Lonza Delivered Solid Business Performance in the First Half of 2012

Capacity utilization in the Life Science Ingredients sector remained high. Sales of agrochemical intermediates increased substantially due to strong food demand worldwide.

26 Jul 2012 --- In the first half of 2012, Lonza delivered solid results in all sectors, despite some ongoing difficulties in the macroeconomic environment and persistent uncertainties regarding a possible recession.

Demand in Custom Manufacturing was firm, resulting in high capacity utilization in both chemical and biological plants, as well as a strong project pipeline. The outsourcing trend is considered to be solid. A full response to the FDA regarding the 2011 warning letter received at our Hopkinton, MA (USA) plant was submitted; corrective action has been taken. The qualification and compulsory validation campaigns of our large scale Custom Manufacturing Biologics facility in Singapore had impact on capacity utilization and EBIT contribution. At our Hopkinton, MA (US) site, quality upgrades were required. 

Microbial Control delivered a solid performance in the first half of 2012 in all sectors. Sector activities in emerging markets continued to be built out. Integration of the business is on track to deliver synergies of USD 50 million as of the end of year 2 and additional revenues of USD 40 million as of year 3 from cross-selling activities; 50% of the synergies will be delivered in 2012. Innovation projects based on the newly combined portfolio are making good progress. 

Capacity utilization in the Life Science Ingredients sector remained high. Sales of agrochemical intermediates increased substantially due to strong food demand worldwide. Price increases were successfully initiated in order to offset volatile raw material prices which persisted in the first half of the year. Nutrition Ingredients continued to suffer from strong price and margin pressure on niacin. However, the situation started to stabilize in certain product areas in the second quarter, though still on a rather low level. 

Bioscience delivered a good performance in the first half of 2012, with major growth in the Therapeutic Services segment and in Asian markets. Cell therapy operations in Singapore were started successfully.   

Following the change of leadership early in 2012, Lonza committed to “Focus and Deliver”, including delivery of an improved return on capital. Lonza aims to strengthen its global market positions in relevant markets, reinforce competitive strengths, and achieve productivity improvements, such as those embodied in the “VispChallenge” project, which are expected to contribute CHF 100 million in profit improvements over three years. The company is fully committed to stepwise improvement of growth, EBITDA margin and return on capital.