Gerresheimer AG (GXI) Earnings Call Transcript & Summary

Welcome to the conference call regarding the publication of Gerresheimer AG's Annual Results 2020. [Operator Instructions] Now I hand over to Ms. Carolin Nadilo, Head of Investor Relations at Gerresheimer AG.

Hello, everybody, and a warm welcome from my side. Thank you for joining us today to review our fourth quarter and annual results for the financial year 2020. With me today are Dietmar Siemssen, our CEO; as well as Dr. Bernd Metzner, our CFO. We will start a little bit different today by showing a short video highlighting our financial results 2020. And afterwards, we will, as usual, show our set of slides to accompany the management's notes, followed by the Q&A session. Please note, this call is being webcast live and will be filed on our website too. Before we start, I have to remind you that the presentations and discussions are conducted subject to the disclaimer. We will not read the disclaimer, but propose taken it as read into the records for the purpose of this conference call. And now it's my pleasure to start our short video and then turn the call over to Dietmar. Thank you. [Presentation]

Yes. I was almost to say. Thank you, Carolin. But -- good afternoon, ladies and gentlemen, and good morning to those of you joining us from overseas, and welcome to our Q4 and fiscal year 2020 conference call. I'm pleased to have you in this call today, and I hope everybody is healthy. Yes, innovation in all areas of the company. I hope you like the video. I could now, of course, say, nothing to add, which would be extremely efficient. But too many things happened in 2020 to not give you more details on that exciting year. We definitely look back to an intense and challenging year globally affected by COVID-19. A year which hardly can be compared to the past. Gerresheimer team has delivered an outstanding performance and successful managing the challenges of the pandemic. All plants worldwide are running and ensuring reliable deliveries to our customers. We added new capacities for the COVID vials and unaffected by the crisis, we continuously focused on opportunities coming up and accelerating on future growth potentials. This lays the foundation for our future success. We are transforming our Gerresheimer into a growth company as innovation leader and solution provider. And you will hear this more often from us in the next 30 minutes. With this, I would like to come to the key takeaways for 2020. Looking back at the financial year 2020 and the fourth quarter, in particular, it is important for me to underline that Gerresheimer is on a growth track. We have reached our top line guidance on group level at the lower end of the mid-single-digit range. Our core business, which comprises the division Plastic & Devices as well as Primary Packaging Glass achieved an organic growth rate of 3.8% despite COVID-19. More important than this pure figure is that wide areas of the core business have shown solid growth in the center of the provided range or even better. A confirmation that the implemented measures are showing effects. The headwinds we took, especially in cosmetics, have been partially compensated. This gives clear evidence for the future. With regards to the adjusted EBITDA margin amounting to 21.9%, we even outperformed our guidance. The fourth quarter itself has been the best quarter in Gerresheimer's history, with strong growth contribution from our core businesses. We see this as a starting point, where investments to -- into innovation starts paying off and where we clearly see the transformation of our company turns in. All in all, a good result in challenging times. Therefore, I am very happy to announce an increase in our dividend proposal, which is now EUR 1.25, the 10th dividend increase in a row. Ladies and gentlemen, in 2020, we made another big step forward in the transformation process for our Gerresheimer. And notwithstanding the pandemic, we pushed forward this transformation and the implementation of our strategy process that we started in 2019 with high dynamics. Our road map has been unaffected. We took important decisions and reached several milestones, bringing our Gerresheimer step-by-step to another level, knowing that the transformation is not yet fully reflected in our numbers. We are though convinced this is about to come. We have just started. At the beginning of our financial year 2020, I told you above -- about 3 key priorities: one, the guaranty of business continuity. Facing COVID-19 as a global pandemic, brought up the most important and relevant focus, secure business continuity. We are and we will be the reliable partner for the pharma and health care industry, and we will deliver our products with highest reliability, highest quality and in time for our customers and patients worldwide. What we clearly see, our global footprint pays off. All our plants, 37 production sites in 14 countries maintained full production. And this was not as easy as it sounds, considering the temporary, very challenging situations we were facing in countries as India, Mexico or Brazil. But our global pandemic plans and measures worked out well without any meaningful interruptions neither in supply chain nor in production, a very good result, which gave us a lot of credit actually and recognition by our customers. Worth mentioning out of, we can easily say, more than 10,000 working days in our 37 plants worldwide, we had only 5 days of interruption in total. Second was deliver according to plan. We reached the guided targets ranged as announced prior to the pandemic. We sticked to our guidance without any adjustments. No doubt, I personally would have rather seen the result in the center of the range, but we made it. We made it in despite of the headwinds focused and all hands on deck. And we're definitely prepared for the day after tomorrow. Besides fighting the challenges of the pandemic and delivering to our goals, we had full focus on exploring and realizing new business and growth opportunities for the time after the pandemic. And the team did very well. We secured important new contracts with new customers, and we won new lead contracts with existing customers. We established new relationships with several of the top biologic companies around the globe. We increased our cost -- customer orientation, focusing on the customer needs in order to accompany them alongside the full journey of their product life cycles. The future Gerresheimer will be even more than today, the go-to partner for our customers, innovating for a better life. The Gerresheimer team is on a mission. Transforming our Gerresheimer into a growth company, as innovation leader and solution provider, this is the core of our strategy process formula G. As partner of choice for the pharma and biotech as well as the health care industry in general, we are providing our customers with the right product solutions alongside their value chain. For this, we focus on the customer needs and demand for innovation solutions. Another fundamental driver of our long-term