Lonza Reports Strong Growth

23/01/08 Lonza has reported 36% growth in EBIT (CHF 408 million), 51% growth in net income (CHF 301 million) and a strong improvement in cash flow (all based on continuing operations). These results significantly strengthen Lonza’s ability to generate further sustainable growth. The revised growth strategies for Bioscience, Nutrition Ingredients and Microbial Control are designed to deliver enhanced returns. Lonza continues to successfully achieve critical milestones in its long-term strategic plan and extends its mid-term guidance to 2013. The Board of Directors is proposing a dividend of CHF 1.75 per share.

The full-year performance was characterized by Lonza’s portfolio changes and solid developments in all businesses, with Biopharmaceuticals experiencing particularly strong growth. The successfully integrated Bioscience division performed according to expectations. As a result, EBITDA for the group rose by 40.9% from CHF 484 million in 2006 to CHF 682 million in 2007, increasing margins by 2.6 percentage points to 23.8% of sales. Along with a lower tax rate, the improved financial result led to a proportionately greater increase in net income of 51.3% to CHF 301 million. As a consequence, gearing declined from 92% at the end of the first quarter to 72% at year-end. RONOA continued to improve from 12.2% in 2006 to 14.1%. Full-year sales in 2007 amounted to CHF 2 870 million.

In terms of outlook, Lonza said that all strategic projects are on track. With sound execution of its long-term plan, Lonza continues to drive aggressive growth initiatives in the form of strategic investments and organic growth projects.

Nutrition Ingredients (formerly Nutrition) posted a strong business performance, driven by good growth for nicotinates (vitamin B3) in both new pharmaceutical and food/feed applications, as well as favorable weather conditions in Central Europe for Meta. However, competition from Chinese producers had an impact on the margins of Meta. L-Carnipure (food/pharmaceutical grade L-carnitine) grew in the USA, while sales in Japan were below expectations due to a volatile beverages market. Carniking (feed-grade L-carnitine) performed well, especially in the pet-food segment.

The DHA business (docosahexaenoic acid) experienced a temporary set-back after the court rulings in the USA and in Germany. While such rulings are being appealed by Lonza in both cases, Lonza is preparing to enter the US market in conformity with the decision of the US Judge.

The vitamin K3 operation in Shawinigan (CA) started up successfully with commercial sales expected during the first quarter of 2008. The new larch arabinogalactan franchise developed well, according to plan.