Afternoon, gentlemen. Welcome to our annual results conference for FY 2015. With me today are Uwe Röhrhoff, our CEO, and Rainer Beaujean, our CFO. I would like to let you know that this conference is being webcast live and will be archived on our website. Our agenda for today starts with the presentations by Uwe Röhrhoff and Rainer Beaujean. As we did in the past, we are presenting a set of slides to accompany our remarks on this conference. The presentation, the press release, and the annual report can be accessed via our website at gerresheimer.com/investorrelations. After that, we will enter into a Q&A session where we, at the start, will invite our guests on-site to ask questions. Subsequently, all participants joining us on the call will have the possibility to ask questions.
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 records for the purpose of this conference call. With that, I hand over to Uwe.
Thanks. Good afternoon, everyone, and thanks for joining us for our conference here in Düsseldorf. Welcome also to those of you joining us on the call. As I start, I would like to share with you some market dynamics that are quite supportive to our growth strategy. Let me start with the worldwide population increase. According to market forecasts from IMS Health, in 2020, which is not too far ahead, 50% of the world's population will consume more than one dose of medicine per day. This number is substantially increased when we look back. Within 15 years, it grew from one third of the world's population to now half of the world's population. And don't forget, at the same time, the population has grown by 1.2 billion people, from 6.13 billion to 7.32 billion during those 15 years.
The increase is predominantly driven by the high consumption in the countries China, India, Brazil, and Indonesia. Better medical care in highly populated emerging markets means volume growth for our company. The availability of drugs at affordable prices boost drug sales, thus generating greater demand for packaging. This is important for us, since the number of packaging units being sold is most relevant to our business. This, too, is exactly the rationale behind our expansion into the emerging markets. We have several plants in China and Brazil, and also three in India. We will start production in our new greenfield plant in Kosamba in 2016. It is not all about emerging or, as we say, pharmerging markets. The U.S. is, and continues to be, the biggest market in spending on medicines. According to IMS, just five years ahead, until 2020, spending on medicines will increase by about one third.
This will be driven by innovation, invoice price increases, and the loss of exclusivity. Generic medicine will continue to provide the vast majority of prescription medicine usage in the United States, rising from 88% today to 92% of all dispensed prescriptions by 2020. We are, in the U.S., one of the most important manufacturers for liquid and solid dose packaging made out of glass and plastics. Widely used for generic medicines, by the way. Therefore, we heavily invested into new production capacity in our glass and plastic plants in the U.S., and on top of this, with Centor, we successfully acquired the market leader for oral prescription packaging. On top of this, we also invested in inhaler capacity for an innovative product in our Peachtree facility. This substantially increases our exposure to the U.S. pharma market to more than 30% of our group revenues in 2016.
With our offerings, we serve millions of patients that suffer from chronic diseases. According to the International Diabetes Federation, 415 million people suffer from diabetes today. This is one out of 11 adults. By 2040, so in about 25 years from now, this is supposed to rise to 642 million or one out of 10 adults. This is why we invest into our production facilities in Plastics and Devices in the U.S., but also in Europe. Our market leading product portfolio includes insulin pens, vials, cartridges, infusion sets, and lancing devices. I would like to share with you some of the numbers. We are a volume producer. Now that we have Centor on board, we produce 15.5 billion products on an annual basis. This gives you almost 500 products per second.
A very comprehensive product portfolio that does not depend on a single form of treatment, but covers a wide portfolio for oral and liquid drug packaging and delivery. The sale of our tubing glass business to Corning has no negative effect on our product offering Since glass tubes are an intermediate product, and as such, the raw material of tubular glass products such as vials, cartridges, and ampoules. In fact, our newly founded joint venture with Corning to bring innovative glass packaging products to the market will contribute in the future new products to our portfolio. Volume matters. Remember, each product counts, since each product is going to serve a patient in a difficult or even a dangerous state of health. I am proud that we can do that. By now, let's move on to the 2015 numbers. 2015 was obviously an exciting year for us.
We are reporting 2015 results fully in line with our targets. We invested in our business, expanded our capacity in the United States, in the Czech Republic, and in India to drive our international expansion. Furthermore, we achieved solid progress in restructuring and simplifying our business. We expanded our plant in Peachtree, United States. We allowed for further additions to production capacity at our location in Oloví, in the Czech Republic, and we completed the extension and quality improvements at our molded glass plant in Chicago, and completed construction of a new production building for manufacturing of vials and ampoules in India. We made a value-enhancing disposal, such as the sale of our former glass tubing business to Corning and with Centor, the U.S. market leader for plastic packaging for oral prescription medication. We conducted our biggest M&A deal in our company's history.
We successfully completed our refinancing in June and issued a Schuldschein in November to replace a bridge loan that we had in place in order to finance the Centor acquisition. That said, 2015 was a very successful year for us, and together with the Supervisory Board Report, we propose a dividend of EUR 0.85 per share to our shareholders. We have a very solid base that we can build upon as we move ahead. The purchase of Centor increases not only our product diversification, but our regional diversification. In 2015, revenues in the Americas stood at 23%. We estimate that the U.S. revenue share to increase even further to about a third of total revenues in the fiscal year 2016. By then, Centor will be contributing on a full year basis.
The acquisition of Centor enabled us to achieve a long-standing goal: to strengthen our position in the U.S. market for plastic pharmaceutical packaging. We have been number one in North America for many years now with our glass vials and ampoules for packaging liquid medication administered by injection. With Centor, we are now America's number one when it comes to plastic packaging for oral prescription medication. Please move on with me to slide eight and take a look at our key metrics. As I said earlier, numbers are fully in line with our targets. On a reported basis, revenues rose by 6.8% to EUR 1,377.2 million. Organic FX neutral growth stood at 1.5%.
Especially our high-value products, such as injection and inhalation devices, as well as diabetes care products, significantly supported our growth in 2015, offset by the expected lower tooling revenues after our record year in 2014 and lower U.S. revenues for pharma glass containers due to the shutdown of our Millville plant. Adjusted EBITDA consequently grew 9.7% to EUR 277.9 million, supported by the inclusion of Centor for the first time in Q4, as well as several operational improvements along all divisions. This gives us an adjusted EBITDA margin of 20.2%, right where we want it to be. Adjusted EPS earnings growth was even stronger, almost twice as high, with adjusted EPS being up 18% to EUR 3.41. Based on our successful year, we will propose a dividend of EUR 0.85 per share for the financial year 2015.
This represents a dividend payout ratio of 24.9% of adjusted net income after non-controlling interest and an increase of 13.3% against last year's dividend. Let me now review our guidance in detail. We fully delivered on our targets for the fiscal year 2015. Excluding exchange rate effects, we recorded organic revenue growth of 1.5%, which corresponds to our guidance of 1%-3% organic growth. In terms of adjusted EBITDA, we were heading for a corridor of EUR 255 million-EUR 265 million at constant currencies, and finally recorded on a comparable basis, EUR 262.5 million, excluding exchange rate effects. Don't forget that in this number, tubing is only included with 11 months contribution. We basically hit the upper end of the corridor.
