containers. They're all not the same because they have different dimensions, forms and so on, but they are various solutions. This business is attractive for us because our plastic packaging exposure in the U.S. historically has not been very strong, and we've ramped up the new facility 3 years ago with first orders. And now with this GLP-1 application, actually, this new facility is steadily filling, which is very helpful.
Are there any further questions? If this is not the case, we would like to thank you for joining us today. All the best. Was a pleasure working with you. Take care. Goodbye.
Thank you so much.
Thank you. Bye-bye.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining. Have a pleasant day. Goodbye.