President Corporate Investor Relations at Gerresheimer AG. Please go ahead, sir.
Thank you, Operator. Let me quickly introduce myself, as this is my first earnings call with Gerresheimer since I recently joined the company in January. I personally started my career in investor relations in the late '90s. In 2007, I joined Aixtron, a supplier to the semiconductor industry. After 67 quarterly earnings calls there, I'm very happy having recently become a member of the Gerresheimer family, expanding that number even further with number 68 today. I'm looking forward to meeting many of you in due course. With that, I hand over to our Chief Executive Officer, Dietmar Siemssen, to run you through the highlights of the quarter and full year 2023 together with our Chief Financial Officer, Dr. Bernd Metzner. Dietmar?
Yeah, thank you, Guido, and welcome, everybody. Thank you for joining us this morning. Bernd Metzner, our Chief Financial Officer , and I will now run you through the highlights of the fourth quarter and, of course, the full year results 2023. As always, we will be then happy to take your questions. Implementing our strategy process, Formula G, has proved to be a success story. Gerresheimer has successfully been transformed to an innovative system and solution provider and the strategic partner of choice for the global pharma and biotech industry. We are a key partner of our customers. Our products are essential for an effective drug therapy and positive results. With our containment solutions, we bring the drug safely protected to the patient. Our drug delivery systems enable the drug to be safely administered.
With our connected devices and digital solutions for therapy support, we help to improve the health outcome for patients worldwide. What you see on this slide is a very important aspect of what makes us so strong: a broad, comprehensive portfolio from standard products and systems to highly sophisticated, customized solutions. This allows us to perfectly address our customers' needs and thus benefit from global megatrends on the market. 2023 showed impressively results of our growth strategy. Our priorities for 2023 were to accelerate our profitable growth and expand our margins, to consequently execute our excellence programs, further extend the order pipeline, and expand our market-leading position with highly innovative systems. And we checked all of that. With this, we laid the foundation for further profitable growth and long-term value creation. The successful transformation is driving our dynamic growth and our margin expansion.
In 2023, we achieved double-digit growth and expanded our organic Adjusted EBITDA margin by 120 basis points to 20.8%. Strong growth while improving profitability. That is the sweet spot for a growth company. We expanded our systems and solution portfolio for the pharma and biotech industries, adding specialized solutions for biologics in all relevant segments. The market increasingly perceives and appreciates us as the system solution provider we have become. As such, we can now seize market opportunities. It resulted in the highest order intake in our corporate history. The key platforms we have won in 2023 are the foundation for our strong value creation in the future. We also executed our investment program. Clear focus, again, was expanding our global production capacities for medical devices and other high-value solutions. We have made significant progress on our journey to become more sustainable, evident, for example, in improved external ratings.
EcoVadis Gold in 2023 is just one example where we were able to increase our score. This program also becomes evident in new customer orders. We support more and more customers on their sustainability journey, for example, by applying our EcoDesign principles in the development process of customized systems and solutions. How effective the successful implementation of our Formula G strategy process has been becomes clear in principle, just three key figures: 10.4% organic revenue growth, 17.5% organic adjusted EBITDA growth, and 7.1% adjusted earnings per share growth. You must keep in mind that we had a capital increase last year, which we already considered. Based on the strong results, the supervisory board and the management board will propose to the annual general meeting a dividend of EUR 1.25 per share for the fiscal year 2023.
That is a payout ratio of 28%, once again at the upper end of our dividend payout policy range of 20% to 30%. Innovative systems and solutions for biologics are an important growth driver for us. The majority of our new order intake in 2023 has been orders for biologics. This includes systems and solutions for GLP-1-based drugs. The successful execution of our strategy process, Formula G, enabled us to capitalize on these growth opportunities. The strong growth and margin expansion we demonstrated in the last years and our strong order book shows impressively that we are on track to reach also our midterm guidance. We have come a long way from historically flattish development with a compound annual growth rate of around 2% to the profitable growth company we are today with an expected compound annual growth rate of 10%+ in the upcoming years.
2023, compared to 2021, just in the last two years, we were able to increase our top and bottom line by over 30%. We have strengthened our foundation by doing what we call the classic homework. We streamlined our operations and processes, utilized synergies, and implemented group-wide excellence and best practice programs. We carefully selected and executed growth investments with a strong focus on expanding our global production capacities and upgrading our facilities with state-of-the-art technology. We strengthened our R&D activities to further broaden our system and solution offering for our customers. The successful implementation of our Formula G strategy process enables us now to leverage on global megatrends and to accelerate our profitable growth in ways our company was not able to do in the past.
We opened the door to new customers and businesses with our broad portfolio, including systems and solutions for even the most demanding biologics, with our ability to industrialize and scale production globally, one of Gerresheimer's core competencies, with our state-of-the-art production capacities in all relevant markets, and, of course, also with our services, which reduce the risk and shorten the time to market for our customers from regulatory support also to lab services. One important global trend that is very relevant to us is the dominance of biologic formulations in new drug developments. These new drugs, which by nature, in most cases, are injectables, are highly specific for the disease as well as for the individual patient. According to IQVIA, the pharma market overall is growing with a compound annual growth rate until 2028 of just 1.7%.
The market for biologics, however, is expected to have a midterm compound annual growth rate of above 15%. Already today, more than half of the new drug approvals worldwide are biologics. This is a highly attractive market for us. We have to keep in mind that due to the high demands of these often sensitive drugs, systems and solutions for biologics are high-value solutions. Within the biologic segments, there are niches that are expected to have an even stronger growth momentum. For example, the fast-growing market for GLP-1 or applications for cell and gene therapy with an estimated growth of 30%. With our innovative, high-value systems and solutions, we have the right answers to address these markets. We already have customers and new orders in all subsegments, another base for growth in the mid and also long term.