CapEx to that 9%, also fully in line with our expectations, with huge investment in furnaces such as Chicago Heights, and as well as machine standardization projects. 2015 was quite a successful year. Rainer will now walk you through the finances in more detail.
Thank you, Uwe. Ladies and gentlemen, welcome also from my side. Let's have a look at the revenue development for the year on slide number 11. On group level, revenues were up by 6.8% and amounted to EUR 1,377.2 million. Our organic growth rate year-over-year was 1.5%. Throughout the whole year, we had a strong and positive currency translation effect, which can mainly be attributed to the strong US dollar. In the Plastics and Devices division, organic growth was 2.8%, and reported revenues increased by 7.8%. This is a decent growth rate, which was driven by plastics primary packaging in Europe, as well as our medical plastic systems, where inhalers, insulin pens, and diabetes care products posted good growth rates. Also Centor made an initial contribution in the fourth quarter of EUR 31.2 million.
Don't forget the counter effect out of the lower tooling revenues as well as the slower start of the inhaler product, which were already included in our original guidance for 2015. In the Primary Packaging Glass division, we had a slow start to the year with negative organic growth in the first quarter of 2015 coming from weaker customer demand in the U.S. Over the course of the business returned back to the growth path. We recorded 0.6% organic and 4.6% reported growth in that division. Other than that, we closed our Millville plant in Q3 as part of our efforts to optimize our portfolio and are now focusing all our U.S. molded glass efforts on our Chicago plant. Considering the circumstances, we had a good year also in Primary Packaging Glass.
Finally, in Life Science Research, demand continued to be muted, as is reflected in the -0.8% organic growth rate for the year. However, the strengthening of the US dollar caused a strong 15.3% rise in reported revenues in full year 2015. From that, we benefited a lot. To sum it up, organic growth picked up in the second half of 2015. In addition, the strengthening of key currency, with the euro, most of all the US dollar, pushed the reported growth rate markedly up. Overall, the developments in 2015 were fully as expected and fully in line with our guidance, and then also included a positive effect from Centor in Q4. Let's move on to the adjusted EBITDA slide and that's slide number 12. Here, the development in full year 2015 was also positive, driven by good margin developments in all three divisions.
For the first time, the adjusted EBITDA margin in a year was above 20%. Actually, it amounts to 20.2% and was therefore markedly above the level in the prior year, where it had been 19.6%. Group's adjusted EBITDA came in at EUR 277.9 million in full year 2015, compared with EUR 253.4 million last year. In the second line on the slide, you can see that the margin in Plastics and Devices went up from 21.1% last year to now 21.9% in 2015, because the business overall performed very well. Centor made an EUR 11 million contribution in the fourth quarter. Therefore, please make sure that when you forecast the 2016 revenues and adjusted EBITDA for Gerresheimer, please remember that we had already one quarter included now in Q4 2015. When you forecast 2016, there will only be three additional quarters of initial contribution from Centor.
Primary Packaging Glass, the margin also rose to 22.1% and was higher than the margin level in 2014, which had been 21.5%. We had a great year here on the margin side, and that was driven by the strong business development in molded glass in Europe and in tubular glass converting in the U.S. It still had EUR 22 million in contribution included from the glass tubing business that we effectively sold on November 2nd, 2015, after 11 months in the full year 2015. Again, when you think about full year 2016, please make sure that you exclude these EUR 22 million in adjusted EBITDA because we sold the business and also please make sure to exclude approximately EUR 34 million in 2015 sales due to this reason, too. Finally, in Life Science Research, our improved productivity led to a higher margin year-over-year.
Effectively, we achieved a new record high margin of 15.2% in 2015, which compares to a margin of 14.2% in 2014. That is a strong 100 basis points upward margin movement, especially considering that last year's margin was already quite good for the business, which is very asset light overall. To sum it up, we managed to show good margin performance in 2015. In 2016, we will lose the clearly positive adjusted EBITDA contribution from the glass tubing business. Please remember that we will have a positive impact from the inclusion of Centor. Please move on with me to slide number 13. Here you can see that this was a very successful full year financially, despite a handful of one-offs that we recorded. The key points are, adjusted EBITDA was up by 9.7% and amounted to EUR 277.9 million, also boosted by Centor.
It was only included since the start of Q4. Depreciation was roughly flat because we had no tubing depreciation since July, but still recorded revenues in that business for most of Q4. Therefore, adjusted EBITA was even up a bit stronger than adjusted EBITDA and amounted to EUR 191.6 million, a plus of 15.5%. You see the one-off that we recorded. The key message is that despite the Centor purchase and the charges for portfolio optimization, which amounted to EUR 15.9 million, these items were overcompensated by the positive one-off income from our disposal of the glass tubing business of EUR 52.2 million. Don't forget, if you forecast 2016, portfolio optimization stands for approximately EUR 60 million of sales with a lower margin, which you have to take out for comparable year 2015. Nothing new. It all depends mostly on Millville.
By the way, you can see a complete overview and discussion of all the one-off effects in our annual report on page 38 and 39. That means we actually had a positive effect of EUR 24.3 million when it comes to one-off effects in 2015. While last year, in 2014, one-off effects had been negative. Amortization of fair value adjustments were up year-over-year, coming from the effect of the purchase price allocation from Centor. The overview on the changes of intangible assets can be found in the annual report on page 99. To summarize, the 2015 fair value amortization for Centor means one quarter is approximately EUR 7 million. The full year effect, 2016, will be approximately EUR 28 million.
Overall, our EBIT grew by 49% in 2015 and amounted to EUR 193.6 million. Clearly the highest annual EBIT that we ever recorded. Going further down, net finance expense was slightly higher than last year. Our debt went up markedly towards the end of the full year. We have included one-off positions here in this figure, which are EUR 3.5 million to hedge for an exchange rate movement related to payment of the purchase price for the Centor acquisition, and also EUR 3 million in write-offs in relation to refinancing mostly debt issuance costs in June 2015. Overall, a very good result. Earnings before taxes amounted to EUR 159 million, a plus of approximately 60% year-over-year. Finally, taxes.
Even though they are higher than in the last year, this is just the consequence of the higher income figure pre-taxes and a partly reversion towards a normal 30% income tax rate, while the tax rate had been extraordinarily low in the previous year. Net income was up by 54.6% to EUR 112.7 million. Overall, a very strong development. Let me now reconcile the net income to adjusted net income with a focus on adjusted net income after non-controlling interest, because this is the basis for our dividend payment, where we have these numbers here on slide 14. The reconciliation can be described pretty quickly. I already explained the one-off effects and touched upon the fair value effects, which are higher because we have made the purchase price allocation to Centor.
