Profit suffers from weak demand for packaging company Gerresheimer

By Katie Bird

- Last updated on GMT

Related tags Revenue

Packaging company Gerresheimer’s bottom line has suffered from a drop in revenue of nearly 10 per cent, but the company maintains the worst is over.

The Germany-based company supplies both the pharmaceutical and the cosmetics industry with plastic and glass packaging, with the latter making up about 10 per cent of the company’s sales.

Sales for the third quarter came in at €242.6m compared to €268.0m in the corresponding quarter last year. Excluding the technical plastics division which was sold earlier in the summer, this amounts to a drop in sales of 5.3 per cent.

Net income for the third quarter, again adjusted for one-off events including the sales of the technical plastics division, was down just over 50 per cent standing a €7.9m compared to last year's €16.5m.

Although the company said the long term trend in the pharmaceuticals side of the business was positive, it did concede that some companies are continuing to reduce their inventories, which is affecting sales.

However, the cosmetics side suffered significantly with sales falling ‘substantially’ because of weak demand, which was expected, according to the company.

Turning point has been passed

Nevertheless, Gerresheimer believes the turning point has been reached and it has a more positive outlook for the future.

The company believes that rising demand and falling inventories will lead to slight growth in the pharmaceutical segment’s fourth quarter, as well as predicting a slight improvement in demand on the cosmetics side.

For the full financial year, ending November 30 2009, Gerresheimer predicts a sales decline of between 1.5 and 2.5 per cent and an operating margin of 18.5 per cent.

According to CEO Dr Axel Herberg, it is the pharmaceutical side of the business that is helping protect the business.

“Thanks to our pharma orientation and very early capacity adjustments and cost reduction measures, our business is stable. We see indications that the turning point has already been passed in the third quarter,”​ he said.

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