We have a unique value proposition for these customers tailored to the needs of highly demanding biologics drugs. What are these needs? Biologic customers need packaging for these highest requirements. Biologics are sensitive drugs, which need to be protected, for example, against temperature fluctuations, light, vibrations, or pressure, or even adverse chemical reactions resulting from contact with the primary packaging. With a high number of biologic drugs in clinical trials and a trend to personalized medicine, biologic customers often need smaller batch sizes. Biologics are often cost-intense drugs. Therefore, customers have high interest to reduce the risk or, with other words, waste or interruptions in the fill and finish process. Requirements for a packaging solution for biologics are high. As these formulations are often both sensitive and aggressive, the right expertise is needed to support the customer's needs.
The biologics market is a fast-growing market, and time to market is crucial for all players. And finally, sustainability is no longer a nice-to-have topic but becoming mandatory for all players in the market. Customers need to take this into account already in a very early phase. We are the right partner to address all these needs for our unique system solution portfolio and our service offerings. Our high-value solutions for biologics offer superior functionality and drug compatibility. They de-risk the fill and finish process and ensure an efficient line performance. Gerresheimer has an extensive and impressive track record for designing efficient production processes and customizing line equipment as well as scaling up production processes from small batch to mass production globally. We offer our customers technical and engineering services, regulatory support, and lab services, everything they need to shorten their time to market.
Going forward, we also offer connected devices with digital solutions for therapy support. Connected devices with digital therapy support for medication adherence, side effect tracking, and patient monitoring have the potential to improve the health outcome for millions of people worldwide while reducing healthcare costs. You might have seen the announcement of our collaboration with Aptar Digital Health in January. Together, we will develop an integrated solution for cancer therapies. Our on-body drug delivery device, Gx SensAir , for the subcutaneous administration for large molecule biologics will be connected to Aptar's digital health platform, which facilitates therapy support from onboarding to the management of possible adverse effects. Our strong order intake, including orders for medical devices and high-value solutions for biologics, are driving our global expansion. This is an overview of our currently ongoing large-scale expansion projects worldwide. I take a couple of examples.
In Morganton, we are expanding our capacities for ready-to-fill vials. In Peachtree, we are building a new production facility for medical devices, namely here autoinjectors. Together with the already ongoing expansion in Peachtree One, we will more than double our autoinjector capacities by the end of 2025. In Querétaro, Mexico, we are expanding our plant with a new 7,500 square meters production building dedicated to high-quality prefilled glass syringes suitable for injectable biologics such as GLP-1 and others. In Europe, we are expanding our production facility in Pfreimd, Skopje, and Horsovsky Tyn for medical devices. And also in Asia and China, our expansion in Zhenjiang is dedicated to high-value ready-to-fill vials. The successful transformation of Gerresheimer, our positive operational development, our strong order book, and our ongoing global expansion will enable us to continue our dynamic growth with an expected compound annual growth rate of 10%.
We are confident that we will deliver once again. Thank you very much. With this, I will hand over to our CFO, Bernd Metzner, for a deep dive into the figures in Q4 and, of course, the full year of 2023.
Thank you, Dietmar. Welcome, everybody, also from my side. Let's dive into the analysis of the key financials for the fourth quarter 2023. The last quarter of 2023 showed a solid performance with mid-single-digit organic revenue and double-digit organic adjusted EBITDA growth. Revenues grew organically from EUR 516 million by 5.1% to EUR 542 million. Reported revenue stands at EUR 545 million. The impact from FX was minus EUR 10 million and resulted mainly from a weaker US dollar. So organic revenue growth of 5.1% includes this temporary destocking effect in our vial business, which we are flagging since our Q2 release last year.
Adjusted EBITDA grew organically from EUR 110 million by 10.5% to EUR 121 million. Organically, adjusted EBITDA margin increased from 21.3% by 110 bps to 22.4%, mainly driven by favorable product mix effects. Reported adjusted EBITDA stands at EUR 119 million. The impact from FX was minus EUR 4 million. Adjusted EPS improved organically from EUR 1.48 by 7.4% to EUR 1.59. Reported adjusted EPS stands at EUR 1.51. The impact from FX was minus EUR 0.09 per share. The EPS figure in Q4 2023 is calculated based on the capital increase of April 2023, which led to an increase of the number of shares from 31.4 million by 10% to 34.54 million shares. Let's move on to the divisional development in Q4 2023. First, Plastics.
Revenues grew organically from EUR 281 million by 9.5% to EUR 307 million. Reported revenues stand at EUR 310 million. The impact from FX was minus EUR 4 million. The organic growth was driven especially by strong contributions from our syringe as well as our medical device business. Adjusted EBITDA grew organically from EUR 79 million by 14.2% to EUR 90 million. Organically, adjusted EBITDA margin increased from 28.2% by 120 bps to 29.4%, driven by an improved product mix. Reported adjusted EBITDA stands also at EUR 90 million. The impact from FX was minus EUR 2 million. Second, primary packaging glass. Revenue grew organically from EUR 236 million by 0.5% to EUR 238 million. Reported revenue stands at EUR 238 million.