sustainable profitable growth is based on megatrends, global megatrends in pharma and health care. We see 9 key megatrends that are relevant in leading for Gerresheimer. The focus on health care has been further strengthened due to the COVID pandemic. The demand for global players with global and also regional footprint throughout the whole pharma value chain is accretive. We are also seeing a broader access to health care in emerging markets, and the focus on vaccinations will expand clearly beyond the current COVID vaccine discussion. Furthermore, demand will be driven by increase in chronic diseases and a continuously aging population. More self-medication and individual customized drugs require safe, accurate and easy application systems for the patients. That's where Gerresheimer comes into place. We see challenges, but also opportunities in higher and tighter regulations. And a dominant factor of future health care systems are the increasing costs that are and will further become globally one of the biggest challenges in the coming years. We see our role in responsibility in finding solutions to fight this trend. Furthermore, the increasing importance of biologics and biosimilar drugs is relevant for us and provides growth potentials. Biotech is a highly promising market for Gerresheimer. We see strong growth potential in the market for injectables in general. While the market for small molecules will remain strong, we see even larger growth potentials for biotech-based drug products, implicating an overall proportional growth in large molecules compared to the small molecules. That means the fast-growing biologics, the biological sector will offer significant growth opportunities, and we will make sure that Gerresheimer with its unique broad product portfolio will be part of this strong biotech market development. Let's come to the company development. We developed a very strong vision. Where do we want our company to be in 2028? How will it look like? We will be leading in health and wellbeing delivery solutions is the vision we developed. To achieve this vision, we have defined 5 strategic directions and very ambitious goals. First, growth. Growth is key. We will bring Gerresheimer on a path for sustainable profitable growth. And we want to speed up our annual growth rates from mid-single-digit into high-single-digit organic revenue growth. Innovation is for me one of the key drivers of our future success. Excellence. We want to be excellent in everything we do. This includes, of course, the product excellence, but it goes beyond the internal processes as well as, for example, things like the customer touchpoints, are relevant for this. Leadership. We take our team with us on our journey into the future, and that requires the right mindset, a mindset for growth and a willingness to win. The cultural change in the company is a core element of the strategy and is fully ongoing. And not to forget sustainability. It was clear to us, if you create a strategy in 2019 or 2020, sustainability has to be a core element of it. We set ourselves ambitious goals, defining key priorities, targets for sustainability, clearly, beyond the need to fulfill requirements, or let me call it, checking the box. As you can see, sustainability is the 5th pillar of our strategy process, formula G. And therefore, it is much more than a common sustainability approach. We set the whole company according to these ambitious sustainability targets, clearly supporting our customers, achieving their own sustainability targets and turning into this into new and additional growth opportunities. Gerresheimer today is strong and very competitive in its existing markets and has attractive and leading market positions. These businesses remain very solid, which has been proven during the current pandemic. In order to significantly outperform market growth, we are now focusing also on markets with over-proportional growth rates, and we are upgrading our capabilities to grow into these segments. Further global expansion is an important element within this direction. And we serve our customers globally, our 37 plants in 14 countries. We produce close to our customers. We are increasing our service offering in North America with a new facility for plastic packaging solutions. We are already strong and well-positioned in the business for plastic vials for prescription drugs, but we are now expanding our footprint in the primary plastic packaging for pharma and health care. In South America, we successfully ramped up a new facility in Anapolis. We are expanding our glass capacity in molded glass in India, and we are building a new production facility for plastic packaging in the west of India. Our new plant for medical devices in Skopje, North Macedonia is steadily ramping up. Within the global expansion, we are also setting up local R&D capabilities. Regional innovation centers are bundling the local competencies into a worldwide network. We expand and grow our global network of competencies and innovation centers, adding to the existing centers like Smart Devices center in Olten and our competence center in China. It is the new glass innovation and technology center in Vineland that we opened in the U.S. in 2019 -- on top of -- '18, sorry. On top of that, we decided to install another center for molded glass in Lohr in '21. India and China are further extensions that are planned in the outer years. Gerresheimer has a strong focus on new innovational products. We see 2 core segments, high-value products and smart digital solutions. Moving up the value chain, it's the first group, examples like ELITE Glass and ready-to-fill products are already well-known to you. We integrate production steps from our customers, which are not their core business, as, for example, the washing and sterilization steps or we deliver a product solution that enables the customer to improve their production filling efficiency. We benefit from our broad experience and competencies, for example, from our ready-to-fill syringe business. Our product solutions of the future are becoming smarter, more digital with connected solutions. Our micro pump are clearly one of these products, but we have extended our approach into areas as respiratory and other devices. Our smart inhaler respimetrix that measures the inhalation airflow and monitors the accuracy and efficiency of the administration. This device is fully in line with the global megatrends towards more self-medication and individual medicines. It supports relevant topics as compliance, correct application and other important monitoring data. We see promising market potential, and it underlines our approach of being innovation leader and solution provider. As my explanations outlined, high-value solutions are key growth drivers. But already in 2021, we see them contributing to our growth. This plus the growth in our underlying mature markets and our global expansion is the base for our guidance for 2021 mid-single-digit growth. With this, I hand over to Bernd to lead us through some of the financials. Thank you.