Included in the net finance expenses is the one-off effect of EUR 4.5 million attributable to the hedging of the payment of the purchase price for Centor, as well as the refinancing of the bridge loan and the revolving credit facility. All of our effects together do have a negative tax effect of approximately EUR 1.3 million. The one-off tax-related effects of EUR 1.8 million relate to the tax payment after recent corporate tax audit. We have finished all tax audits for the German tax group, including the year 2012. This gives us a good security on tax going on forward. The adjusted net income was up by almost EUR 20 million and amounted to EUR 117.7 million. Obviously, then we have an amount of EUR 10.7 million attributable to non-controlling interests.
Overall, there's a strong increase in adjusted earnings per share from EUR 2.89 to EUR 3.41 per share. As you know, our dividend policy is to distribute 20%-30% of the adjusted net income after non-controlling interests. Therefore, we want to pay EUR 0.85 per share, which is 25% like in the prior years. It is a 10% increase compared to last year's payment, and actually the fifth consecutive increase in our annual dividend. Let's have a look at our new financing structure that we now have in place after our refinancing of our bank loan on slide 15. We implemented in June 2015, as well as Schuldschein debt placement that we concluded in November 2015. This was all necessary to refinance our new company, Centor.
The purchase price of EUR 652 million was fully financed as of 30th of November by the Schuldschein of EUR 425 million, plus the higher drawn revolving credit facility, as well as the tubing sale of approximately EUR 196 million. A huge success, if you remember that we acquired Centor as of 1st of September 2015. Let's just have a quick look at the components of our new structure at the end of full year 2015 on the right-hand side of this chart. This first position on top in light blue is the new Schuldschein emission that we concluded in November. The total amount here was EUR 425 million. It consists of tranches of five, seven, and 10 years to maturity, the interest rates are between 0.75 variable interest rate for five years and 2.04 fixed coupon for 10 years on that debt.
You can read all details in our annual reports on the pages 113 to 115. Secondly, in the darker blue, you see our corporate bond in the amount of EUR 300 million, which matures in May 2018. Finally, the third big position in green represents the EUR 232.8 million in our new revolving credit facility that we put in place in June 2015. This facility carries also very good interest rate of roughly 1% of the reporting date. It matures in 2020. With this, we have a strong financial structure in place, which has very attractive interest rates and still give us a lot of headroom to execute our strategy for profitable growth. With this, we have also fully financed the Centor deal over the mid to long-term.
That is the reason why our leverage has gone up year-over-year from 1.7 times to now 2.9 times net debt to adjusted EBITDA as of full year-end 2015. This number is better than originally indicated with approximately three times, we further intend to bring that down from the 2.9 times with the cash that our business generates, especially also now boosted by the strong cash generation of Centor. To remind you, our ideal structure should be two and a half times, we intend to reach that in approximately 24 months. Let's have a closer look at the key balance sheet and cash flow figures on slide 16. Overall, the good set of results that we achieved in full year 2015 is reflected also here, meaning our balance sheet remains healthy and cash flow development very favorably.
Total assets were up markedly by 46.1% compared to the last year. That's mainly coming from the initial consolidation of the assets and liabilities of Centor, and was slightly damped by the sale of the glass tubing business. You will find here also all details in the annual report on page 84 under number 2. Group equity was up by 15.5% to EUR 698.1 million. Most of the increase is attributable to the continued positive development of group net income. The equity ratio was lower than last year. It amounted to 28.8% compared to 36.5% at the year-end 2014. The reason is that the purchase price for Centor was debt financed, as explained before. Net working capital was about EUR 20 million lower compared to the previous year's end. It amounted to EUR 213.7 million at the reporting date, which is 15.5% of the last 12 months revenues.
This is not really a run rate. You should really go with the average net working capital figure in relation to last 12 months revenues, which amounted to 19% and was therefore unchanged year-over-year. Net working capital at the reporting date was influenced by two one-off effects, of which one is related to the sale of the glass tubing business, because here we have still included revenues up to the date of the sale of November 2nd, 2015, while we did not include the assets and liabilities of that business at the full year-end, according to IFRS. The other effect was related to the Chicago plant overhaul, which was implemented rather at the end of the year, so inventories here were also lower than usual.
Due to the tubing sale and the acquisition of Centor, we believe that we can reduce the average net working capital to a good 17%, starting in 2016. That means if you compare 2015, where we're at 19%, we think that we can reduce this 2% in 2016 on average. We will give here the overall guidance a little bit later. Looking at the key cash flow figures for 2015, what I can say is that they are markedly up. This is due to the good business performance, the one-off gain from the glass tubing sale, the initial cash contribution of Centor in Q4, and the improvement in net working capital to a very low 15.5% at the year-end of 2015.
Please keep in mind that we will have to pay one-time taxes in relation to the profit of the tubing sale of about EUR 35 million in the U.S. Therefore, the full effect of the improved cash flow profile due to the sale of tubing and the acquisition of Centor will be seen starting with the year 2017. We expect an operating cash flow margin of approximately 13% in the year 2018. Our former number by the year 2018 was above 10%, an outstanding improvement. Finally, looking at the CapEx figures, nothing surprising, all in line with our expectation. Overall, the good performance in full year 2015 is for sure also reflected favorably in the balance sheet and cash flow figures. Finally, let me sum up the key financial takeaways from full year 2015, which you can see on slide number 17.
First, let me reiterate that our financial profile clearly improved as a result of the Centor acquisition. It is a game changer, because we have a broader footprint in the U.S., and Centor markedly strengthened our margins and cash generation. The disposal of the glass tubing business leads to lower CapEx requirements, because we do not need to maintain six furnaces that we sold as part of the glass tubing sale anymore. Uwe will give you some more color on that in a minute. In total, we now have eight furnaces left compared at the beginning of last year, because we sold six as part of the glass tubing sale, and we closed another two as part of the plant shutdown in Millville. That means we have 13 furnaces remaining.
That means as a company, we have not only a better CapEx profile, but also markedly improved risk profile resulting from that. The fourth point is that our net working capital requirements should be lower next year, excluding the glass tubing business, essentially because we will buy the tubes that we need for our converting business from Corning and other companies. We do not need to hold the inventories associated with the tubing business anymore. Together with all other installed improvements, this should make possible a reduction in overall net working capital requirements for the group of about two percentage points, so that an average annual net working capital of about 19% 2015 to about 17% in 2016 of revenue.
I just outlined that as well, we have the strong financial structure in place, which has very attractive interest rates and still gives us headroom to execute our strategy for profitable growth. With that, I hand it back over to Uwe.
Thanks, Rainer. As you said, our target is to grow the company profitably. We started several initiatives to get ready for further revenue growth and strengthening of our profitability. Number 1, we made a lot of progress in Peachtree City. Our facility is now ready for the start of the production of an asthma inhaler in 2016. On top of that, we will have a contribution of additional nine months of Centor helping us to grow in 2016. Third, we expect our Primary Packaging Glass business to grow organically with low single digits, which has been the normal rate in the past. For 2016, we guide for approximately EUR 1.5 billion revenues at constant currencies, which gives us a 9% FX-neutral revenue growth. Underlying organic growth will be about 4%-5%. Exactly as we have indicated last year.
