Capsugel acquisition boosts Lonza's “record-breaking” 2017 full-year results
31 Jan 2018 --- Swiss multinational, chemicals and biotechnology company, Lonza has exceeded 2017 earning expectations with robust sales and profit growth that is partly down to acquiring Capsugel last summer. Having closed the acquisition on 5 July 2017, Lonza consolidated Capsugel for nearly six months last year, which the company says strengthens its positions as a world leader in pharmaceutical, biotech and specialty ingredients markets. And now Lonza announces it’s “record-breaking” full-year results, hailing 2017 as a “major transformational year” for the company.
The results included double-digit organic sales growth, organic growth in Earnings before interest, taxes, depreciation, and amortization (EBITDA) as well as core EBIT growth. There was also CORE RONOA of 28.3 percent for Lonza standalone.
However, despite the Swiss company exceeding its full-year 2017 guidance, the stock was down by just over 5 percent this morning (Jan 31) to CHF 261.10 (US$280.14).
Financial highlights
The company reported sales of CHF5.1 billion (US$5.4 billion) for the full-year 2017, which represents a 23.5 percent increase in reported currency compared with the same period in 2016 (Lonza standalone 10.4 percent sales growth in reported currency).
Margins for Lonza further improved, resulting in a record-breaking CORE EBITDA margin of 24.8 percent (23.9 percent Lonza standalone) and CORE EBIT margin of 18.8 percent (18 percent Lonza standalone) in reported currency.
Net debt as a consequence of the Capsugel acquisition ended 2017 at CHF 3.8 billion (US$4 billion), which resulted in a net debt/CORE EBITDA (proforma) ratio of 2.65x – a leverage level significantly below the previously communicated threshold of up to 3x net debt/CORE EBITDA.
This ratio was also supported by the strong operational free cash flow of CHF 619 million (US$664 million) before acquisitions.
The organic sales growth and high margin improvement demonstrate Lonza's robust operational performance and commercial excellence.
Both of Lonza's segments – Pharma&Biotech and Specialty Ingredients – contributed to the record-breaking full-year results with offerings along and beyond the healthcare continuum as growth drivers. With less than six months on Lonza's books, Capsugel has already shown its potential to add to Lonza's growth, especially as synergies are expected to materialize starting in 2018.
"With 120 years of company history, we are now stronger than ever as these outstanding results demonstrate," said Richard Ridinger, CEO of Lonza.
“Following the acquisition of Capsugel, we have successfully achieved our goals and even over-delivered," he added. "With such a rapid step-up in size – of our sales, employees and entities – we are now optimizing all of our processes and structures to ensure profitable growth continues well into the future.”
NutritionInsight will be hosting a webinar with Lonza on new market opportunities for L-Carnitine. To register please click here.