The impact from FX was minus EUR 6 million. The temporary destocking in our vial business is still ongoing but was overcompensated by a strong growth in our molded glass business unit. Adjusted EBITDA grew organically from EUR 44 million by 3.1% to EUR 45 million. Organically, adjusted EBITDA margin increased from 18.6% by 50 bps to 19.1%. Reported adjusted EBITDA stands at EUR 43 million. The impact from FX was -EUR 2 million. Third, advanced technologies. Revenues declined organically from EUR 4 million to EUR 2 million. Reported revenue stands also at EUR 2 million. Adjusted EBITDA declined organically from -EUR 4 million to -EUR 6 million. This result in Q4 is, however, not representative for the quarters to come.
We expect for the financial year 2024 a slightly better outcome than in 2023 financially. We announced recently a collaboration with Aptar in the area of cancer. Aptar Digital Health is providing its health platform for monitoring side effects of cancer therapy. And we are providing our SensAir device. With the development of a device for the delivery of large molecules, we are responding very well to the market needs and trends. Overall, we will continue to invest in advanced technologies to pursue our compelling strategy regarding our own IP devices, being an original equipment manufacturer, and developing new digital business models. Coming now to the cash flow development in the fourth quarter of 2023. As discussed, Adjusted EBITDA developed nicely. Our operating cash flow was strongly supported by a reduction of net working capital.
We were able to generate EUR 22 million more cash in Q4 2023 from our working capital release compared to the already good performance in Q4 2022. Cash outflow related to interest paid was higher year-on-year. The increase is primarily due to higher variable interest rates from the promissory loans. Net CapEx increased year-on-year as we continue to execute our investment program into highly attractive growth opportunities. Reflecting on the full year 2023. During our Q2 2023 analyst call, we indicated that we expected a free cash flow to range between moderately negative to almost break even. In fact, we achieved this minus EUR 3 million almost break even. This good result is driven by our strong operating cash flow performance in 2023.
We increased our cash flow from operating activities from EUR 222 million by more than 30% to EUR 294 million. That means that the net Capex cash out of almost EUR 300 million in 2023 could almost entirely be funded by our strong operating cash flow. As you know, our relatively high net Capex cash out in 2023 is a consequence of very, very attractive and unique business opportunities. We are especially ramping up our capacities for medical devices, GLP-1 products, and biologics. Also, on the basis of our investments, we are planning to bring our ROCE of around 11% in 2023 to 15% in the medium term. Finally, let's turn to net financial debt as well as the adjusted EBITDA leverage. Both performance indicators improved year on year due to the capital increase and the strong EBITDA growth in 2023.
Net financial debt stands now at EUR 862 million compared to EUR 1 billion at the end of 2022. Adjusted EBITDA leverage improved from 3.0 to 2.1 times EBITDA. This results in a financial headroom of around EUR 500 million and provides us with further flexibility. This slide shows the reconciliation of the reported to the adjusted financials for the financial year 2023. Revenues grew organically from EUR 1.79 billion by 10.4% to EUR 1.98 billion. Reported revenue stands at EUR 1.99 billion and so achieved a new high for the group. The impact from FX was minus EUR 14 million and resulted mainly from a weaker US dollar. Adjusted EBITDA grew organically from EUR 351 million by 17.5% to EUR 412 million. Organically, adjusted EBITDA margin increased by 120 basis points to 20.8%.
Reported adjusted EBITDA stands at EUR 405 million. The impact from FX was minus EUR 11 million. Let me briefly comment on our EBITDA adjustment, which amounted to EUR 9 million in full year 2023. The EUR 9 million consists, among others, of an inflation compensation premium paid. With this amount, we cut prior year's EUR 19 million net exceptional expenses into half. The increase of the adjusted depreciation and amortization by EUR 16 million to EUR 143 million in 2023 is mainly reflected by the higher investments in our business in the most recent years. The adjustment of EUR 39 million consists of amortization of fair value adjustments. Now, over to the next line item, the financial result. The decrease of the financial result is predominantly due to increased interest expenses from promissory loans and the revolving credit facilities.
Regarding income taxes, the adjusted tax rate in financial year 2023 was 26.8%. Adjusted EPS improved organically from EUR 4.63 by 7.1% to EUR 4.96. Reported adjusted EPS stands at EUR 4.62. The impact from FX was minus EUR 0.0032 per share. The EPS figure for 2023 is calculated based on the capital increase of April 2023, which led to an increase of the number of average shares from 31.4 million for 2022 to 33.3 million for 2023. Moving now on to our sustainability strategy. Sustainability is the fifth pillar of our corporate strategy and is, as mentioned before by Dietmar, becoming increasingly important also in our customer interactions. To that end, we have included an ESG update on this slide as first time in this format.
We want to particularly highlight our carbon emission reduction target. Our ambition is to reduce our Scope 1 and 2 emissions from 570,000 tons in 2019 by 50% to 285,000 tons CO2 equivalents until 2030. And this against the backdrop of our growth plans. To reach this ambitious emission target, we focus on the electrification of our furnaces, energy efficiencies, and green electricity. We also have officially committed to setting Scope 3 targets by 2025, validated by the Science Based Targets initiative. We also make our progress transparent and measurable each year. In 2023, we were able to reduce our carbon emissions to 455,000 tons, representing a 20% reduction versus the base year 2019. And this on the back of a green electricity share of 46%. As you see, we are on track to deliver on our 50% CO2 reduction target in 2030.
