EUR 850.00 For Business Accounts Only

Morningstar | ATR Updated Forecasts and Estimates from 15 May 2019

Aptar is the global leader in resin-based dispensing technologies. Its aversion to low-margin bottle forming has allowed Aptar to focus on the more lucrative production of items like fragrance pumps, respiratory inhalers, and food and beverage closures. Patented designs and high regulatory switching costs have allowed Aptar to earn excess return on invested capital, while revenue growth has been spurred by increased health spending and a consumer preference for convenience. The pharmaceutical segment is Aptar's core earnings growth driver. It delivers almost two thirds of operating income. We project high-single-digit earnings growth as an aging population drives healthcare needs higher. Prescription-grade respiratory inhalers require clean-room environments and a knowledge of labyrinthine regulatory hurdles, leading to segment operating margins of around 30%. Less complex products like vial stoppers still require production expertise; they are custom-made to remain nonreactive with the specific medications they contain. Unlike most packaging, these products have high value/weight ratios and can be shipped globally. While sales and locations are predominantly in Europe (73% of sales) and North America (20%), Aptar should have no problem shipping these products as healthcare needs grow in emerging markets. At the close of 2018, Aptar will acquire CSP Technologies, adding to its portfolio of healthcare capabilities.Aptar's beauty and home and food and beverage segments maintain healthy margins despite participating in generally competitive markets. Beauty and home makes up over 50% of revenue but less than a third of operating income. Lower operating rates have weighed on profits in recent years due to weakness in luxury fragrance markets. Attempts to streamline production costs and a return to normalized luxury spending should drive operating margins toward 10% by the end of 2022. Food and beverage remains the smallest segment for Aptar at around 15% of revenue and 10% of operating income. We expect sales growth to continue at a high-single-digit pace, as consumer packaging increasingly favors ease-of-use applications and still over carbonated beverages.