Earnings Call: Q1 2016

Apr 13, 2016

Welcome to the conference call regarding the publication of Geraisimer AG's First Quarter Results 2016. At the moment, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Now I hand over to Nicole Winkler. Hello, everyone, and thank you for joining us to review our 1st quarter results 2016. With me today are Unruhlehoff, our CEO and Rainer Boussaint, our CFO. As we did in the past, we are presenting a set of slides to accompany our remarks on this conference call. The quarterly report, the slide presentation and the press release are posted on the Investor Relations page of our website at gassetimer.com/investorrelations. Please note that this call is being webcast live and will be archived in our website. Before we start, I would like to remind you that the presentations and discussions are conducted subject to the disclaimer. We will not read the disclaimer, but propose we take it as read into the record for the purpose of this conference call. Our agenda for today starts with presentations by Resolute Health and Rainer Roussjean. After that, we will enter into the Q and A session. Now it's my pleasure to turn the call over to Uwe. Thanks, Nicole. Good afternoon, everyone, and thanks for joining our Q1 conference call. We had a very good start in our financial year 2016. On a reported basis, group revenues rose by 13.4 percent to €342,300,000 Center is now included for the first time in the Q1. And of course, our Tubing business, after its sale to Corning in November 2015, is not included anymore. We also had a very solid organic business performance of +4 percentrevenuegrowthquarteroverquarter with strong revenue development in our core regional markets, Europe and U. S. First, let's talk about America. On this slide, you can see why we were very excited about the revenue contribution of Centro to our North American sales. It significantly strengthens our presence in the Americas region underpinned by the fact that plastic packaging for prescription medicine now has a major footprint in the U. S. The purchase of Centaur enhances not only our product diversification but our regional diversification as well. Overall, we have increased our Americas revenue share from 21% to 30% quarter over quarter. With this acquisition, we have improved our U. S. Presence. U. S. Market continues to be the biggest and most important market in the world in spending on headwinds. As far as our existing business in the U. S, we are also pleased with the revenue development, especially in our primary packaging glass business where we continue to make good progress. Based on the implementation of our technology strategy, we have further improved our cost and quality position, resulting in strong revenue growth in Q1. 2nd, moving on to Europe. We are currently very satisfied with a good business performance in Plastic and Devices, especially driven by good growth with Medical Devices. Our multi class business is doing well too, notably due to a strong cosmetic business uptake in Q1. In the emerging markets, we saw some weakness in our revenues. This affects mainly our primary packaging glass and plastic business after many years of very good growth. This comes on the one hand as a result of the recession in Brazil as well on the other hand by a modest market development in China. However, the overall impact on our own growth is relatively minor. Generally, we are very optimistic with regard to our investments in China, Brazil and India because the long term growth perspectives are intact as the emerging markets remain the growth drivers for the worldwide spending on medicine. Let me remind you what I've already said on our year end conference. According to IMS Health, over 50% of the world's population will consume more than one dose medicine per person per day by 2020, up from only onethree in 2,005. So the growth will be driven mostly by the foreign emerging countries as the availability of trucks at affordable prices boost truck sales thus generating greater demand for packaging. This is important for us since the number of packaging units being sold is most relevant to Neilsen. Please move forward with me to Slide 5. Our reported sales grew by 13.4 percent to €342,300,000 which corresponds to an organic growth rate of 4.4%. As I have said, a very good development in the Q1. As a consequence of the increased sales in the U. S. And Europe, adjusted EBITDA performance was excellent in the quarter, growing by 29.6 percent to €66,000,000 The adjusted EBITDA margin was up from 16.9% a year ago to now 19.3% in the Q1 2016, and there is some record for Q1, just as expected. The increase on group level came mainly from the first time exclusion of Centaur. This shows in the EBITDA margin of our plastics and device business that came in at 23.7% compared to 18.5% in prior year's quarter. The favorable first quarter margin development in our device business contributed to that development as well. The margin in Primary Packaging Glass came in a bit better than expected with 18.3% but lower than prior year's quarter due to the effect of the sale of the Tubing business in November 2015. The higher group adjusted EBITDA base is also well reflected in the growth of the adjusted earnings per