As a production company, safety is also of utmost importance to us. We significantly reduced our lost time incident rate since full year 2019 from 12.8 by 50% to 6.4 in full year 2023. As important recognition of our achievements, we have been, as you know, awarded with EcoVadis Gold status for the second year. EcoVadis assesses the maturity of ESG management of companies. More than 100,000 companies worldwide turn to EcoVadis for the performance reviews. With the Gold status, we earned a spot in the top 5% of all companies assessed by EcoVadis. Before finally handing back to Dietmar, we would also like to welcome Guido to our Gerresheimer team. He is bringing extensive investor relations experience to Gerresheimer, supporting us to successfully communicate our profitable growth story. Welcome on board, Guido. With this, I hand back to Dietmar.
Thank you, Bernd. With this, I would like to come to the outlook. Let's come to the key priorities for 2024. We continue leveraging unique business opportunities. We will also further accelerate our profitable growth, our margin expansion by consistently increasing the revenue share of system solutions for injectables, in particular for biologics. We will consequently execute our ongoing growth projects and drive operational excellence. Further expand our portfolio with high-quality and highly innovative products and solutions. I am confident that we will be able to check all boxes again when we present the results for 2024 to you. Three main growth drivers will support us to achieve our targeted compound annual growth rate of 10%+ in the upcoming years. The solid base growth in our classic portfolio. Our high-value solutions, including ready-to-fill vials, cartridges, and syringes. To an even larger extent, medical devices for biologics.
This includes pens and autoinjectors, as well as our own IP platforms for autoinjection, on-body, and on-body drug delivery systems. Providing added value with high-quality and innovative solutions for our customers will support our sustainable, long-term, profitable growth in the future. This leads me to our guidance. In the previous years, our outlook encompassed the current fiscal year and the midterm guidance. This year, we decided to give you a two-year outlook plus midterm guidance to give you a better insight into where we are headed. For 2024, we expect a revenue growth between 5%-10% as we take into account some destocking effects in the market in the next months. The Adjusted EBITDA will once again be strong and reach between EUR 430 million and EUR 450 million, in line with our plans for further margin expansion.
The adjusted earnings per share is expected to grow between 8%-12%. In 2025, revenue growth will accelerate to 10%-15% with an expected adjusted EBITDA margin of around 22%. The adjusted earnings per share is expected to grow around 10% in line with the midterm guidance. The midterm guidance shows a compound revenue growth rate of 10% and a margin target for the adjusted EBITDA margin between 23%-25%. Adjusted earnings per share growth will once again be around 10%. As you can see, we are continuing our profitable growth path and would be delighted if you would accompany us going forward. The next opportunity to check in will be our first quarter results for the fiscal year 2024, which we will publish on April 11. I hope you will join us again. Thank you. We are now happy to take your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press "star," followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press "star," followed by two If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press "star," followed by one at this time. One moment for the first question, please. First question from Oliver Reinberg, Kepler Cheuvreux. Please go ahead, sir.
Oh, yeah. Thanks so much for taking my questions, if I may. The first one would be on the 2025 guide. I guess it looks quite encouraging looking at the kind of implied sales and EBITDA growth. I struggle a bit to connect that to the EPS guide. On EBITDA, I think the guide implies roughly 18% to 25% EBITDA growth. The EPS growth guide basically starts at 10% to obviously be open to the upside. Can you just provide a bit more color what is driving this kind of somewhat disconnect? Is it fair to assume D&A of 180%-185% for 2025 and a 25% tax rate? And if that is the case, any kind of color, what kind of financing costs do you have baked into this guidance? Just trying to make sure that earnings are getting to the right place.
Second question, please, just a kind of clarification. The midterm guide, is that still referring to 2027? Just to confirm that. And secondly, on the 2024 guide, there was a major currency impact, obviously, in 2023 when you had a 1% headwind on top-line growth. I think EPS growth was diluted by 7 percentage points. So what do you currently see in terms of currency impact? What is the kind of impact on EPS growth versus currency growth? And 3rd question, if I just can squeeze it in, on phasing. I guess the Capex surge in 2024 has been a kind of concern, in particular in Q1 and Q2. Given the kind of destocking effects, I guess both West and Schott have cleared up expectations for the first quarter.
So just wondering if we can remove a negative catalyst to just get some kind of color how you think about growth in Q1, respectively, the first half of the year. Thanks so much.
Maybe just to Oliver, thanks a lot. Maybe just to take on your first question regarding this 2025 guide regarding EPS growth. Normally, as you know, we don't guide for the year following the guiding year of 2024. Normally, we don't do this. We want to give also a certain flexibility in our EPS growth for the year 2025. That was basically the reason why we said at least 10% EPS growth, to provide also a little bit flexibility in this regard. Just to put it in perspective, as you know, last year in 2023, we guided for low single-digit EPS growth. Now we're ending around 7%. I think this is something just to lay it down on the table. We don't want to be more precise regarding EPS growth. Just on this note, we don't expect that our financial results are increasing.
Depreciation line should be always in line 7.0% to 7.5% depreciation to revenues. And then you can calculate on your own what this would mean for the EPS growth, just to touch base on your first question. Dietmar?
Yeah, that's not much for it. The focus for 2025 was to give you a better understanding of top and bottom line, the earnings per share. In principle, we didn't adjust it. You can expect there's no reason why it should not develop nicely in 2025. Then there was the question to the that's an easy question. I take this one. For the midterm guidance, the midterm guidance for us always budget plus four. In this case, 2024 plus 4 would lead up to 2028. And then the next question is also the comms. I think that he was raising it there.
Can you repeat this again, Oliver?
The currency impact was the next one, and then the comms.
What was, again, the currency impact question, Oliver, if I may ask?