Thank you, Dietmar, and welcome to everybody also from my side. Before we go into the analysis of our figures, some introducing words. As already mentioned by Dietmar, we are proud that our Gerresheimer achieved a quarter of historic records in Q4 2020. On the back of this development, we reached also our 2020 guidance range. We accelerated our growth in 2020 even in a difficult market environment. In our core business, we achieved revenue growth of 3.8%. To put it in perspective, this level of growth was not reached in the last 5 years, and we accomplished it despite headwinds from COVID-19, as you know. Now let's dive into the P&L analysis of Q4. Reported revenues in Q4 2020 came in at EUR 403 million. This includes a negative currency impact amounting to approximately EUR 12 million. Organically, we achieved revenue growth of approximately 7.3% for our core business in Q4 2020. Let's turn to the earnings. We achieved a strong adjusted EBITDA of EUR 100 million, reflecting an organic improvement of 6.5% in our core business compared to last year's quarter. The adjusted EBITDA margin increased to 24.8%. The one-off costs in Q4 2020 increased by approximately EUR 2 million. This increase is mainly related to our COVID-19 bonus accrual for all our workforce worldwide as a big thank you for guaranteeing business continuity in times of the global pandemic. Below EBITDA in Q4 2019, both depreciation and amortization as well as taxes have been materially distorted by extraordinary effects at Sensile. These effects are mainly triggered by the impairment at Sensile in 2019 and related tax impacts. Depreciation and amortization dropped by EUR 119 million to EUR 40 million in Q4 2020. Last year's figure includes impairment losses at Sensile totaling EUR 117 million. The taxes in Q4 2020 amounted to EUR 19 million, translating into a tax rate of around 38%. This relative high tax rate is not representative going forward and triggered by adjustments from temporary restricted loss carryforwards of foreign subsidiaries. The adjusted net income surged almost 50% to EUR 42 million in Q4 2020. However, the comparison to previous year is distorted by extraordinary negative effects at Sensile in the last year. Now let's have a closer look into the divisions. Again, we are very happy and pleased with the development in our core business during Q4. Plastic & Devices. This division grew organically 6.0% in Q4. The negative currency effects, mainly from U.S. dollar and Brazilian real, impacted the reported revenues by a high-single-digit million euro amount. In Plastic & Devices, we saw significant revenue contribution in medical plastic systems and our syringes business. Both businesses achieved double-digit organic growth rates in Q4. While the Plastic Packaging business unit reached high-single-digit growth, Centor in the U.S. was stable as planned. The adjusted EBITDA increased to EUR 73 million, which leads to a margin of 33.3%. The P&D division had a positive impact of EUR 1 million due to the first-time application of IFRS 16. Adjusted for this and FX effects, the EBITDA margin would have amounted to 32.2%, so arriving at the same high level achieved in Q4 2019. Now turning to the division Primary Packaging Glass. PPG had an impressive fourth quarter. Organic revenues surged by 9.1 percentage points over the last year's quarter, Q4 2019. A key driver was tubular glass with organic growth in the mid-teens percentage range. This included first significant sales contribution from high-value solutions such as ELITE Glass and also from the first supply of injection vials for COVID-19 vaccines. In addition, in Q4, cosmetic revenues attained prior year's level, which shows that cosmetic can recover quickly once the lockdowns are somehow -- somewhat lifted as this was the case in September, October last year. A clear encouraging signal for the time after the pandemic. The negative currency effects, mainly from the U.S. dollar impacted the report in revenues by a low-mid-single-digit million euro amount. The adjusted EBITDA increased to EUR 38 million in Q4 2020 and reached a margin of 21.2%. This is being supported by efficiency gains and further insurance compensation in the magnitude of a low-single-digit million euro amount. The insurance compensation is caused by damages linked to the furnace leakage in the U.S. in 2019. It is associated to lost business, representing revenues of almost EUR 2 million in Q4 2020. Now turning to Advanced Technologies. The revenue contribution of GAT advanced technology in Q4 2020 was in line with our expectation and benefited from settlement agreements with regards to the cancellation of projects in the Sensile business last year 2019. The impact from the settlements led to a positive revenue contribution of EUR 5 million. With regard to the adjusted EBITDA, it was overall neutral. The underlying performance in Q4 was in line with our expectations. 