share in the quarter, which were up by 72.1 percent to €0.74 so markedly higher than the €0.43 just a year ago. And last but not least, our operating cash flow was up quarter over quarter as well. In fact, it more than doubled to €33,500,000 which was mainly driven by the higher adjusted EBITDA that we achieved in Q1. Overall, the favorable impact of our portfolio changes last year to the acquisition of Centur, the sale of the tubing business and the portfolio adjustments is already very visible on all our financial figures in Q1 and demonstrates the development of our business towards higher profitability and cash generation. So to sum it up, we had a very good start to the financial year in the Q1, which developed fully according to our expectations. That said, let me now hand it over to Reinhard who runs you through the financials. Thanks, Uwe. Ladies and gentlemen, welcome also from my side. Let's have a look at the relatively development for the Q1 2016 on Slide 7. On group level, revenues were up by 13.4% and amounted to €342,300,000 This is an outstanding growth rate, which was mainly driven by the inclusion of Centa. On top, we had some positive foreign exchange rate translational effects, which can be attributed to the stronger U. S. Dollar to U. S. Dollar quarter over quarter. In the Plastics and Devices division, reported revenues increased by 29.1%, which is a very good performance too. Center made a big initial contribution in the Q1. As you know, we bought it just last year on December 1. Furthermore, our device business grew quite significantly and especially this effect pushed our organic growth in the plastics and devices business to 4.2%. Looking at the performance in the Primary Packaging Glass division, we might have expected a steep downturn in revenues as a result of the sale of our tubing business on November 2, 2018. But with our converting business showing strong growth and our molded car cosmetic business doing very well, we managed to have only a decline of minus 2.5% in the reported growth rate even though we decided to close down our motor class plan in Newell in the Q3 of 2015. These measures made a decisive contribution to improve the efficiency and profitability of our business. The result is visible in our organic growth rate of +5.6%. So to sum it up, the Primary Packaging Glass division is fully on track and meets our expectations for the quarter. And finally, in Life Science Research, demand continued to be muted. Due to the inventory management for some of our customers, optimized their inventories towards the end of their business years in a seasonally driven fashion. During the quarter, we acted quickly and quickly placed countermeasures such as extended planned holidays and output management. This is reflected in the minus 3 point 5% organic growth rate for the Q1. However, with the strengthening of the U. S. Dollar, we got a 2 point 4% rise in reported revenues in Q1 2016. To summarize, the first time inclusion of Centa pushed the reported growth rate up even much further, smaller, but the positive impact came from the strengthening of the U. S. Dollar versus the euro. And so overall, the developments in Q1 2016 were positive, fully as expected and fully in line with our guidance for 20 6. So let's move on to the adjusted EBITDA slide, that's Slide 8. The adjusted EBITDA margin amounted to 19.3% and was therefore markedly above the level of Q1 2015 where it had been 16.9%. Here you can see the enhanced earnings power from the center inclusion. The group's adjusted EBITDA came in at €66,000,000 in Q1 twenty eighteen compared to €51,000,000 in Q1 last year. In the second line on the slide, you can see that the margin in Plastics and Devices went up from 18.5% in Q1 twenty 15 to now 23.7% in Q1 2016 because the business performed well especially because the high margin center business was excluded for the first time in a quarter. This was fully as expected and as indicated on the full year 15 results conference call, the earnings power for that business has now become visible and compared to our other business, the margin profile of the plastic and saliva business is now clearly superior. In Primer Packaging Glass, we can see positive effect in Q1 with a strong business development in Tubular Glass Converting, especially in the U. S, where we were able to increase sales and productivity. Furthermore, gold and glass contributed also good margin expansion, especially due to the optimized fixed cost structure as a result of the Millville plant closure in 2015. Thanks to these effects, we were able to generate 18.3% margin, which was only slightly below the margin level in Q1 2015 with 19.1%. Don't forget that we had expected an even greater decline caused by the sale of the glass tubing business. So we are happy that we were able to almost offset the now missing contribution from the recently sold glass tubing business that was still included in last year's Q1. Therefore, we are very satisfied with the margin development in Primary Packaging Glass. And finally, in Life Science, the mutual revenue development led to a 1% lower adjusted EBITDA margin year over year. Overall, we managed to show a very good margin performance on group level in Q1 2016, not only