Yeah, of course. I mean, in 2023, you have delivered basically 7% constant currency EPS growth. But in actual currency, it was just like zero. So 7% headwinds, despite the headwind to top line was only 1%. So I'm just thinking, where currency stands today, is there any kind of meaningful deviation between expected EPS growth for 2024 constant currencies and reported?
Now I get it. But the answer is no on the last topic. So we don't have so we are calculating this is actually planning FX rates. We are basically in line with the actual rates. So therefore, I don't expect any meaningful headwinds here. But I don't want to speculate now on the currencies for the next couple of quarters. But that's basically the idea. The other question is, what hits us in 2023?
It was basically, if you look at U.S. dollar. But cost-wise, it was actually the Mexican peso significantly because we have here our production plant there. And we get caught a little bit by surprise, as all the other players as well, that you have here a very strong, relatively strong Mexican peso. And this is something what you need now to address with your customers to increase also the prices because, obviously, from the operational basis, your costs are now increasing if you translate this into euro. I hope it helps, Oliver.
I think the last question you raised sorry, go ahead, please. [crosstalk]No, no, go ahead, please. The last question you raised with the comps, yeah, no doubt, we had strong comps in the first and second quarter last year.
Nevertheless, what we see and that's probably the root cause of your question is, how do we see the destocking also taking place in first and second quarter? We see the destocking definitely also in the first quarter. We have to see how deep it goes into the second quarter. There are indications that it might clearly improve in the second half of the year. That is something you also see in the relatively broad bandwidth of the guidance, 5% to 10%. But 2024 is a relatively broad bandwidth. And that's, of course, a question of how far do the destocking effects actually decline or disappear in the second half of the year? What you have to see is, beside the destocking, that the general business in Gerresheimer is actually doing well.
And losing a digit of growth is a reasonable assumption for top line for Q1?
It will probably not might be in the lower range or in no single digit, whatever you want to do. Single digit, something that this is not what you can expect.
Perfect. Thanks so much for the column.
He probably was asking whether we would be negative. And I can tell you, this is not what we expect. No, we see really a solid growth.
The next question from Gaurav Jain , Barclays. Please go ahead.
Hi. Good morning. Thank you. A few questions from me. So number one is that I didn't see any disclosure on HVS share, which you used to give earlier, and how you think it will grow going forward. So any reason why you have stopped providing that disclosure, that's number one. Number two is that clearly, based on the projections you have, your leverage will start falling quite rapidly. So what should we then expect?
Can there be some capital returns from the company in the form of share repurchases, or you would explore inorganic growth opportunities? The third is just on the depreciation. You gave that number there. Now, if I just do depreciation by PP&E, your number seems to be much higher than generally your peers have. It does seem your depreciation policy is more conservative. Is there any particular reason for that? Why is your depreciation so much higher than your peers? Thank you.
I take the first one as the second one I had difficulties to understand. I assume the first one was we had difficulties to understand you. The first one was probably around the high-value solution revenue share in was it Q4 or is it in 2024? Yeah, it's in 2024. Where is a high-value solution share for 2024?
And where will it be in the future, like FY27? There's no doubt. I can answer this relative to January. Unchanged, we are very well underway with growing in our high-value solutions. And here you will see also in 2024 double-digit growth.
Maybe I take your. Which is not a big surprise because you see that some of the launches are now taking place. Some of them were launched in the fourth quarter and are steadily ramping up. That's why we will also benefit from this in 2024. Maybe just to take Jay, hi, to take your second and your third question, starting with the leverage. In the end, your question was what we do. We have a relatively low leverage now with 2.1 or something, how we want to handle this. So we are paying now actually a dividend. And this is what we are proposing.
And therefore, this is what you already give slightly back. And we should not forget and we should not forget that actually, we have a significant investment program in front of us, basically in line with what we are doing now in 2023. So we think and are convinced that our investments opportunities, which we have, actually are more beneficial for our shareholders to do instead of paying the money back to the shareholders, just to comment on this in this way. And last but not least, the depreciation. We are looking always to the, let's say, normal depreciation apart from the PPA effects. And these are basically always in line of 7.0%-7.5% of actually revenues. That's basically the background. So you need to see this also in line of the sales.
And therefore, we are always around 7.0% to 7.5% as the normal depreciation apart from the PPA depreciation and amortizations.
Sure. Thank you. Just to confirm what you just said, CapEx for FY 2024 will be in line with FY 2023?
Yes. Basically, we have always the same concept. Obviously, it increases in line with this revenue growth, obviously. We have always a rule of saying, as you know, 4% base CapEx of revenues is our base CapEx. And each additional euro investment, you should see also an additional revenue growth. And in this sense, you should see the CapEx expense in 2024.
Thank you so much.
The next question from . Please go ahead.
Yes. Good morning from my side. Three questions I have. The first one is, you already made a comment on the range of your top line guidance for 2024. You mentioned destocking most likely as the most prominent aspect for this broader range. It's understandable, but for me, not 100% satisfying. It would be quite good to understand the moving parts. My base assumption is, if destocking weighs on the results in the first half and resin prices stay as they are, it's basically the lower end, therefore, the base scenario. What really might bring revenue growth more towards the higher end? That would be great to understand.
The second question is on your free cash flow profile for 2024 and 2025. In 2023, free cash flow was clearly or strongly supported by net working capital. It would be great to have a comment on this too. My last question is on the contributions for the midterm guidance. So the biologic medical devices seems to have a higher or stronger contribution than the other contributors. So can you comment about the phasing of the timeline? When do you think that this part of growth will come through to a stronger extent? Thank you.