Given that the dollar got a lot stronger compared to last year, we base our assumption for the dollar on an exchange rate of USD 1.12 to EUR 1. Adjusted EBITDA is expected to come in at approximately EUR 320 million at constant currencies. Compared to prior year, there will be EUR 22 million for 11 months less EBITDA contribution from our tubing business. Therefore, you have to adjust the Primary Packaging Glass margin down by approximately two percentage points. The remaining Primary Packaging Glass business is expected to achieve a margin increase in 2016 of up to 50 basis points. Centor, as part of the Plastics and Devices division, will generate a full year of adjusted EBITDA contribution compared to the Q4 2015 contribution of approximately EUR 11 million. CapEx requirements will be at about 8% of FX neutral revenues, which is substantially below historic CapEx levels.
Let me tell you 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 Centor business, which has significantly reduced CapEx requirements compared to the remaining business. Also, average net working capital, as Rainer said, will improve from the 19%
LTM in 2015 to approximately 17% in the coming year. We are also reiterating our indication for the years 2016 to 2018, with a CAGR of 4%-5% organic revenue growth. For the adjusted EBITDA margin, we still target approximately 22% by 2018, and the CapEx requirements, as in 2016, will stay about 8% of currency-neutral revenues, which is a bit lower than we have guided so far. Let me finish in saying Gerresheimer is very well prepared for the future. Our business is supported by stable, diversified growth prospects based on long-term mega trends. We did a forward-looking and trend-setting asset swap. Bought Centor, sold tubing, our goal is to reduce debt again to secure our current investment rating. We are fully committed to move consequently forward on our path to becoming the leading partner of the pharma and healthcare industry.
Again, we have a high confidence in the setup of our company, and I'm personally excited about the future. With that, I would like to hand it back to Anke.
Thank you for your presentation. Ladies and gentlemen, we are now ready to take your questions from everybody here in Düsseldorf. May I ask you to use the microphone so that everybody can understand you also in our call. Thank you, Sabina. First question comes from Christoph Gretler.
Thank you. It's Christoph Gretler, Credit Suisse. I have a question with respect to Centor. Could you elaborate on the performance in Q4 versus the past 12 months? If I look at your annual report, page 85, you basically had a contribution of EUR 11 million in EBITDA. If it was consolidated for the last 12 months or since the beginning of fiscal 2015, EBITDA would have contributed about EUR 63 million. Could you elaborate on what is the difference here in terms of full-year performance versus Q4? Again, if I understood you correctly, you expect about EUR 28 million in incremental contribution for fiscal 2016, whether I got that correct. The second question is with respect to your restructuring. Are there any costs and assets planned for fiscal 2016, actually?
Centor. You should assume for the year 2016 that nearly the same amount for Centor for the full year also is our expectation going on further. As we said during the acquisition, we want to keep the good profitability and the margins which we have there on that level, and that's clearly our target for the last quarter. That's exactly what we have expected. The EUR 11 million, that's totally in line because have in mind, the year-end for us ends at the thirtieth of November, flu season and all the other stuff starts normally a bit later. First effect, second, in the EUR 11 million, you have a one-time effect due to the purchase price allocation of approximately $2.3 million, which is another $2 million. Now we are in the jungle of a million up and down. We are pretty happy with the performance of Centor.
It's exactly in line with that what we have expected. If you see our quotes in Q3 or when we announced that we are doing it, we said EUR 13 million and approximately EUR 12 million. With the EUR 13 million, which we reached at the end, when you take the special effect out due to the write-off of inventories due to the purchase price allocation, and the EUR 31 million for the last quarter, we are totally where we wanted to be, and we also can say, right now, it also works very good or acceptably good as we expected it in our guidance for the year 2016. We are happy with this acquisition. Second question I haven't got, to be honest.
That was on restructuring, actually. Whether there are any assets and plans for 2016.
Yeah. The EUR 28 million, which you asked before, I don't know, what was the EUR 28 million? Perhaps you can repeat that in your second question, which you had.
Yeah. No, maybe I just misunderstood. I thought you said that there was an incremental EUR 28 million in EBITDA contribution for Centor for this.
No. You have to assume, what I would forecast is I would take out the EUR 11 million, then I would take in the full year effect, which you could see in the annual report. I think that's the best guess which we can have right now for 2016 as the full year amount for Centor and their contribution to the EBITDA. Portfolio optimization, as you know, we always streamline our profitability going on further. For us, that's an exercise which we do during the year, we don't forecast that. We would like to keep our margins on a high level like we did in 2015, where we have taken out some stuff here, EUR 16 million in revenues, approximately. I would say profitability was EUR 2 million-EUR 3 million. That's the reason which we had in 2015.
We are not forecasting right now what is going on in 2016 because that all depends on the performance.
Thanks for taking my questions. Three, if I may. One is relating to the emerging markets. Can you potentially comment on how your business is developing in Brazil, India, and China? Second question, a follow-up question on Centor, please. How do you expect the top-line development going or the general market trends for Centor? That'd be helpful. Last question, when I see your Life Science Research performance in the fourth quarter, the margin development, maybe the market is getting a little easier for the business as well. Is this increasing the likelihood of a potential third party coming around the corner, knocking on your door, and saying, "We are interested in this business." Thank you.
I start with the emerging markets. As we stated, as you know, the IMF forecasts and our own business estimate, we believe that the contribution, particularly on volume growth in the emerging markets, will continue to be solid for the coming year. Nevertheless, we have a couple of different economic situations in different of those markets today, and we know that particularly in Brazil, economic development has been rather soft. Even though that we are basically in the prescription medicine market, you see some of those issues in our business, and we have already included that in our forecast. I see India continuing to be quite strong. Going forward, I also expect that even though that the growth is rather limited by the infrastructure in India, the overall development in the pharmaceutical markets are continuing to go strong.
In China, we have a number of regulatory changes that move regulatory hurdles more or less closer to the Western world, which makes it more difficult to approve new packaging for drugs and new drugs with registration. I think that overall it's a very solid trend on increasing the entry barriers in that business. I do think that the excellent growth rates we have seen in the past in China, maybe for 2016, are somewhat dampened as well, and we have taken that into account in our forecast as well. On Centor, I think that the top-line expectations, we said this is a top-line business that grows low single digits, is included in our forecast.
What can happen to the top line are basically only two things, which is depending on oil price and resin development, that we have increases or decreases in prices to the customers that are generally margin neutral. That could potentially affect a little bit, the growth number for the year. That is really the only effect. Other than that, this is a super robust business due to that it is all prescription packaging. Estimation, as we have indicated during the acquisition, those assumptions are included in our guidance. Life Science, yeah, Rainer Beaujean achieved the magical 15%, we always said, this is a nice margin, which could trigger a potential sale.
Since we generally do what we promise, it would certainly not be a surprise if a good offer comes to our table and our partner, Thermo Fisher, don't forget, it's a joint venture, we have to act in concert, agrees to it as well, that this will trigger a portfolio change going forward. It should not be considered, if it happens, a surprise. If it doesn't happen, it always takes the necessary offer for a good transaction as well. From that standpoint, it's pure speculation at this point.