because of the positive impact from the integration of Centa, but also having positive margin effect through our strong portfolio optimization efforts. We have a clearly improved earnings profile, which enables 2 40 basis points margin growth on group level in Q1. So this clearly was a positive start for the year, also in terms of earnings performance, which came in fully as expected. Now please move on with me to Slide 9. Here you can see that this was a very successful quarter financially. The key points are, as already discussed, adjusted EBITDA was up by 29.6% and amounted to €66,000,000 Depreciation was below the prior year figures and amounted to 21 point €5,000,000 Therefore, adjusted EBITA was even a bit stronger than adjusted EBITDA and amounted to €44,500,000 at a plus of 55.1 percent. Then you see the one offs that we recorded. You can see that now in Q1, we had a total of minus €1,000,000 in one off effects, which were mainly coming from our portfolio optimization that we implemented in 2015, but we are only now bookable in Q1 2016. Smaller and even positive amounts of €0,300,000 was related to the adjustment of the purchase price related to the sale of the last 2 new business in the past financial year. So that means in total, we had a net effect of minus €1,000,000 when it comes to the one off effect in Q1 2016. While last year in Q1 2015, one offs had been minus €400,000 Amortization of fair value adjustments was up year over year coming from the effect of the purchase price allocation from Centa, The figure in Q1 2016 attributable to Centa was US7.8 million dollars So for the full year, the total center effect in 2016 should be approximately US31 million dollars Overall, our EBIT grew by 35.8 percent in the Q1 and amounted to €33,300,000 which is the highest EBIT figure that we ever recorded in the Q1. Going further down, net finance expense of €8,400,000 was slightly higher than last year in Q1 even though we have increased our debt level market in the meantime. Overall, it's a very good figure, which underlines the attractive interest rates that we got as part of our refinancing activities last year. Accordingly, earnings before taxes amounted to €24,900,000 plus of approximately 43% year over year. Refinery taxes, even though they are higher than in the last year, this is just a consequence of reversion towards a normal 29.5 percent income tax rate. You may recall that last year's Q1 hedging had been extraordinarily low. So net income was up by 38.9 percent to €17,600,000 which is also a very strong development. Let me now reconcile for you through the net income to adjusted net income, which is with the focus on adjusted net income after noncontrolling interest. As you know, this is the basis for our dividend payments. We have that here on Slide 10. The reconciliation can be described in a few steps. I already explained the one off effect and the fair value amortization on that slide on the last slide. Here on Slide 12, these two positions are shown in lines number 23, net of their associated FX effects. The net figures for the FX are €0,600,000 in total one off effects and €6,800,000 in amortization of fair value adjustments. After the add back, adjusted net income was up by 60.6% and amounted to €25,000,000 in the quarter. And so overall, there's a strong increase in adjusted net income after non controlling interest and therefore also in adjusted earnings per share, which is up from 0.43 euros to €0.74 per share. This is a new adjusted EPS record for Gerhardheimer in the 1st quarter. Please move forward with me to Slide 11. So let's just have a quick look at the development of our financial debt as of the end of February 2016 compared to the previous reporting date on November 30, 2015 on the right hand side. Overall, the main message is that the net financial debt position was slightly up, but only because you paid approximately €35,000,000 of taxes related to the sale of the glass tubing business in the U. S. We have already flexed that in February during our financial year 2015 results conference call and now the taxes were paid as expected. Excluding this one off tax payment, net financial debt would have been down quarter on quarter And also very importantly, even including this tax payment, our leverage remains unchanged at 2.9x adjusted EBITDA. The first position on top in light blue is the Schulzen emission that we concluded in November last year. The total amount here is €425,000,000 Figure remains absolutely unchanged compared to the end of November. This debt consists of tranches of 5, 7 10 years to maturity with interest rates roughly between 1% 2%. Secondly, in the darker blue, you see our corporate bond in the amount of €300,000,000 which matures in May 2018, but that also did not change during the last 3 months. The specific position in green represents €241,600,000 in our revolving credit facility, which was drawn by about €9,000,000 more than 3 months ago. We have put the facility in place in June 2016, and it also carries a very good interest rate of roughly 1.2% at the reporting date, and it matures in 2020. And then the remainder in our slightly higher net financial debt position can be explained by the slightly higher local borrowings and leasing, which was