I think this question is perfectly the first one is relatively easy. The destocking is really a temporary effect. What we do not know at the moment is how far will these customers that affect us with the destocking driving their stock down. And that actually is the wide range. So if the destocking goes on into the second half, which we don't see at the moment, then we will probably come to the lower range of the bandwidth. As sooner as the destocking ends, the better it will be definitely for the sales development.
You have to see it's a temporary effect for the destocking products. Other products are actually doing pretty well. And that actually helps us also to drive growth in the second half and into the higher levels. The third question was. This was about[crosstalk] biologic medical devices. Biologics. Yeah. And this is right. It's of course, the switch of Gerresheimer to more and more high-value products is, of course, in line with all the biologics because a lot of or most of the biologics actually have high demands and, as such, need higher-demanding solutions. And this is actually the high value.
So in the outer years, driven by, on the one side, more and more content of high-value products and biologics, but also driven by the extra tailwind coming from the GLP-1, you will clearly see the majority of the growth taking place in large molecule applications. And you see this in 2024, but you will even stronger see this in 2025, 2026, 2027. But a lot of the platforms that we are successfully bringing in last year and also 2022 will actually start production and then contribute to the party. And in the end, this is what drives not only the top line strong growth, but this is what will help Gerresheimer to drive towards the midterm guidance of 2023 to 2025 EBITDA margin.
And I would take your second question, Oliver, basically regarding the free cash flow profile 2024, 2025. If you have seen already in 2020 that we were able, with our operating free cash flow, actually to fund also our investment plans, our attractive investment plans. And also in 2024, as you know, as a consequence of very attractive and unique business opportunities and especially our order intakes, we are also in 2024 ramping up our capacities for medical devices, GLP-1 products, and biologics. We should not forget this. And having this said, I would assume that also in 2024, we should see a moderately negative free cash flow. The truth is, however, you cannot pinpoint this precisely down.
You have always a ballpark of EUR 20 million, something like this, plus minus, when you talk about your free cash flow as a guidance because it depends. You mentioned it working capital. It depends how your Capex implementation works out and so on. For 2025, based on the actual plan, we are assuming you mentioned this, we are assuming to really see a break-even plus. So there we see this is basically what we see also for 2025. I hope it helps, Oliver.
Yeah, yes. Absolutely. Thank you. One very quick follow-up on my first question regarding the 2024 top line guidance. So am I right that if destocking ends, let's say, after Q2, then we should rather look more towards the midpoint for guidance? Is this correctly interpreted?
I would leave room for some fantasy here. Yeah? Okay. We have fantasy. If the destocking is ongoing, but I would not give up the growth story in general that we experience in Gerresheimer at the moment because of the destocking. When it hits us in the first quarter, it hits us probably also in the second quarter. But the general business is doing very nicely and well in line, in principle, with the midterm guidance.
Yeah. No, no, no. That's well understood. Thank you.
No doubt. Of course, we would come to the lower end, which was very bad in 2024. Then, of course, the impact on the 2025 figures would be stronger. Yeah. Or beneficial even. Yeah.
Okay. Thank you.
The next question from Victoria Lambert, Berenberg. Please go ahead.
Thanks for taking my question. I just wanted to follow up on the high-value solutions. Could you repeat what the penetration rate is in 2023? Last year, it was 24%. And if you're still confident in reaching your 35% target by 2027. And then my second question is just on the FDA approval for your SQ Innovation pumps. Do you have a rough estimate of when you could receive approval? Are they requiring more data from you? Just want to get a better sense of what that launch pipeline could look like. Thanks.
Maybe I take your. I think for the I take the questions. Yeah, yeah. The high-value revenue share in Q4, for the full fiscal year 2023, high-value solutions, including also high-value solutions of cosmetics—we should not forget this—amount to approximately 24% of the group revenues. We aim to continuously expand this share. This business is not reported as a separate division, as you know. The reason for this is that we have high-value solutions in all of our business units. Nevertheless, one thing we learned out of the reporting of some of the peers, we will recalibrate our definition of high-value solutions over the next months in order to simplify certain comparisons that you obviously are doing. Very short to the FDA program, you want to say this, or should I?[crosstalk] No, no, please.
I think what we see is that the FDA asked for a couple of more questions, which was quite a surprise to us. We don't see this as a severe topic. It's a couple of months' delay that our customers here experience, most likely. We do not expect that this has an impact on the sales that we plan for this year as we anyhow plan them relatively conservatively. It might not be a delay for us in the shipments in all.
Thank you.
The next question from Falko Friedrichs, Deutsche Bank. Please go ahead.
Thank you and good morning. My first question is on destocking. One of your US peers last week had indicated that destocking has also expanded into the high-value solution offering. So I'm curious to hear if that is something that you have also noticed or whether destocking is still only affecting your bulk vials, your standard vials. Then my second question is on your GLP-1 contracts. Were there any changes now at the end of 2023 to those contracts? And what is the potential here in 2024? We've seen that the pharma companies are increasing their fill and finish capacities. So could that mean that there is potential upside to your exposure here as well over the next few months?
And then my last question is briefly coming back to Q1 and the comments you made. If I understood you correctly, you said low single-digit growth is sort of a fair starting point, maybe even a few % more. Is there any new capacity that comes online in the first quarter that could boost it a little bit more? Or what are sort of the bigger drivers now in the first quarter? Thank you.
