AVI Global Trust PLC on Thursday said Gerresheimer AG needed to ‘restore credibility’ which had been eroded by Gerresheimer’s trading discount.
The London-based investment manager has a 3.5% stake in the Dusseldorf, Germany-based manufacturer of medication packaging.
AVI Global claimed: ‘The market is assigning a punitively large discount to the sum of Gerresheimer‘s parts.’ Over the last year, the German manufacturer’s stock price has declined by roughly 54%.
Gerresheimer shares were up 2.2% at €48.82 each on Thursday afternoon in Frankfurt, giving it a market capitalisation of about €1.68 billion.
AVI called for ‘new financial leadership’ of the Germany company to regain market trust after slashing dividends. ‘A shot of new medicine is required,’ the investment manager quipped.
Gerresheimer on Monday set a dividend of €0.04 per share, down 97% from the €1.25 per share proposed in February. This is equivalent to the minimum 4% of capital required under Gerresheimer’s dividend policy, and is meant to help ‘maintain financial flexibility’. Gerresheimer also noted that adjusted earnings per share are expected to decline in the low double-digit percentage range, swung from previous guidance for growth at a high single-digit percentage.
AVI recommended a capital allocation committee to review expenditure and acquisitions more carefully. The investor also speculated that Italian packaging producer Bormioli Pharma Spa, acquired by Gerresheimer in December, accounted for ‘a meaningful portion of the problems’ facing the German firm.
According to AVI, the manufacturer should reduce debt by disposing of its Moulded Glass division ‘with haste’, and prioritising Containment Solutions & Delivery Systems.
AVI praised Gerresheimer’s development since the appointment of Chief Executive Dietmar Siemssen in 2018, the investor said: ‘Gerresheimer shares have suffered a lost decade.’
AVI shares were flat at 235.00 pence each on Thursday afternoon in London.
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