In addition to the key goal to grow revenues by around 5% and CORE EBIT around 10% in 2014, Lonza’s management has set a series of financial guidelines and targets:
CORE Results as Defined by Lonza
Lonza believes that understanding in the financial markets of the Group’s performance is enhanced by disclosing core results of performance because the core results enable better comparison across years. Therefore the core results exclude exceptional items such as restructuring charges, impairments and amortization of acquisition-related intangible assets which can differ significantly from year to year. For this same reason, Lonza uses these core results in addition to IFRS as important factors in assessing the Group’s performance.
Lonza’s BBB- Investment Rating Maintained Post FY 2013 Results
Following Lonza’s full-year 2013 results presentation on 23 January 2014 a number of the leading Swiss banks have re-evaluated Lonza’s investment rating. Following their analysis, the banks came to the conclusion that Lonza’s BBB / BBB- rating should be maintained. At the end of 2013 the Company’s net debt amounted to CHF 2103 million, giving a debt-equity ratio of 0.99 and a net debt/EBITDA ratio of 2.77x, as a result of the acquisition of Arch Chemicals in October 2011 which was entirely debt financed. During its 2013 Results Presentation, Lonza communicated that due to the free cash flow generation of the business it was targeting a net debt/EBITDA ratio of around ~2x by the end of 2015.
The policy is to pay between 25% and 40% of net profit to shareholders in the form of dividends.
For the fiscal year 2013, the Board of Directors is promosing a cash divident of CHF 2.15 per share.
Despite having a strong exposure to the US dollar in terms of sales (50%), Lonza has an extremely good natural hedge in that a majority (45%) of costs are also in US dollar or dollar-denominated currencies. In addition, Lonza also has some exposure to the Swiss franc (20% of sales, 25% of costs), and the euro (15% of sales, 20% of costs), whereas exposure to all other currencies represent less than 5% of sales. Translation represents 2/3 and transaction represents 1/3. Hedging policy / foreign exchange management policy and process:
Lonza uses an average WACC of 8,0% for the group, this figure varying then division by division depending on the anticipated volatility of the business.
Defined benefit pension plans Lonza sponsors pension plans set up according to the regulations of the countries in which it operates. For pension accounting purposes, these plans are considered as defined benefit plans. During 2012, actuarial valuations were performed for all significant defined benefit plans using the Projected Unit Credit Valuation Method. The principal assumptions, expressed as a weighted average for Lonza, are the result of the underlying national economic conditions of the respective countries.
Assumptions regarding future mortality are based on published statistics and mortality tables. The average life expectancy of an individual retiring at age 65 is 19.56 for males and 21.89 for females. The overall expected long-term rate of return on assets is 4.9 % (2011:4.2%). The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.
The Funded Status of the Defined Benefit Pension Plans and the Related Net Position in the Balance Sheet is as Follows:
Funded status (surplus) / deficit
Plan Assets Consist of the Following:
How Much Does Lonza Spend on Research and Development (R&D)?
Research and development costs include all primary costs directly related to this function as well as internal services and imputed depreciations. These costs are incurred for:
The research and development costs amounted to CHF 215 million (2011: CHF 171 million) and represent the full range of R&D activity. However, the consolidated income statement discloses research and development costs of only CHF 116 million (2011: CHF 94 million), because of costs absorbed in "Cost of goods sold" by R&D products and services sold.
Where are Lonza Shares Traded?
Lonza shares are traded at the SIX Stock Exchange in Zurich the home market for the Swiss Leader Index (SLI) and at the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”). Lonza has secondary listing at SGX Singapore Exchange.
What is the Stock Symbol?
The stock symbol for Lonza shares at the SIX is LONN and O6Z at the SGX-ST.
How Many Shares Does Lonza Have Issued?
What is Lonza Doing to Protect the Environment?
Lonza is committed to generating sustainable added value. This is only possible if ecological, social as well as economic objectives are met. Our highest priorities are personal safety and environmentally sound processes and products. For more information, please visit our Environment, Safety & Health section.
What is Lonza Position on Corporate Governance?
Lonza has implemented modern corporate governance structures to ensure accountability, responsibility and transparency throughout the Group and for its shareholders. Corporate governance reporting is in compliance with the guidelines of SWX Swiss Exchange. For more information, please refer to the section relating to Corporate Governance.
Where can I Obtain More Information?
Don’t hesitate to contact the Investor Relations team.