3 topics, I would again like to highlight for Advanced Technologies. First, Advanced Technologies is an innovative -- innovation driver by developing intelligent drug delivery systems and steered as a long-term investment case. And please remember all the potential benefits of this division are excluded from our guidance. Sensile is financially a very promising call option for us. Second, as you know, end of last year, we changed our revenue model. Instead of getting reimbursed for the development costs from PharmaCo, we preferred to get a higher portion of the revenues from our PharmaCo partners instead. In other words, since 2019, we evolved from a contract developer for PharmaCo to a revenue-sharing partner of PharmaCo. Third, the development of our micro pump for chronic heart failure treatment with SQ Innovation is on track with first sales contribution expected from 2022 onwards. In addition to our strong revenue and adjusted EBITDA performance in Q4 2020, I would like to highlight our free cash flow contribution of EUR 60 million, which reached the prior -- high prior year's level. This strong cash delivery was supported by excellent earnings quality and the reduction of our net working capital by EUR 45 million. Worth noting, we decided to forgo expensive cash discount agreements in the magnitude of EUR 10 million to EUR 15 million and replace it with much cheaper factoring. The position others includes a positive impact from hedging. The change of EUR 11 million compared to previous year is, however, mainly linked to the noncash-related derecognition of contingent purchase price liabilities with regard to the acquisition of Sensile in the amount of EUR 11 million in Q4 2019. On this slide, we show our financial year 2020 figures in comparison to the actual and underlying development of financial year 2019, which was severely impacted by nonrecurring extraordinary items in the relation to Sensile. Here, you can see that on the back of the strong fourth quarter, we achieved to meet our guidance range for 2020. Organic sales growth for the group amounted to 2.6%. Our core business grew organically 3.8%. This growth rate, in my view, reflects more adequately is the underlying performance of the group in 2020 due to the distortions at Sensile in 2019, without cosmetic growth would have even surpassed 5%. This is an encouraging growth dynamic with regard to our mid- to long-term ambitions. The underlying organic adjusted EBITDA growth of 1.7% for the group and 7.9% in the core business was somewhat better than expected. As a result, the adjusted EBITDA margin increased by 80 basis points to almost 22% and was so above the guidance of 21%. The adjusted net income amounted to EUR 124 million and declined slightly by 4% compared to the underlying figure in Q4 2019. The drop was mainly caused by a higher tax rate in 2020, which amounted to around 30% in 2020 compared to 26% in 2019. 2020 was distorted by a noncash relevant one-off devaluation on tax assets, as mentioned before. 2020 was somehow an outlier year as far as taxes were concerned. As you know, we are guiding for a tax rate level of 25% in the midterm. No doubt that we will achieve this. Also, thanks to a strong cash conversion, we managed to almost double our free cash flow from EUR 34 million in 2019 to EUR 65 million in the financial year 2020. In Q4, we reduced our net financial debt to EUR 923 million. This resulted in an improved financial leverage of around 3.0x compared to 3.2x in Q3 2020. The financial covenant for our revolving credit facility stands unchanged at 3.75x. This covenant gives us solid financial headroom and will remain in place until mid-2020 -- '22. We have not only reduced our financial leverage, but we also managed to improve our maturity profile. On October 1, 2020, we signed a promissory loan agreement amounting to EUR 325 million. This issuance was significantly oversubscribed by 3 to 4x, which reflects the confidence in our business model and in the long-term success of Gerresheimer. We so have refinanced the promissory loans maturing in November 2020 and strongly reduced our drawing in our revolving credit facility agreement. Without doubt, given the global COVID-19 pandemic, the fiscal year 2020 passed under truly extraordinary circumstances, but we excelled and delivered to our promises. What are the key takeaways from a financial point of view for 2020, 5 topics come to my mind. First of all, we proved to have a very robust business. We managed to meet our initially set guidance range despite COVID-19, which also underlines our high forecast accuracy. No doubt, we had also to deal with COVID-19 challenges, especially in our cosmetic business, but we managed to deliver. Second, it's worth highlighting that we accomplished to secure a bridge financing in April 2020 in the middle of the storm and uncertainties of the COVID-19 pandemic. This demonstrates the high level of confidence of the credit market in our business model. Third, in October 2020, we achieved the next milestone in our refinancing and issued a new promissory loan amounting to EUR 325 million. Our issuance had been 3 to 4x oversubscribed, and we managed to improve our financing conditions really remarkable. Fourth, another outstanding achievement from a financial perspective was a strong cash flow development in 2020. Fifth and last but not least, in December, we held our virtual Capital Market Day where we presented our new transformative Gerresheimer. There, we elaborated on our growth strategy, as Dietmar already mentioned. We also introduced our new guidance, which is now even more focused on our core business, with a particular emphasis on revenue growth. The new guidance, KPI, earnings per share is a consequent development of our strategy implementation, which will be reflected in an increasing shareholder value and return. With this, I'll now hand back to Dietmar.