almost CHF 3,000,000 higher compared to the 13, 2015. And then secondly, the cash balance was lower by €5,400,000 compared to the level 3 months ago. With this, we continue to have a strong financial structure in place, which is very attractive interest rate and gives us a lot of headroom to execute our strategy for profitable growth. As I said at the beginning, our leverage remains unchanged at 2.9x adjusted EBITDA. We intend to bring that down with cash that our business generates. To remind you, our ideal structure should be 2.5x and we intend to read that approximately 24 Let's then have a closer look at the key balance sheet and cash flow figures on Slide 12. Overall, a good set of results that we achieved in the Q1 2016 is reflected also here, meaning our balance sheet remains healthy and cash flow developed very favorably. Total assets fell down by 2.5 percent compared to November 30, 2015, decline. On the asset side of the balance sheet, mainly results from amortization of intangible assets in regards to the Tenter deal in 2015 as well as changes from foreign exchange rates. On the liability side, the decrease mainly results from the €35,000,000 tax payment in Q1 twenty sixteen regarding the sale of the Tubing business in the U. S. Group equity was down by 1.4% to €388,000,000 compared to €698,100,000 as of November 30, 2015. The main reason for the decline is the change of foreign exchange rates, which overcompensated the positive net income in Q1 2016 amounting to €17,600,000 Let's turn to net working capital. Due to the Tubing sale and the acquisition of Finta, we believe that we can reduce the average net working capital in relation to last 12 months revenues to good 17% starting in 2016. This figure amounted to 18% at the end of Q1 and was therefore improved from 19% as of November 30, 2015. Aside from that, reported net working capital as a percent of last 12 months revenues was 16.2% at the end of the Q1 compared to 15.5% as of the end of our last financial year. But yes, we have repeatedly said the number to monitor and in that sense, the real run rate is the average net working capital, 39%, last 12 months revenues that I mentioned before. And here, the 18% that we had at the end of Q1 2016, you can see that we are coming closer to our 17% target for the full year 2018 means we are fully on track to meet that. Then looking at the operating cash flow figure in Q1 twenty sixteen, you see that it came in at €33,500,000 which means that it is more than twice as high than the figure generated in last year's Q1. As indicated before, this development is clearly driven by the first time inclusion of the very profitable incentive business. With the line below, which is the free cash flow line, you see reflected that we paid the one time taxes in relation to the profit of the Tubing sale of about €35,000,000 in the U. S. In Q1 2016. Therefore, the free cash flow was lower than in last year's Q1, but obviously, it is only a onetime. As indicated on our 2015 year end conference call, the full positive annual effect of the improved cash profile due to the sale of Tubing and the acquisition of Centa will be seen starting with the financial year 20 17. And by the financial year 2018, we expect the operating cash flow margin to be at approximately 13%. That would be another very strong improvement. Finally, looking at the CapEx figure, nothing surprising, everything in line with our expectations. So overall, the good performance in Q1 twenty sixteen is for sure reflected in the balance sheet and the February cash flow figures. Finally, let me sum up with the key financial takeaways from Q1 2016 that you can see on Slide 13. First, let me reiterate that our financial profile clearly improved as a result of the Center acquisition. It is a game changer because we had a broader footprint in the U. S, and Center markedly strengthened our margins and cash generation. You're starting to see that in these Q1 figures, as revenues, adjusted EBITDA margin and earnings per share all markedly up versus the prior year. Secondly, we are fully devoted to primary packaging primary pharmaceutical packaging. You see now our strong setup with both plastics and devices and Primary Packaging Glass showing mid single digit organic growth rate in Q1. And that is what laid the foundation for the overall vertical of the financials in the Q1 2018. 13, operating cash flow was markedly stronger in Q1 now including Center. It shows the strong cash generation of that business. And as I just outlined for the whole Gerasana Group, we want to increase the cash generation even further over the course of the coming years. The 4th point is our very solid financial structure because our leverage remained at 2.9x at the end of the quarter even though we made the 1 off tax payment of about €35,000,000 related to the sale of the glass tubing business in the U. S. And besides, our financial structure has very attractive interest rates and still gives us further headroom. And last but not least, we now have lower CapEx requirements, a better risk profile from our fewer furnaces, which is mainly driven by last year's disposal of the glass tubing business. Also the lower average net working capital requirements of the business excluding