Also to say that it's not a miracle that we reached the 15%. It had to do with several minor actions. For instance, shift some system change, some mix portfolio optimization, some efficiency gains in the two major manufacturings and so on. We've done a lot. We also will do during this year a lot. We're ready to invest further on, as Uwe said, in that moment, somebody comes along. That's what we always said several years. We always said in 2012, I remember that. It's also written down on our annual report that 15% is the magical number which we have to reach, and this year we have reached the 15%. That's true.
Good job, Rainer.
Thanks, Uwe.
Thank you.
Jan Keppeler, please.
Yes, hello. Jan Keppeler, HSBC. Thanks for taking my questions. I also have a follow-up on the Centor acquisitions, especially on the top-line development here. If I take the annualized sales number from your annual report, which was EUR 143. Convert that back to US dollar, the number is somewhat lower than the initial number you have given for 2014. Is this really an underlying sales decline or any specific differences here maybe in the accounting standards? That's the first question. The second question would then be on your EBITDA guidance for 2016. I was wondering if you could share with us a bit what are the crucial triggers actually, which could decide if you end up with the upper or lower end.
I think I was particularly asking this question in regard to the lower end, because I think this scenario, if we take into account the Centor acquisition and the disposal of the tubing business, does not guide for any organic EBITDA growth in 2016.
When you look on Centor, this is a pro forma number, which has to be put in. Don't forget these numbers are not our numbers in that case. We have to take it how they are from the audit reports. Before, there was also included several changes during the year. The number which we have here and the one that EUR 43 million is in the notes of the annual report is a number which is okay. We don't have a better number going on further. That's the number for the revenues. It couldn't go up, as Uwe has said, based on raw material up and down, but the margin is totally robust. The attrition rate.
When you see that we have put in EUR 450 million on customer value, it shows you that the attrition is very high and you can see how robust the business is. We are not afraid, going on further, that we can keep the good cash flow and the high profitability on that level. Yeah.
The only thing you have to keep in mind, what can influence the revenue base, which is on the volume base is extremely robust, is the development of oil price that eventually might have an effect on resin prices. We have pass-through clauses with customers, with a very low oil price, you can always expect that the resin prices might be down and then some adjustments have to be made to the sales prices. You can imagine that easily can have an influence of 1% or 2% or 3% on total revenues, but it will not have an effect on the margins because this is generally margin neutral in the worst case, I would say. That's really the only one. Other than that is a super stable business, same customers, same products. We have one product here in your hand.
From that perspective, I think that has added a substantially increased robustness to our overall business model. We are convinced that this will show in 2016.
Perhaps you give me a chance. Now I have to give you some numbers and that will be a little bit more complicated, but at the end you will see it comes to an end. When you see our revenues this year of EUR 1.377 billion and say this is roughly [EUR 1.12 billion]. We have included in that EUR 31 million of tubing, which you have to take out. You have to take out roughly EUR 31 million in Centor and EUR 34 million of tubing, which you have to take out, and another EUR 60 million of portfolio optimization. You come to EUR 1,296,000,000 of revenues. You add for the next year, on top the EUR 143 million for Centor for full year effect. You come to EUR 1.440 billion roughly as the comparable revenue number for 2015.
You see that the organic growth compared to the EUR 1.5 billion is fine because you calculate roughly 4.2%. If you do the same exercise now for the profitability, you will come up means, you start from the EUR 278 million. You take out the EUR 11 million effect for Centor. You take out the EUR 22 million effect for the tubing business, and you take out for the portfolio optimization roughly EUR 2 million. You add back the full year effect of Centor of EUR 63 million roughly. You come to a number of roughly EUR 305 million. By the way, that's pretty exactly the number which you also need for the pro forma calculation for the net debt calculation because the 2.9x only calculates with the EUR 305 million. The EUR 305 million compared to the EUR 320 million means you have EUR 15 million on top profitability, EBITDA, compared to EUR 60 million on top organic growth.
That means you have an incremental margin out of this extra profitability compared to the revenues of 23%-24%. When you then see at the same time that we are ramping up manufacturing, like for instance in India, like for instance in Peachtree and so on, you see that the incremental margin is even higher. That means, the EUR 320 million doesn't look bad. Again, we don't know it exactly. That's the reason why we have said ±10% is in the ballpark. Therefore, we feel comfortable with the numbers, and we think it's a good number going on further.
We are at the beginning of a year, as usually, we give you more color as we move forward. I think on EUR 300 million, a variation of EUR 10 million on the number, I think is quite a reasonable bandwidth.
Yeah.
Next question from Sven Kueten, please.
Two questions. Thank you. First one is again on the guidance. I think you're guiding for 4%-5% organic growth for 2016. The question is, which product groups do contribute most to that? I think you mentioned already asthma inhalers as one factor, I would like to know the other factor for that. Then again on the Centor, question is, if you could elaborate a bit on the seasonality of Centor. I think you mentioned already the flu season. I don't know, how would you see that, going in the course of a year, the seasonality of revenue and then EBITDA then. Thanks.
I start with Centor. Do not forget that this is a business that has two components. The direct sale to the pharmacies, which are the Walgreens and the Rite Aids of this world, and the sale to distributors. Basically, those have different buying patterns, of course. Distributors generally load up their warehouses before they actually sell to the end customers, while direct customers, basically order quantities directly for the pharmacies. On the seasonality, that depends a bit on when pharma companies start to fill up the pipe, when pharmacies start to fill up the pipelines.
I can only recommend, I think I saw a very similar question to STADA revenues a few months ago, where the question was actually, "When is the flu season going to start?" One of the main selling products is, and this was a month off, I think, compared to the year before. Interestingly, in this business, we see about the same pattern. I would not recommend looking at Centor to look too much at a single month, because the variation from month to month can be quite significant. If you take a look over a longer period of time, this is extremely stable. You can have a super high December, for example, and then the next month, because pipelines are full, will be significantly lower, then the next month could be significantly higher.
It's different than in a direct pharma business where you continuously fill a pipeline because you basically have the distributor here, as a stocking business in between. My recommendation is, I think over the quarters, you do not see too much of it. Generally, taking a look at the numbers, you can already figure out that our Q4 is not a very high quarter, which is different than the rest of our business, by the way.
Are there any further questions here?
The second question was on the guidance. The 4%-5% growth, which products contribute most to it? I think you mentioned already asthma inhalers, the other products, please.
If you take a look, that is very in line with the trends. Number 1 is we think that we have a Primary Packaging Glass, a more normal year in 2016. Compared to a low year that we had in 2015. You will see a normal contribution. On the products, we expect, as we said, I already elaborated on Centor, and we know that Life Science Research will have difficulties on the top line. Those are the performers in the low single-digit growth or no growth areas, if it comes to FX neutral growth rates. You are back to the devices. In the devices, you are back to the high-value products. You are basically back to inhalers. We actually think that in the insulin sector, we will continue to do well, which means the whole product range, not a single product.