Yes. Thank you, Bernd. It's always a tremendous amount of figures you are delivering. So let's move this up a little bit. Yes, ladies and gentlemen, we are transforming our Gerresheimer. The change into the future is fully present. We set very ambitious goals, targets, and we are now implementing the necessary steps to deliver. The financial year '21 will be the year of transition and delivery continuously and reliable. From 2022 on, we plan to bring the company into high-single-digit revenue growth levels. We have started our growth engine. Gerresheimer is on track, and further acceleration is what keeps us going. The focus for '21, the key message and focus for '21 in a few words. First, we will deliver according to plan. COVID-19 is not over yet. And we will still see COVID-19 effect throughout 2021. We will consequently secure business continuity in all our plans, serving our customers. The cosmetic business will not fully recover until global lockdowns are easing, but we expect that the supplies of COVID-19 vials will compensate this. Second, we will continue to fill the pipeline in all areas of the business. And third, the most important point to me, we will maintain or even accelerate the dynamic in the company, the drive and also the momentum. We pushed Gerresheimer to the next level, transforming our company into a growth company as innovation leader and solution provider. With this, I hand over and back to Carolin, and I'm looking forward to your questions. Thank you.

Thank you for your presentations, Dietmar and Bernd. And so let's enter into our Q&A session. [Operator Instructions] And the first question comes from Scott Bardo of Berenberg.