tubing have started to materialize in the Q1 as well. So overall, the strong financial situation and increased profitability of the company gives us the power to continue to execute our strategy for profitable growth. So with this, I hand it back over to Ulf. Yes. Thank you, Rainer. In summarizing what we have said so far, Q1 came in absolute in line with our expectations, and therefore, we fully confirm our guidance for fiscal year 2016. We're also fully reiterating our indication for full year 2016 to 2018. Our target is and will remain to profitably grow our company. For 2016, we continue to guide for approximately €1,500,000,000 revenue at constant currencies, which gives us 9% FX neutral revenue growth. Underlying organic growth will be about 4% to 5%. Our guidance continues to be based on an assumed euro U. S. Dollar exchange rate of €1,000,000 for 1.12. Adjusted EBITDA is expected to come in at approximately €320,000,000 at constant currencies. Sanddro, as part of the Plastics and Device division, will generate a full year of adjusted EBITDA contribution compared to the Q4 2015 contribution of approximately €11,000,000 CapEx requirements will be at about 8% of FX neutral revenues, which is substantially below the historic CapEx levels. And let me tell you again that this is not a temporary effect. The lower CapEx rate reflects the structurally lower CapEx intensity of our business driven by the disposal of our tubing business, the shutdown of our Millville plant and the purchase of the Central business. Also leverage net working capital will improve from the 19% in 2015 to approximately 17% in the coming years. We are also fully reiterating our indication for the year 2016 to 2018 with a CAGR of 4% to 5% organic revenue growth. For the adjusted EBITDA margin, we still target approximately 22% by full year 2018. Asset requirements as in 2016 will stay at about 8%. So let me finish in saying, General Simon is well prepared for the future because we see very healthy market dynamics supporting our growth with stable and highly diversified growth prospects based on long term megatrends. Our portfolio changes in 2015 and our growth initiatives have further improved the robustness of our business model with an enhanced product portfolio, greater regional diversification and an expanded customer base while reducing our capital requirements. Our business is more profitable after our 2 week divestment and including Centur, and the Q1 figures makes us visible. We focus on deleveraging while continuing to invest in the future of the business to generate higher high shareholder return also in the future. And if there are interesting M and A opportunities, we would be ready to act because of our good financial profile. We are fully committed to move consequently forward on our path to becoming a leading partner of the pharma and health care industry worldwide. Therefore, we have a high confidence in the setup of our company, and I am excited about the future of Erasat. With that, I would like to hand it back to Nicole. Thank you for your presentation. So let's enter into our Q and A session. The lines are now open for any questions you may have. So the first question comes from Mr. Romain, Deutsche Bank. The first one would be with regard to FX and specifically whether you can break out the effects FX have on sales both for the group as well as the divisions. And secondly, also in order to better reconcile the organic performance, Would you be able to share with us Centra EBIT or adjusted EBITDA contribution of Centra in Q1 this year and maybe also the comparable figure from Q1 last year. Same for the glass queuing business, obviously, here for the Q1 last year, the adjusted EBITDA contribution. And then my last question would be with regard to primary packaging glass. I think, Uwe, you highlighted that the margin was slightly better than expected. Was that down to very good performance in Movie Glass and therefore, better capacity utilization? Or was there anything else behind it? Thank you. Yes. I might start with the PPG margin. As a matter of fact, the main contributor for the movement was our West business, quite frankly. And here, particularly, the 2 pillar glass business was the main driver with 2 effects. Number 1 is obviously higher utilization due to a higher revenue base and more so higher productivity due to the implementation of our machine strategy. The improvement in mold class we saw was compared to the miner. So then let me answer, first of all, your questions about the reconciliation of numbers. I would expect that the next question would be about revenues. So therefore, I start with revenues and I'll give you several numbers about the EBITDA. So when we start with the revenues for Q1 2015, you can see in our report that we had €301,800,000 So Tubing was included in Q1 2015 with approximately €8,000,000 Portfolio optimization means Millville was included with approximately €4,000,000 Remember, we closed our Millville facility in Q3 and it's mostly Type 3 glass type revenues. So you end up and you take out these effects at €289,800,000 And the pro form a figure of Enter in Q1 2015 for revenues was approximately €38,000,000 So when I give you €38,000,000 that means this is based on IFRS