Lonza reports pandemic boost for nutritional supplements in 2020 results

27 Jan 2021 --- Lonza has reported a “strong” performance for its 2020 financial year. Notably, the Capsules & Health Ingredients segment benefited from increased demand for nutritional supplements caused by the COVID-19 pandemic.

“The full-year results reflect our commitment and focus to maintaining operations throughout the pandemic, while making an active and decisive contribution to controlling it,” says Pierre-Alain Ruffieux, CEO, Lonza Group.

He describes the group’s sales growth as demonstrating the “resilience of the business during a year of unprecedented change.”

Delivering on guidance
Overall, Lonza delivered on guidance with CHF 4.5 billion (US$5.0 billion) sales, 12.0 percent sales growth, and CHF 1.4 billion (US$1.6 billion) CORE EBITDA, resulting in a 31.2 percent margin. 

Meanwhile, Capsules & Health Ingredients saw high single-digit growth. The company anticipates that demand for pandemic continues. In this context, the forecast for 2021 anticipates low single-digit growth until new assets come online.

Notably, the company recently invested CHF 85 million (US$93.7 million) to increase its capsule manufacturing by 15 percent in the coming year. 

However, last week saw Lonza pull out of the softgel market, with the sale of two of its production sites to NextPharma. 

Overall, the Capsules & Health Ingredients business maintained operations and business continuity throughout 2020, with minimal disruption arising from the pandemic.

Nonetheless, there was high-capacity utilization across existing assets, which led to an increased lead time for capsule products.Lonza’s 2020 sales are up from 2019. 

Specialty Ingredients carveout
The divestment of Lonza Specialty Ingredients (LSI) is also proceeding and was reported as a discontinued operation in these results. Ruffieux hopes to be able to make a sale announcement this quarter.

“[This divestment] provides the LSI business with a significant opportunity to find a home where its value can be fully appreciated, and its potential can be unlocked.” 

He continues that having decided to divest the LSI segment, Lonza can now focus on the Pharma Biotech & Nutrition (LPBN) segment, which will become the “future Lonza.”

“We see this as a moment of significant opportunity, as we achieve a clear identity as a single business, operating as a preferred global partner to the healthcare industry.”

This latest structure was announced in October and will see four business divisions unpacked from within the LPBN segment. 

The road ahead
In the long term, Lonza is maintaining its focus on strategic capital expenditure investments to support its growth momentum. This is while redoubling its focus on sustainability.

Lonza’s guidance for the 2021 years is low double-digit coupon equivalent rate (CER) sales growth and improved CORE EBITDA margin, both in line with the 2023 mid-term guidance trajectory. 

While the businesses have shown “strong levels of resilience” during the pandemic, Lonza warns that all forecasts should continue to be treated with some caution at this time of global uncertainty arising from the COVID-19 pandemic.

Edited by Katherine Durrell