Yes, a few questions, please. So in fiscal '20, I think you achieved just a tad below the low end of your 3% to 7% mid-single-digit growth range. As you guide for 2021 for a similar range, can you help us understand a little bit what needs to happen to reach either end of those ranges? And which end of that range you think is more likely in fiscal 2021? And I guess following on from that, is your EBITDA margin progression in 2021, purely growth dependent? Or are there some other factors there between the 2022 and 2023 prelim range you highlight? Second question, please. Dietmar, I wonder if you could give us a bit of an update, please, on the progress of your Czechoslovakian facility for your new asthma inhalation device in Europe. And also help us understand the build-out of your ready-to-fill syringe capacities and how committed they are by customers currently?

Yes. Thank you, Scott. Have to sort the questions a little bit. Yes, the guidance, no doubt, 2020, as I said in my presentation, my -- our goal was to hit the guidance just in the center of the range we provided. The cosmetic effect, we took a certain hit, and with the corrections, we hit the lower bandwidth, which is a fact. In 2021, there's no doubt we are clearly aiming at least for the middle of the -- the center of the guidance again. Here, there are various effects again. Yes, the COVID is still present, the cosmetic is still down. But on the other side, we will have more tailwind coming with the COVID vials and that will support us that gives some evidence into the year-end. As we are not before the year, actually we are already in at least the first quarter. There's also a couple of things that gives us evidence that we will hit the guidance in this regard. For the margin, I don't know whether you want to say something Bernd.

Basically, Scott, to take this question regarding the margin. I mean, it's under the assumption that we said we go really in the middle of the mid-single-digit growth as Dietmar mentioned, and it's really somehow balanced risk and opportunities view, then we should also be in the middle of the 22% to 23% range. Why we are a little bit careful on this topic is regarding the EBITDA margin, because we don't know exactly how the energy prices are developing into the year, and therefore, a little bit better to be on the safe side. Therefore, we want to have a little bit bigger room on this topic. But all in all, we are cooler than last year, honestly spoken, as a matter of fact.

Yes to the second question, Skopje. Skopje has certain delays, maybe 3, some of the areas even 6 months. Why is this because some of the machines in -- some of the machines could not be delivered due to COVID, which is, in the end, we should not forget this sales neutral because we are here talking about relocations from Pfreimd that are taking place a little bit later than expected. And as -- and this is actually pretty neutral and has no sales impact. To the syringe expectations, as we always said, we are ramping up the production in Bunde at present. The ready-to-fill line is installed and is ramping up since mid of 2020. The RTF6 is supposed to come into place beginning of -- in late summer of '21, also on schedule. And these additional volumes will definitely be used. So what you just said, how much is covered from your customers. So this is not our problems. I would have been able to sell significantly more syringes in 2020 as '19, if I would have had the capacity. And this will not change in '21. I hope this answers your questions.