numbers on the accounting principle of Rexam. So that means we haven't reconciled them. They weren't all but reconciled to get a similar number in our pro form a figures, which we have given to you in the annual report. So when you put on the €38,000,000 on top, you end up at €3 27,800,000 of revenues. If you then compare this figure with the €342,300,000 euros revenues for Q1 2016. You see a difference of 14.4%, and this difference then exactly showed you our organic growth of 4.4%, which you can see in the which you can see in our report for the group. So for the EBITDA, the same reconciliation. Q1 20 15 EBITDA was €61,700,000 Cubing EBITDA was approximately €5,000,000 Portfolio was approximately €600,000 portfolio optimization. So you end up and you deduct these 2 effects of €5,600,000 You end up at €46,500,000 You add back and you have to add back the pro form a figures from Centa, euros 17,400,000 in Q1 2015. And then you would end up for the comparable EBITDA, which is then approximately for Q1 2015 with 63.9, somewhere around that. And when you see our current Q1 figures, which is €66,000,000, you see that we had an increase year over year of €2,100,000 Again, these figures based on IFRS for some Rexam, not ours. So that's always a little bit an unsecurity also going on further. So the second question was getting together with currency effects. Two main effects, we had a positive effect in currency. So I also can split it up in sales and EBITDA. Sales effect was approximately year over year €4,700,000 and EBITDA was roughly €1,700,000 You had a positive effect out of the U. S. Dollar. With the EBITDA of approximately €1,900,000 and then several negative effects. Brazilian DI, for instance, was approximately 200,000 and Mexico was approximately 300,000, Poland was approximately KRW100000, KRW200000. So you come to the numbers. So the big effects, same effects for revenues. The correlation which we have given you on the past are mostly based on U. S. Dollars and is still in place, which means in the U. S. Dollar change, roughly 10% up and down. You have €0.10, yes, roughly €0.01 means €4,000,000 revenue effect and €0.01 adjusted EBITDA means approximately €1,000,000 EBITDA effect. This is roughly in line. Hopefully, that answers your question. That's great. Maybe just one follow-up. I mean, on the group level, that mean roughly 1.5% of tailwind from currency in the quarter. Can you break that down for the divisions, respectively? Because historically, I'm just asking that question because historically, I think that the tailwinds have been somewhat more limited in the Plastics division, which probably should have changed now with the Central acquisition. Can you look for instance I'll give you one example. When you look on the numbers which we have which we have planned with the 1.12 and all the currency which we have planned, we were totally in line because overall the effects in a positive and negative offsets roughly and especially on the EBITDA because we had the discussion also in our Supervisory Board. We had DKK66 million, which was from the currency effect totally in line with the numbers, which we all had here. So we are this is not a huge effect coming out of currency up to now. Nobody knows where currency will go. That's the reason why we always give you numbers based on 112. So I don't want to go too deep into this or that discussion because at the end most important is the U. S. Dollar and that's what you have to look at. And the effect was nearly offsetting in the Q1 with the other currencies. Okay. So we move on. And the next question is from Daniel Endorff, Commerzbank. Thanks for taking my question. And it's really related to the Classics and Files division. And can you give us a little more color on how you expect the cooling revenues develop in 2016 compared to last year? And also with regards to the Centaur business, can you tell us a little more about the seasonality you will expect from that business during 2016? Yes. Thanks for the questions. I think I can reiterate what I said on the in February. We still expect for the tooling revenues about the same level that we had in prior year. We will see that is a relatively volatile business. There's something some larger development things can come in. It could influence, but we have no different visibility today that we had in February on that business. So the assumption should be and that is included in our guidance at the board at the same level. On Centro, we are still earning the seasonality. Since it goes some of the business goes direct, some of it goes through distribution and then you have the so called flu season or you do not have the flu season or you do have the flu season earlier or you do have the flu season later. We just finished our IT integration into Centaur just a few weeks ago. And there's more analytical tools, we probably look at it. I will reiterate what I have said in February, give us a little bit more time to fully understand that what I see today is that it can fluctuate from with limited competitors and a stable amount of customer with limited competitors and a stable amount of customers on a year to date basis, and this smooths out quite normally. So probably a little bit more color on in the