Lonza on Track to Meet 2012 Full Year Targets as Arch Integration Progresses as Planned

May 04,2012

 

  • Overall business on track to meet 2012 full year targets
  • Arch integration progressing as planned: 75% of synergy measures implemented with 50% of the EBIT benefit expected in 2012. Microbial Control order intake on target
  • Custom Manufacturing saw good capacity utilization and continued pipeline development
  • Life Science Ingredients achieved good growth in agro sales but continued to experience price pressure in Nicotinates
  • Bioscience further expanded its cell therapy product pipeline
  • Visp Challenge project aiming at improving productivity by CHF >100 million over three years
  • As previously announced, Richard Ridinger started as Lonza’s new CEO on 1 May 2012  

Basel, Switzerland, 4 May 2012 – Lonza’s business performance was in line with expectations in the first quarter of 2012. Capacity utilization was at good levels across all business units. Growth in project pipelines reflects the Company’s global leadership in a large number of its key business areas. In Microbial Control the integration of Arch is proceeding as planned and the good order intake was in line with expectations. Looking ahead, management expects to deliver the Company’s full year targets for 2012.  

Rolf Soiron, Chairman of Lonza, said, “We have started to bring more focus in order to improve delivery on results. The Arch integration is on track to achieve the financial targets that we communicated; Microbial Control will be a key driver of the EBIT increase expect in 2012. In Custom Manufacturing, we are achieving good levels of capacity utilization, as new contracts continue to drive both our chemical and biological pipelines. The performance of the Life Science Ingredients business has been good in most areas, however, Nutrition Ingredients are facing unsatisfactory margins due to strong competition and higher raw material prices. Lonza enjoys globally leading positions in Custom Manufacturing and Microbial Control and with Richard Ridinger as CEO we now have a manager at the helm with a strong record of achieving results from complex businesses.”    

Custom Manufacturing enjoys good levels of capacity utilization and growing project pipelines, reflecting increasing use of out-sourcing. Lonza’s leading expertise allows it to meet the wide ranging needs of our pharma and biotech customers.  

In Chemical Manufacturing we continue to sign new contracts for both marketed and development products. We have seen good utilization in our early phase capacity as well as satisfactory demand for our peptide capacity.  We are currently focusing investment in cutting-edge technologies such as high potency APIs (HPAPIs) and antibody drug conjugates (ADCs) where Lonza benefits from clear competitive advantages.  

In Biological Manufacturing, capacity utilization remains at a high level, including our new facility in Singapore. The expansion of our Slough facility remains on track to be completed by the end of 2012.  

We have submitted a full response to the FDA requests at our Hopkinton site.  

Microbial Control has delivered as anticipated in the first quarter of 2012. The Arch integration is progressing as planned and is on track to deliver the cost synergies expected.  The US market has seen a strong performance across most areas; recently, the business background in the EU and Asia has shown signs of improvement as well.   Water Treatment finished the recreational season in South Africa quite well; order patterns in the US and Europe are in line with expectations. Wood Treatment has moved in line with the US housing market; higher demand was partially offset by negative currency effects. In Materials Protection, sales of automotive and building materials have been strong across all regions. Personal Care and Hygiene and Preservation have developed as expected.  

Life Science Ingredients saw good underlying demand. However, margins were impacted by intense competition and, above all, higher raw material costs, particularly in Nutrition Ingredients where returns remain unsatisfactory.  Performance Intermediates had a good first quarter led by agro where there was strong demand for both intermediates and active ingredients.  

Our Bioscience business saw substantial growth in its Cell and Viral project pipeline as well as a solid performance by its Research business. The new Cell Therapy production capacity in Singapore will come on stream as planned in the second half of 2012. Academic and instructional demand for Research products in the US and Europe continued to be impacted by government spending constraints.  

As previously announced, Richard Ridinger started as Lonza’s new CEO on 1 May 2012. Rolf Soiron, who acted as CEO a.i. since end of January will concentrate again on his role as Chairman of the Board of Directors.

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