You cannot reduce this to an insulin pen, but also more products that go with pumps, infusion sets, lancing devices. We think that continue to do well in 2016 as well, and are at the higher range of our guidance. If you take a look at the absolute lower end, you have Life Science Research. I think the Primary Packaging Glass business comes right in the spot where it has been coming in over the last years on average. On the upper part, you are in the higher value products, devices. Very much in line if you look at the long-term trend at Gerresheimer. I view 2016 as a very normal year, robust business.
A follow-up question from Daniel Wendorff.
Thanks for taking the question. It would be on your RTF syringes within Primary Packaging Glass, sorry, within Plastics and Devices. The fourth line, is this now fully operational? Is it built? How is the competitive situation versus Becton, Dickinson and Company in this field? Any more color you can give us here would be much appreciated, yeah.
Yeah, we made good progress in 2015. We know that we still have, when you take the competitive position to Becton Dickinson, we still have a few more gaps to close. That has also to do with the product portfolio. As you know, we do not have safety devices. We do not have, currently, a marketable COP syringe out of own production. We are working on all those type of development programs going forward, as we have already indicated, during the last capital market days. This is going on with full force. Operationally, Bünde has made good progress last year. Quality indicators have been substantially improved. The fourth line is fully operational. We are very happy with the technology, and we would actually, if there's going to be a fifth line, we are quite sure that it's going to be the same technology.
We are very happy with this. I would say, this is going on quite well. Nevertheless, the largest competitive gaps, if you might say, to Becton Dickinson, are still in the complete product offering. We are working strategically to close those.
The market, in general, is still
This is a good market. It continues to be a good market. I really do not think that what you see here is, you see more generic heparins coming. They will be in syringes as well. You have vaccines growing. I think that market is fully intact. I believe that a glass syringe will continue to see the highest growth rate of all glass primary packaging. No question about it. This is a strategic product for us.
Thank you.
Are there any further questions? Ladies and gentlemen, the lines are now open for any questions you may have. To ask the question, please dial nine plus star on your phone to register. Thank you. First question comes from David Adlington J.P. Morgan, please.
Good afternoon, gents. Thanks for taking the questions. Two, please. Just trying to get a handle on how important the inhaler launch is for your growth expectations this year. Maybe you could help us, how much of that four to five percentage points is attributable to that inhaler launch. Secondly, just with respect to guidance, sort of bigger picture question really. You're still guiding on revenue and EBITDA, but given the fact that depreciation and financing costs are dropping your business, I wanted to get considered at all moving towards guiding on adjusted EPS rather than EBITDA.
Yeah. Thanks for your question, David. I think the inhaler launch is honestly not that important for the overall guidance. In a ramp-up situation, and you guys know that we have learned that not to listen too much on the promises of our customers on the last launch in the Czech Republic. We have been taking a little bit more cautious approach. It is, for us, a strategically important product, but I think the effect on the 2016 guidance would be very limited. Since the launch quantities, we have estimated in our guidance are not set super high. From that perspective, we will see how that develop, but I'm not concerned that this will in any way affect our business with any significance.
Okay. Just to follow up on that. Can I ask, you're expecting, presumably, not to make much in the way of profit, whatever happens this year in that ramp-up phase?
Well, in a ramp-up situation, it is all about cost, quite frankly. This is a heavily regulated business. You have to go to all kinds of hoops to get this approved, get this through the lines. You are absolutely correct. From a profit business, the impact is even less.
Thank you. Then the guidance question.
We were just about to answer the guidance question.
Yeah.
Sorry.
Sorry. Yeah. On the EPS guidance, we obviously have chosen not to change that at this time. I think that we have seen that and tried to explain that for 2016 compared to 2015 with the portfolio changes, this is already a more complex year to understand the transitions, I think, for everybody. We have basically focused on providing guidance so that you compare previous guidance to new guidance on the transition. Going forward, we will always take advice and recommendations if we can improve our overall capital market contribution and include other aspects. For this year, we have not foreseen to give an EPS guidance.
To add on that, I've given several numbers now. As you can see, we have provided you with the fair value amortization out of Centor, which is approximately for the full year, EUR 28 million. We have given you in our annual report a good discussion about the financial debt. If you would calculate that in, would assume that the interest rates for pensions and all the other stays on the same level, you would figure out that the financial income could be similar to the 2014 number. Depreciation, we already said when we came to the tubing business that the depreciation for the tubing business is higher than a normal business. We said during the Centor acquisition that CapEx is lower. When you look on these numbers and would take that as a percentage, you can see in 2015, that we had roughly 6.3% depreciation.
When you then take out the tubing business going on further, that naturally goes down in depreciation, if you can assume 6.1% or something like that. With all these numbers, tax rate, I explained before, we closed our tax audits in the German area up to the year 2012. The indication of the 30% tax rate, and that basis is a good one. With all these numbers, you can easily come to the right numbers. When you believe in our numbers, then when you follow us on the numbers which we have provided you with. Because the fair value amortization also to add on on that. For sure, your assumption would have been that it's going down from the EUR 15 million roughly, which we had without Centor in 2015. Because normally the assumption would have been that it's going down with EUR 5 million.
On that basis, with all the numbers, I would say, even I could build a pretty easy model out of that. Perhaps, with this help, we should come to the point, that you can be pretty close to that what we also have in mind.
Great. We'll certainly try. Thanks very much.
Okay. The next question comes from Veronika Dubajova.
Good afternoon. Thank you very much for taking my questions. The first one is a little bit longer term, and it relates to Uwe, your announcement that you would not be staying on beyond 2018. I know that feels like quite a long time away from today, but I was just wondering if you can walk us through yours and the board's thinking on the whole transition process. My second question is just quickly on Chicago Heights, and if you have an update on now that you've been up and running, is there anything that has surprised or the downside on that? My last question is just quickly to confirm, because from memory, when you announced Centor, I think you were guiding to depreciation at around 7% of sales. Are you now more comfortable with 6%, not just for 2016, but also in the medium term?
That's it for me. Thank you.
Thank you for your question. On my personal situation, obviously, if you are 25 years with the company as I am this year, 2 years more to go, quite frankly, sound like a rather short time, to be honest, and I think I have to speed up a couple of things to achieve what I want to achieve before I step down. I provided the board with Supervisory Board, with plenty of time, to look for replacements. I think that with Axel Herberg being the head of the Supervisory Board and a person who has been 10 years the CEO of this business. We have a fully capable person to guide the process, and I think, that this will, as usual in Gerresheimer, if you take a look at continuity in management, the Supervisory Board will do an excellent job managing the process.
It is my full intention, to stay on till the last day of my contract and do any necessary steps to help with the transition. On the Chicago Heights side, technically a good start-up, complicated furnace, glass quality very good. We are still a bit working on the, what I call the infrastructure, the surroundings. By the way, we will have a Capital Markets Day. No, not a Capital Markets, we will have a Customer Day, sorry, in Chicago Heights. This plant will be in the spotlight of our customers, in the first half of this year. We are very confident, showing the facility around and the achievements, that this will be a successful story in the pharmaceutical market.