next quarter, and then we have 6 months on on that. So far, it looks like between the months, it is more volatile, but it catches up quickly. Okay. Now Veronika Dvorola, Goldman Sachs. I have 2, please. The first one is just on Centaur and if you can give us a sense on an underlying basis, the kind of growth rate that you saw in that business year on year in Q1, that would be very helpful. Just so that we have a sense whether it's tracking in line with the expectations that you've communicated to us previously. And my second question is on M and A and it sounds like you feel that you have the ability to integrate transactions. Are you seeing more assets out there available for sale potentially? Is that what's driving your commentary? Or is it simply that we are ready for potential transactions should the assets be available? Thank you. Yes. Thanks for the question. I'll start with the last one. As a pharmaceutical component supplier, we are in a very, very small niche. In that niche from an M and A perspective, there might be opportunities opening or not, and sometimes those opportunities are there or are not there for a number of years. So what I wanted to say, and I probably haven't done that as precisely as I should have done, is that we continue to keep an eye on those targets that might be interesting for us. And those targets can be basically can be technology add ons in our device business. And that field is probably a little bit wider than what I call more strategic assets that can move the needle. And that amount of business is very, very limited. Some of that is in private equity hands and if one of the private equity companies sooner or later decides to put something on the market, some of those assets here that we will probably look at very intensively. So this is not much different than in the past. So I didn't want to confuse anybody here with my comment. I hope that's clear as it Yes, that's very clear. And on the sell through, I would say, we are quite very much in line with our expectations. We always said that this is not a business with significant organic growth rate, very stable type of a nondiscretionary spending business, it tracks in line with us. And generally, what drives the revenue is what I said before. On the volume side, it is whether particularly you have a strong flu season or not, which so far actually in the U. S. We obviously didn't. And the second one is, you know, we have passed through clauses on resins. And you can imagine that compared to the Q1 last year and the first quarter this year, the oil price and therefore resin prices have decreased. So there is a small contribution in that number from reduced resin prices, which do actually not affect the margins in this case. So I would say from our perspective, Q1 was well in line with our expectations. Okay. So if I were to You have to keep an eye on Concentrationals. And to add on that, when you look on statistics like IMS or whatever, that's also pretty good reliance to us. When it's going down, it's going down. When it's going up, it's going up because we are well above we are above 50% market share. So the increase gives you a good indication how the business goes, but it's the where the market goes. Understood. Thank you very much. That's really helpful. Okay. Next question please comes from Scott Bauer, Berenberg. Yes. Thanks so much for taking my questions. First question, please, just relates to the plastics and device business. And it seems that you posted around just over 4% organic growth in that business. And whilst that's still healthy, I think compared to the relatively low base that you had last year with the delay in the insulin product sorry, the asthma insulation product last year. And considering the investments that you've made in Czechoslovakia and Peachtree also, I just wondered if you could frame that sort of performance and give us some feeling on whether you expect that organic growth number to accelerate over the course of the year or whether that's a relatively good proxy for how you see the organic performance of the Class 16 Novartis business over the course of 2016? And second question, just coming back to Rainer's reconciliation. Was I right in understanding that there wasn't too much in the way of underlying margin expansion in the group when just for the portfolio effects of Tubular and Centaur. I just wondered if you could give us a feeling for what the underlying margin development was for plastics and Tubular and the glass packaging business was pleased and how you see that when you see that trending up. Our question comes back to some one off restructuring charges that you started to modestly put through in the Q1. Just wondering if you could remind us of what, in absolute terms, do you expect for the full year fiscal 'sixteen and what the sort of restructuring projects relate to? What are they actually? And what will be the benefit for those? Yes, Carlos. I'll take the plastic and device question. So I think you can answer almost the question yourself. Looking at the numbers, we give an indication of an organic growth rate of 4% to 5%. The primary packaged glass business, to my joy, since I'm responsible for that, better in this quarter. But I really do not believe that