Next question comes from Dr. Daniel Grigat from Stifel.

I would just like to get back to the question on the full-year 2021 guidance. And I would ask you, could you please be more specific on the dynamic through the quarters that we expect for 2021. So for instance, in particular, in Q1, you have a rather soft base with the center adjustments, for instance, you had last year. On the other hand, there was no COVID effect. And obviously, in the second half, you have a rather higher base so that would be interesting to get more color on that? And secondly, please, a question on Sensile, in particular on SQ Innovation. What is the status there? And how confident do you feel about this project?

Thanks a lot, Daniel. I'll take your first question regarding how we basically started now into Q1. And looking also at the first half of the year and how is our expectation. In the end, we really started good into the year. But as you know, we had -- and we said, we guided for the full year mid-single-digit growth, and this is something that you could what we basically can confirm our guidance. And under this perspective, we started pretty good under the year, but you need to know that we have a certain correlation always with the lockdown. So what we see is Q2, Q3 last year, just to remind ourselves when the severity of the lockdown was high, also our cosmetic business was impacted into something what we see as well in Q1. Nonetheless, we had a good start into this year. And we will present the numbers in April, in 2 months from now.

I will probably take the Sensile questions, the SQ Innovation. I think you were referring to the project SQ Innovation. Yes, the project is now running. Actually, the clinical studies are ongoing right now, so -- which is what takes place at the moment. We have plans to see first sales in '22. And at the moment, the project is on track. We don't -- I don't see a reason why, at the moment, this wouldn't come. So we are setting up production capabilities at sub-suppliers, partly. And I'm still optimistic that we will see the first sales in '22, there's no change on that.

Now we have Daniel Wendorff from Commerzbank.

2, if I may. The first one is actually referring to your Slide 13 in your presentation. And can you maybe shed a bit more light on the revenue you expect to come from high-value solutions in 2021? What are they? And what products, in your view, have the highest potential also to help achieve high-single-digit growth as of 2022? That is my first question. And the second one is on the vials being sold to corona vaccine manufacturers. Can you update us again on the overall amount you currently would expect to ship during 2021?

Yes. Bernd, do you want to elaborate it? Because this is your favorite question, the first one. I'll take the second one.

So just to take up, Daniel, I hope I cover your question in appropriate way. Basically, you're asking where is the high-value solutions, as this kind of growth is coming from. And so we set around 2 to 3 percentage points. And if you look at it, it's actually innovation and in the area of biologicals, I have to say. We really start getting traction for ELITE products. We have seen this already in Q4 with a contribution of EUR 4 million. As mentioned, RTF -- ELITE and RTF files are the contributions, especially also RTF COP syringes are benefiting. Obviously, also the biological vials is something where we really see growth compared to 2020 of around EUR 15 million that are basically the key elements where this kind of product growth is actually coming from.

Yes, then I take the second one, which is probably referring to the COVID vials. We have added capacity in the last -- let it be some 18 months of around 500 million units a year. That fits very well into our plannings because we are still referring to this 1 billion of vials that we always spoke about that we believe we will ship in the next 2 years. That fits to the 500,000. We have started some shipments already now in the fourth quarter, not too much, but we have started to ship them. And we have to see how this distributes over time, but we are still expecting this in the ballpark of 500,000 units a year in the COVID vials. It's quite interesting, and it's highly dynamic. You clearly see that at the moment there is out of a sudden a discussion of a second vaccination that you need to order to protect yourself, maybe there's a virus and the mutation of the virus is interesting and there it might require a secondary vaccination or even an annual or biannual vaccination. This is something we are monitoring closely and then react as we see the market to be relevant for us.

Are there any further questions in the line? We have a follow-up from Scott Bardo.