Downsides are generally in such a transition, customer approvals for new technologies and in the pharmaceutical sector, you need to make change requests and approval for any type of technical changes in your manufacturing process. That can here and there, affect your ability to ship product, from one month to another, but that is well underway. Customers are so to speak, still daily there.
All the things are planned until we have gone through the entire customer portfolio after the completion. I think that is the only timing downside. Technically, we look quite good.
For depreciation, for Centor, as we said during the acquisition, that the CapEx will be around 4%-5%, so depreciation shouldn't be higher than. That was one of the reasons why we always said, that Centor is asset light or lighter than our normal business, and that also helps us to get down to the 8% CapEx, which we have as a guidance for the year 2016 and also up to the year 2018, because we changed from the asset-heavy tubing business, where we had a depreciation, which is on a yearly basis, approximately 12%, and also had then the positive effect for the group to the approximately 4%, whatever, for the Centor business.
Yeah, my question was more on the group level. Apologies. I think at post-Centor, you were guiding for group depreciation to be at around 7% of sales in the medium term, and currently, you're guiding for 6% in 2016. It was really a question about 2017 and beyond. What are your expectations now?
We are investing on that level, with 8%. We're not expecting that the depreciation will be down further. We even would expect up to the year 2018, coming from the, whatever is your number for 2016, take 6.1 whatever. It should go up a little bit with 0.2% up to 2018. It all depends which kind of CapEx that you will use and so on, and where it's depreciated. Somewhere around gives a good feeling, so it's not going back to 7% up to the year 2018.
That's terrific. Thank you very much.
Okay, Gunnar Romer please, Deutsche Bank.
Good afternoon, everyone. Thanks for taking my question. The first one would be, with regard to your plastics pipeline, whether you can share an update here, and also potential launches from that pipeline, let's say, over the next 12 to 24 months. Secondly, just coming right back on the fair value amortizations, you've indicated, I believe, EUR 28 million for Centor. Is the EUR 15 million underlying still the right number for 2016, and going down probably to the high single digits over the coming years? Last question would be with regard to potential impacts from the oil price. I think you've highlighted some of the potential impacts on the Centor business.
I was just curious whether you can give us some color on the impacts of the remainder of the business and whether near term, this is a margin tailwind that's going to be significant or whether we can neglect that. Thank you.
As with the plastic pipeline. The pipeline is quite good. I can only reiterate that we are working on a lot of longer term projects. I would say there is not a single project that I would like to mention that is worthwhile being as a standout project, such as, a large inhaler line or a large insulin pen line, or 50 million or 100 million pieces to be launched in the next 12 months. We actually, in this case, we should have already announced respective infrastructure investments in this case before we would even do that, because that's generally the start. Don't forget that. First, investment in the infrastructure. Second, investment in the production facilities. Third year, start up of the facility. For the next 12 months, I would not advise you to look for a single lighthouse project in the devices, that makes up for the growth.
We do have a lot of very, from my perspective, lucrative projects. Some of the smaller volume case, but they are very attractive projects. We have some very interesting long-term projects that again, could move the needle quite significantly, and we will keep you updated as we are more certain about the realization of those, because you might remember that our customers can stop those type of developments any time during the project, unless we have signed a manufacturing agreement at some point. Once that would be the case, we would keep you posted. Oil price. Yeah, we have still a business, even though that we have only 13 furnaces. That depends on energy cost a bit. It will have an impact, the oil price, indirectly on our glass business, most definitely.
Even though that we use natural gas as the main source, there is still a movement of the gas price in line with the oil price. Unfortunately, not as strong downwards on the gas price as the oil price has moved down. Here applies what we have always said, when the energy prices move up, we have the ability to pass those on. If the energy prices move down and hit certain trigger points, we have to give customers credit on prices. This is expected to happen in 2016. I see that rather on the price concession side than on the price increase side in the glass business, and I do see the same in the plastic component business with the resin prices, and we have that figured in to our guidance.
The value amortization we had last year, means 2015. As I said, for Centor in Q4, approximately EUR 7 million fair value amortization out of the EUR 22 million means the rest is roughly EUR 15 million. As fair value amortization for a normal year, and you should assume that this is going down, as I said before, the EUR 15 million is going down to approximately EUR 10 million in 2016. Then on top of that, you have then in 2016, the roughly EUR 28 million for the fair value amortization of Centor.
Thank you very much
that's all based then on EUR 1.12 to U.S. dollar, because, that's also what you have to have in mind. Yeah.
Perfect. Thank you.
I give you for Centor or whatever, are always based for sure on currency-neutral numbers. Yeah.
Okay. Scott Bardo, please.
Yeah, thanks very much for taking my questions. Just three, please. First of all, thank you very much for all the excellent financial disclosure this time around. That's very helpful. One of the things that wasn't disclosed, however, was the breakdown of your glass business to tubular and molded. Historically also, you provided some sort of syringe numbers. I wonder if you could just share at least those with the analyst community, so we can track the sort of progress. There are some different moving parts for those businesses, including cyclical effects to some of the molded glass business, so that would be helpful. I wondered if you could also please clarify what the margin is for your ready-to-fill syringe business. That's something you've shared with us historically. Just so we can gauge whether your investments in this area are starting to pay off. That would be helpful.
That's question number 1, please. Second question just relates to leverage. You mentioned, you're at about 2.9 times levered, which is not a huge stretch compared to the history of Gerresheimer, and that you expect to delever to about two and a half times in the next 24 months. That doesn't seem like a particularly challenging target. If my math is correct, just the incremental EBITDA from the net effects of Centor plus the tubular business disposal broadly takes you, without any absolute debt reduction, to around two and a half target next year. I just wondered if you could share if there are any other moving parts that we need to consider there. Last question, please. Very encouraged to see CapEx continuing to trend down.
Can you just give us an update as to why now you see 8%, whereas you had announced this sort of 8%-9% range after the disposals. Also similar sort of FX environment. I just wonder if there's any structural change or any change in investment or things that lead you to be more optimistic about your future expenditures. Thank you.
Well, I might start with the CapEx question, the answer is very simple. We do a strategic planning every year. We go through the needs of the business. We see where we have to invest based on projects and based on our machine strategy. As we always have said, we have invested quite a bit in the past. During this exercise, we realized that probably when we gave the 8%-9% guidance, we were a little cautious, not having completed that exercise at this time. After going through that and going exactly through the effects of Centor for the portfolio and tubing and the CapEx requirement of the underlying businesses, we feel very, very comfortable with the guidance of 8%. That has really nothing to do with a different look at the underlying businesses.
This is just a result of doing the homework more thoroughly than a week after the Centor acquisition.
Understood. Thank you.