we can run over 5% going forward Because otherwise, I should have changed the guidance that was based on a lower number subsequently. Obviously, we expect BND to be in line with our with the guided number that we had. What you shouldn't forget if you look at P and G, we have here a plastic, a primary packaging business in it, which heavily relies on sales also in emerging markets, particularly Brazil. I mentioned that those revenues did not come in as we initially had expected that. That was actually compensated pretty much by devices. So I relate here, you know, and defer to the strength of our portfolio that due to the different regions, the different products, we are pretty much capable of achieving our numbers that we have guided when one or the other business might be doing a little softer and the other are doing a little stronger, which is generally I think is a benefit of our life portfolio. Yes. And remember what we have said at the beginning of last year for the margins and the restructuring we've said, we've given you the pro form a numbers for the full year. And for 2015, including center and in Primark Packaging last year, I have to have in mind that we exclude tubing business especially with a very high margin. If you set for plastic and devices, the 2015 number somewhere around 25% and you can go to 25% we'll stay on that level a little bit above. And for Primary Packaging last, from the 22.1%, which we had in 2015, you first of all have to deduct for the Tubing business approximately 2% and from that basis and perhaps there is an organic growth of a little bit but not more. And therefore there's nothing surprising right now in the numbers. So that's totally in line with that what we have communicated And we are totally on track to reach these numbers. Restructuring, I explained in my speech, €0,300,000 from the glass tubing business is nothing else than a recalculation, which was positive for us for the purchase price. And the other effects are, for instance, clean up. So when you are when you need people to further deliver to customers out of your inventory for instance, that's something which you can't build and accrue for. And so at the end, that's the reason what the numbers are worth. This is directly together for sure with the close-up of our millwork facility. There's nothing new coming in. That's only the add on effect for the Q1 based on that. It's only accounting. We're talking about accounting. Okay. Perhaps just a quick follow-up, if I may then. So are we correct to assume that we shouldn't see many in the way of additional restructuring costs over fiscal 'sixteen? Or would you anticipate more? And just lastly, following up on Uwe's comments, can you confirm that you're starting to ship products now out of the Peachtree facility and with new investments there for asthma? And also, are you now starting to ship the asthma product that was delayed in fiscal 'fifteen in line with expectations? I know that this was clearly delayed last year, but is that back on track? Well, I can not make a forward looking statement with respect to PEACHTREE shipment, but I can confirm that we have not made shipments out of PEACHTREE Tree in the Q1 related to the asthma inhaler. And I can confirm that we have increased shipments out of the delayed asthma projects in line with our expectations out of the Czech Republic perspective. And for restructuring for portfolio optimization, that's an exercise that you normally do at the end of the year. And we also don't forecast it right now because it has to come doing our assessment of our business. Okay. Thanks, Gus. Okay. Then we have a follow-up from Torben Teijsar, Hauck, und Aufeijsar. Yes. Hello, gentlemen. Thank you for taking my question. I will have actually only one left and that's related to the Life Science Research business. You said you were generally willing to sell that business if there was a buyer. Now that's a JV you have there. First of all, what's the JV partner thinking about that? Are they maybe the natural buyer? Are there any talks with that partner? Or if not, do you have any feedback from the market whether this AD structure is really a problem? Just to get a feel for how realistic and maybe easy this business could be sellable and what the current status is for that? So I think that this is fairly easy to answer. We have not made a decision whether we sell it or not. We have said we would entertain the idea. We do have discussions with our joint venture partner about such a potential process given that we have the right valuation. And we have no excess sales, also running, and that's pretty much it. All right. Okay. And at the margin level in U. S. Dollar terms, could you give a feel for that? Because you initially said, okay, if it's 15% margin It was 15 percent last year. I think that Reiner worked hard on keeping the margin. The Q1 is generally a weak quarter. You saw that last year. So I'm quite confident that our folks can deliver the target margins on that business. So I will not worry too much about it. All right. Okay. Thank you. As there are no further questions, we would like to thank you for joining us today. And please note that we are going to publish our Q2 results for 2016 on July 7, 2016. Thank you so much.