Lonza reports Health and Nutrition segment profit rise; appoints new CEO

30 Jan 2019 --- Lonza's Consumer Health and Nutrition and Specialty Ingredients divisions saw steady growth reinforced by the acquisition of Capsugel in 2018. Moreover, the company has appointed Marc Funk as its new CEO and is “focusing its growth for 2019 towards its Healthcare Continuum segment,” Lonza Head of External Communications, Constance Ward tells NutritionInsight.

Consumer Health and Nutrition segment growth
Specialty Ingredients saw an overall 3.4 percent organic sales growth, while the company’s Specialty Ingredients’ Consumer Health division grew organic sales by 6.3 percent. This was despite increases in raw materials and supply chain challenges that were faced in 2018. Lonza says this division's performance was driven by its proprietary nutritional ingredients, innovative dosage forms and increasing demand for specialty polymers hard capsules, such as all-natural and clean-label products, as well as the company’s household and professional hygiene solutions. 

The acquisition of Capsugel and the new combined Lonza-Capsugel offerings experienced strong demand, with 2018 seeing a series of product launches that brought together innovative nutritional ingredients and tailored capsule-delivery technologies, according to the company.

“The transformative acquisition of Capsugel added value from the first day and we can be proud of our achievement in bringing two high-performing companies together successfully,” Richard Ridinger, CEO of Lonza says. 

Consumer & Resources Protection segment
The specialty portfolios within Consumer & Resources Protection, especially in composites and material protection, reported ongoing demand and performed well in terms of sales. The negative impact of 2018’s challenging environment for cyclical business affected mature parts of Lonza’s portfolio with price increases and supply-chain constraints in basic materials and intermediates, as well as raw materials. 

These results were also influenced by the ongoing downward cycle for basic feed ingredients, especially for vitamin B3. Despite these hurdles, the division delivered US$1.3 billion sales for 2018 which translates to 1.2 percent organic growth versus prior year.

The company is strongly focusing on its Healthcare Continuum segment, which offers a wide range of services and products from the custom development and manufacturing of active pharmaceutical ingredients to innovative dosage forms for the pharma and consumer health and nutrition industries.

As a result of this focus on the Healthcare Continuum segment, Lonza says it has become more resilient and independent from its cyclical parts. The results for the full-year 2018 show that growth and profitability in the healthcare businesses and in the specialty chemical portfolios balance the exposure to cyclicality in other more mature parts of the business.

“The Healthcare Continuum, which we first introduced in 2016 and have continued to shape since then, has been proven to be the right strategy for profitable growth and strong market leadership,” says Ridinger. 

Appointment of new CEO
Pharma and Biotech Chief Operating Officer Marc Funk will succeed Richard Ridinger as CEO, this coming March. Ridinger says he will be working closely with the incoming CEO to make the transition as smooth as possible for the company. 

“He [Funk] has been integral in developing our Healthcare Continuum strategy and will provide needed continuity for the organization,” Ward notes.

“As Lonza’s next CEO, I am committed to building on the company’s foundation and to driving forward the strategy across all our businesses along the Healthcare Continuum,” says Funk.

What happens next
Despite a slight 1.1 drop in its fiscal 2018 profit, Lonza saw steady growth across its divisions, with 2018’s core profits rising roughly 14 percent due to its business supplying the biotechnology and drug industries. 

The company says it plans to continue investing in its healthcare businesses and announced the expansion of its Ibex Solutions facility based in Visp, Switzerland. Its Water Care division, on the other hand, will be terminated in the first quarter of 2019 as it was sold to Platinum Equity in a US$630 million deal. 

“We are putting the Water Care business in the hands of an experienced owner who will develop Water Care as a stand-alone business while focusing on innovation and further growth. We believe that we have found the optimal partner for the business to give new perspectives to the global sites and its employees,” says Ridinger.

In lieu of its 2018 growth, Lonza expects to “sustain high core EBITDA margin level and mid-to-high-single digit sales growth,” Ward tells NutritionInsight. The company has released an extensive analysis report of the growth it expects to see in 2019.

By Kristiana Lalou