To answer your net debt question. As I said before during my speech, have in mind that we will pay out in February, means first quarter, the special effect for taxes out of the tubing sale of EUR 35 million. Which is then an effect which you have to have in mind compared to the operating cash flow improvement in 2016. It's a one-off. For sure, I would be happy to be faster at two and a half. First step is that we think that's our target to get at the two and a half times. Again, if there is something which comes up, we're not ruling out that we also can do something on smaller acquisitions left and right, in products or portfolios or whatever. The two and a half, for sure, our target is to be there in 24 months.
Main reason for sure is also that we have to refinance, as you all know, in March 2018, our bond. Therefore, before we would like to have a good financing situation, that we have a good feeling, how much we need and how we can do it. That's mostly the target. You always can be better on that, first of all, let us have Centor and all the other stuff. We changed our portfolio dramatically during last year. Let us see how the year runs, then we discuss further during the year how the numbers will develop.
To your first question, I only have to say no, because we already provided you with a lot of numbers also for the margins and all the others on the segments, and we won't go deeper than the numbers which we have given to you, because I think that's already a lot. Some work I also have to do, I should say, but I'm not doing that.
Yeah, I know. I appreciate you provided a lot of numbers. Just to refresh your memory at the time of the change of divisional structure, I think you committed to updating the market verbally about the progression of these various businesses. Just given the various different moving parts and the investments in each, is there at least an ability to give us a feeling for what the magnitude of the ready-to-go syringe business, molded business is, how they're growing, would be helpful actually for modeling purposes.
I think we have already made comments to that. The margin in the Primary Packaging Glass business went up in 2015, despite a very difficult revenue year. As you guys know, we generally need volume to achieve price concessions in that business. Obviously, we did not achieve volume, but we increased the margins. I can tell you that most likely did not come out of the molded glass business, in this case. That has to come out of the businesses, where we can improve the margin. That was mostly tubular. As I said before, in the syringe business, I said we have made significant progress. I have told you about improved quality, KPIs that generally show up in reduced costs.
I think you can take the assumption that the profitability of those businesses, what you call former tubular glass, has developed well in 2015, and we continue to expect positive developments going forward.
Thank you so much
as light as we want to shine on this at this moment.
Understood. Thanks very much. That answers my question.
Oliver Reinberg, please.
Hello, can you hear me?
Yeah.
Oh, perfect. Oliver Reinberg from. Three questions if I may. Firstly, just coming back to net financials. I'm not sure, did you say we should expect the net financial income to be in line with 2014 or 2015? If you can just clarify that. What percentage of your debt is actually currently subject to variable rates? That would be the first question. Secondly, I think in the U.S. there was a bill signed about two years ago called the Drug Quality and Security Act. I think this bill is mostly about a compounding center, but one side element of the bill also includes the requirement for manufacturers to put a product identifier on each package. Can you just talk about how this will actually impact Centor and how this is going to be implemented in the industry?
Thirdly, I think there's also, this may be long term, a trend towards smart inhalers in the industry. Is that something thirdly you could also offer or could that be a certain switch in the industry demand? Thank you.
Start, with the interest rates, you can find them in our annual report on page 114. You can also see in which area we have which amount, with which interest rate. That's hopefully pretty transparent, then you can make your calculation, what the average interest rate is. If you do your exercise, you should come out between 2.6% and 2.7%. I said 2014 number, not 2015 number, because in 2015 we had some special effects, especially due to the refinancing of the revolving credit facility, the one-time effects out of that. That's the reason why this number is not really comparable. For sure, if you look in the financial result, dependent on interest rates for pensions and how many gain you have, you can have a deviation of a million up and down. It's pretty stable going on forward.
Perfect.
Let me comment on the track and trace situation. We did, in fact, and I think that's a very good question, have that as one of our key components. While we did the due diligence on Centor together with industry experts, investigate that situation and the potential impact on Centor, the conclusion was basically that this will happen at the pharmacies, and we do not expect an effect on the Centor packaging for the implementation of those laws. From that perspective, we feel very comfortable that the issuer of the medicine, which is a pharmacy, has to fulfill those obligations and not the provider of the packaging to the pharmacy. On the smart inhaler, for clarification, I would ask you, can you specify what you mean with it?
I think I have an idea, before I answer a question that I might interpret differently than you ask it, that you give me a little bit more color on what you are looking for here.
Basically, smart inhalers is that you try to track with the certain sensors whether patients are taking their respective dose.
That is what I thought. Being the largest contract manufacturing supplier for inhaler in the world, we certainly work on innovative concepts with a number of our customers for improved drug delivery and traceability and compliance devices. Yes, if those type of developments will see market acceptance, we would be capable of delivering that together with our customers that generally own the IP to the market. That would fall right into our sweet spot.
Great. Can I just get brief back to this U.S. act? Whose responsibility is it, finally? There's various parties involved. The way I read it's up to the manufacturer. You also have parties involved that are actually doing these kind of machines in which you put your plastic devices, and there's also the pharmacy. Who is ultimately responsible, and who is bearing the cost of that?
It looks, in the interpretation on the implementation, that the cost is with the pharmacy, because the pharmacy runs the container. We actually do not put the container into the robot. It is the pharmacist who controls that process, who makes sure that the appropriate tablets are filled in the appropriate silos and that the process runs right. That is basically like an extended filling as you would have it in a pharmaceutical company, and that is why industry experts and the pharmacists basically see that responsibility clearly with the pharmacies.
Okay.
For that type of drug dispensing systems. You know that it is different within pharma companies filled liquid products, that then basically goes with the pharma company.
Well, I'd last follow-up with me on that. That would basically imply that according to the law, it's the responsibility of the manufacturer. In this case, you assume that they pass on this responsibility and basically rely on that the pharmacies are doing that. Normally, if I just think about it, obviously, an existing system will not change overnight, but would not be simply moving towards this stream be the easiest solution for a manufacturer?
Could be, the manufacturer, in this case, doesn't bear the cost because it's a pharmacist, because that's a dispensing system. That basically creates the hurdles and the little interest for the pharma companies to take on the packaging, because today they deliver for those type of products, tablets, they deliver bulk ware. There is no branding on the bulk ware. Don't forget that. For most of those medicines are generics. On the label, we have here a number of those packages on the table. You basically have the active ingredient mentioned on the table that is prescribed. There is no brand name for the manufacturer.
I think particularly with enhanced discussion on drug pricing in the United States, where pharma companies providing life-saving, patented, branded drugs and increasing prices, there is a strong push in the healthcare system for the pharmaceutical environment to keep healthcare costs low. The only way to do that is basically avoid any type of branding to get to price diversification on those type of products. The best way is a standard packaging product with a label and nothing printed on who is the supplier. That is basically the outcome of the investigation we have done, that there are too many aspects in the process that would not make it likely that the packaging goes away to the European way of packaging tablets.
It's still on, basically, to be implemented late 2017, correct?
Yes, definitely.
That's all.
In a regulated environment, anything that is implemented 2017 needs to be basically already working in 2016. That is the case. We do not see a risk.
Okay, perfect. Thanks a lot.
If there are no further questions, we would like to thank you for joining us today. Thank you very much. Please note that we are going to publish our Q1 results on April 13, 2016. Thank you, and goodbye.