I tried to short this a little bit. The first one is relatively easy. It's the destocking. It affects the bulk vials for us. And of course, I heard, of course, I saw what the peers are experiencing. We are, of course, with the very broad portfolio, not so completely dependent on the products that are affected by the destocking. But nevertheless, Falko, we feel it. Otherwise, we would get double-digit for the first quarter. To your result, yeah, whatever it is, it is positive single-digit to maybe a bit single-digit as in this ballpark. Yeah? Yeah? So the GLP-1 contracts, actually, there were no further decisions in the fourth quarter last year made on the platforms or further platforms in the market.
As such, we have no changes, which does not mean that these things are not in intense discussions at the moment because there might be further platforms on the market that we are aiming for at the moment. We are, honestly spoken, very well underway with filling the order books in the right way. Then ramp-up Q1 was the next question. There are no ramp-ups that start because they usually start in, like in the automotive industry, actually in summer, fall. But of course, you see that the ramps up steadily are supporting because the volumes are going up, are supporting the sales and profit lines. And that's beneficial.
Okay. Thank you.
The next question from David Adlington, JP Morgan. Please go ahead. Morning, guys. Most of my questions have been asked, but maybe a couple.
Firstly, leading on from your last answer around expanding into further platforms, will that require you to in-license any IP from third parties to allow you to do that, or have you already in-licensed that IP? And secondly, to the housekeeping one, I may have missed it, but in terms of CapEx for this year, could you give us a range like previously in terms of the actual EUR CapEx that you're planning on spending this year?
Thanks. First question is easy and complicated at the same time. We are not licensing in at the moment IP from competitors or something like this. But I think I understand what you're referring to. This would be handled by the customer that asks us to produce the products. To the CapEx, the CapEx will be similar to 2023. Basically, what we just said, it grows in line with the in line with, say, in terms of sales growth. We would expect between EUR 300 million and EUR 350 million net cash Capex.
Thank you.
The next question from Sven Kürten, DZ Bank. Please go ahead.
Yes, thank you. Two questions left. Firstly, how much of the 10%-15% growth target for 2025 is based on GLP-1? And secondly, do you think that in the foreseeable future, an oral application of GLP-1 will have a realistic chance to enter the market?
I didn't understand the second part. Can you repeat the second part?
The second question was if you think that in the foreseeable future, an oral application of GLP-1 will have a realistic chance to enter the market so that we have a weight loss pill, not a weight loss syringe, so to say.
Yeah. Got it. Yeah. There's no doubt. GLP-1 in the next years will clearly drive our growth, not only in 2025 but also 2026, 2027. I would say you can go over the sum. Half of the growth that we will deliver will be delivered by GLP-1 systems and solutions in the full portfolio. And to the oral question, that's an easy one. The oral applications were always part of the plan of our customers. We're actually serving the oral solutions and are going with our plastic packaging solutions. They will be dedicated to certain, yeah, patients and the degree of the disease development. I don't see them that they are realistically disrupting or cannibalizing the volumes or the injectables.
Okay. Thank you.
The next question is from James Vane-Tempest, Jefferies. Please go ahead.
Yes, hi. Thanks for taking my questions, please. I've got two left if I may.
With the 2025 guidance you've given, just trying to think about that as it relates also then to the midterm. So more than 22% margin in 2025, and you're sort of saying 23%-25% over sort of the midterm. Just sort of wondering what would have to happen for you to kind of deliver the low end of that in the midterm, particularly if there's an inflection with the launch of the dual-chamber syringe and everything else, or whether there's sort of scope that you could perhaps be more towards the upper end of that or look to revisit that in time? And then my second question is the release talks about syringes, pens, and autoinjectors for GLP-1.
But I'll just kind of conscious what is the potential for cartridges for you, especially ex-US, where the demand for those types of products is potentially going to be higher from a volume perspective? Thank you.
It's a good question. In principle, the lower end at the end, yeah, I have no doubts. I'm pretty confident that we will deliver our midterm guidance here also in the margin range. We are steadily moving up. And the question is, where does it come from? And the improvement of our margin comes from two sides. One of them is classic coming from mix effects. And they come primarily out of high-value solutions and more profitable products that we actually are selling. Most of it, we have already in the pipeline. And that's why we are confident in this working way.
The other portion of the EBITDA improvement actually comes by efficiency, scale, productivity topics. There are programs that we are driving through our facilities, partly involved with some capex, also in efficiency. And they will steadily be rolled out according to the plan. And we expect them to deliver also the results. The second question, the cartridges, yeah. Absolutely. The cartridge demand is actually not only in the U.S. It's also very relevant for Europe. We see a clear advantage also for us. This is a market that we, especially in the side of the ready-to-use, did not focus on strongly in the past. With our clear focus on large molecule biologic applications, we clearly see advantages with our very strong global footprint, access to customers.
And as such, we will also benefit from an increased amount of cartridges, which is a key portion of our ready-to-use high-value products, not only today but especially increasingly in the future.
Thank you. [crosstalk]Bernd, I'm just followed up. To add on the. Yes. Sorry.[crosstalk] Go ahead. James, just to add on the margin topic, we should not forget that we have really a nice margin improvement past now. We improved our margin by 120 basis points now from 2022 to 2023. And as a jump-off point, we are now at a margin of 20.4%. And we are seeing also that in 2024, we'll be able to improve our margin. And then we said, "Okay, 20%-22% is then on the back of this, basically our aim." And what we are seeing that we will achieve this.
Then from there, the question is then when to get to the 23%, is it 2026 or 2027? But basically, we have a clear plan on the basis of what Dietmar just said to improve our margin year by year.
Thank you. Yes, I can just also follow up in a different way. Is it fair to say if you deliver on the contracts and the plan which you kind of laid out for the next few years, that it's more likely you're going to be towards the upper end of the guidance range? So obviously, notwithstanding there could be things beyond your control to kind of give a range. But thinking of the roadmap from here, if you're more than 22% in 2025, then that sort of 2023 to 2025, just given that step up in 2025, is more likely to be at the upper end, assuming you can deliver on what you've got?
Let me say it in the following way. The programs that we drive, both mixed effect but also efficiency programs, will steadily help us to increase the margin. The old guidance, we should not forget this, was within the planning period to go to 23%. As the midterm guidance is kind of rolling, budget plus four, we clearly see at the upper end that the margins are increasingly higher. And we think it's pretty realistic to assume that we can achieve the midterm guidance, especially at the end of the planning period. And later, we might even be able to go beyond this.
That's very clear. Thanks very much.
The next question from Alexander Galiza, HAIB. Please go ahead.
Yes. Hello, and thank you for taking the questions. I have a couple. The first one is whether you could confirm that you expect no exceptional items for 2024. The other question is regarding the resin prices effect on your top line. If you could give us a number, how much revenue did the effect of resin prices cost you in 2023, and also what do you bake into 2024 outlook? And the last question is regarding your midterm adjusted EBITDA margin guidance. Just wondering if you could clarify how you think about the range, right? You mentioned that it's always plus four years. But I think that the margin guidance was out not today but some time ago, right? At least the 23% figure, I think, was communicated in 2020, I believe.
So when do you expect to realistically get into this 23-plus range? That's the question. Thank you.
Maybe the exception is definitely your question. Thanks, Alexander, for asking. I mean, we don't plan for exceptional nature. But basically, you can always consider that in a ballpark of EUR 10 million, this is something what you can always pencil actually in. And basically, the same magnitude like in 2023. Regarding the resin price effects, it's difficult to speculate now. Again, the resin price doesn't have any impact on our bottom line. That's very important to note. And it's basically an effect of pass-through. So it's really something what doesn't keep us up at night. But you can say that 1 percentage point is actually ± organic growth is affected by this effect.
And if you see how the resin prices are developing compared to the previous year, for example, in Q4 2023 compared to Q4 2022, 1 percentage point is something what you have seen in the actuals. But again, we don't want to speculate about the resin price development, especially because bottom line-wise, it really is not material.
And the last one, in principle, I just answered this question. The planning period does or the midterm guidance is always within the planning period, which is the budget plus four, which is actually 24 + 4 is 25. As this is a rolling midterm guidance, of course, you also see a steady increase of the guidance now instead of '23 to '23 to '25. As we are steadily increasing our margins, as I indicated in the former question, actually, you can expect that within the midterm period, we are achieving our 2023 to 2025. In the logic, as we are steadily increasing it, the higher level at the end of the planning period and a little bit earlier. I think we are pretty precise because we gave a 22% EBITDA margin guidance for 2025. And this is what we are actually aiming for.
Thank you.
We have a follow-up question from Mr. Oliver Reinberg, Kepler Cheuvreux. Please go ahead.
Oliver, please don't be shy. [crosstalk]Maybe questions that you.
I try not to. But unmuting is a good idea, I guess. Two follow-up questions, if I may. Firstly, it's on energy costs. I think two years ago, we intensively discussed it each quarter when these were shooting up. Now, actually, energy prices have come down quite substantially. So can you just talk to what extent is that supporting your earnings development this year, any color in terms of the unhedged share of your energy costs? And is there any kind of concern that this may also lead to any kind of price pushbacks when the next renegotiations are coming up? And then secondly, just on Gerresheimer Advanced Technologies, fully appreciate the kind of certain delay from SQ Innovation.
But can you just provide an update how happy you are in general with this kind of franchise? Do you make progress on alternative contracts and any update when you expect the division to turn break-even EBITDA? Thank you.
As we come down with energy costs, the value of the hedge this year is pretty low. So we are pretty neutral, I would say. The effect is a neutral effect. The price pushbacks for energy, I don't expect because these were sustainable price increases that were primarily done by inflation impacts that were not necessarily coming from energy only because of the hedge but other aspects. So we see this also relatively stable. I don't expect major pushbacks here at all. To the advanced technology, what if I were to break-even. This is strongly depending, of course, on new orders because a lot of the sales and profit of in principle, all of the sales and profit you see here is reimbursed engineering costs at the moment as sales is very small.
And of course, as soon as the sales really are starting, we will also steadily come closer to break-even. I expect this maybe within the next years. And are you happy with the progress that you're making outside the SQ Innovation contract?
If you ask this question to a CEO without patience, he would always answer, "I'm not happy enough." But I think we are in very interesting discussions with various customers. And due to the nature of this business, I'm not able to disclose them. It's all far too slow, but it's moving in a good direction. Just to add on this energy cost question, you know that we don't disclose the share for competitive reasons and also not see the hedge price. Obviously, we have not done this in the years where the energy prices were quite high. But really, we feel quite comfortable on this. And this topic doesn't keep us up at night, as mentioned by Dietmar.
Okay. Perfect. Thanks so much.
Okay. Ladies and gentlemen, there are no further analysts with questions in the queue at this time. We will therefore now conclude today's call.
We're very happy to organize follow-up calls, as you know, should you still have any questions open. We're looking forward to seeing many of you soon. Thank you, and bye-bye. Thank you for your interest.
Ladies and gentlemen, the conference is now concluded. You may.