The year 2015 started with
an overall good momentum, leading to business performance fully in line with
- Foreign-exchange effects are
under control and being managed through counter-measures and business
- Strong business results
from regions unrelated to the Euro have balanced the impact of the strong Swiss
- Sales and profit growth are
expected for 2015 despite currency challenges
- Mid-term guidance to 2018
indicates positive development for both segments of Lonza
Basel, Switzerland, 28 April
2015 – During the first quarter of 2015, Lonza’s business performance was fully
in line with our expectations. In both the Specialty Ingredients and
Pharma&Biotech segments, we realized our growth targets and achieved good results.
The impact of the foreign exchange changes earlier in the year is under control
and being managed through counter-measures across the company.
Our recent investments, such as in the
niacinamide plant in Nansha (CN) and the Agro Ingredients plant in Visp (CH), are
ramping up production and are providing projected volume growth. Adaptations of
the large-scale microbial plant in Visp to accommodate different customers are
also successfully underway. In addition, we are making good progress on preparing
to build out our assets for emerging technologies, such as cell and viral
therapy in the United States.
We can also confirm that our global balance
of currencies is continuing to provide stability to our business. Strong
business results from regions outside Switzerland and the Eurozone have largely
balanced the impact of the strong Swiss currency. Operational improvements,
portfolio optimizations and quality initiatives remain high on the agenda.
Richard Ridinger, CEO of Lonza, said, “Our
first-quarter results demonstrate that we are well positioned to deliver on our
2015 targets. We’re expecting positive performance and further growth
throughout the rest of the year and in the foreseeable future. Our solid
business plans in our well-defined markets and associated clear strategic
direction allow us also to provide a positive mid-term outlook until 2018.”
The Specialty Ingredients segment had a good
start in 2015 with healthy overall market demand in most areas. Consumer Care had
a solid quarter with good uptake of some new, innovative products. Although
Agro Ingredients was the most impacted by the strong Swiss currency, our
business continued to grow; and results were on target with good capacity
The Industrial Solutions business also had
high asset utilization across the board with a generally favorable demand
situation mainly in our Coatings and Composites business. Our Wood Protection
businesses had a slightly slower start to the year than expected with record
snowfall this winter in the United States, which led to delayed deliveries, and
with weakening currencies in some regions. Both the residential and the industrial
parts of our Water Treatment business experienced improved sales as the year began,
and the business has been performing better than the two prior years.
The Pharma&Biotech segment benefited
from enhanced operational performance, ongoing portfolio optimizations and good
quality results. We experienced good momentum, especially in market demand for biologics
and ongoing interest in Lonza services. Contracts were signed with our Custom
Manufacturing clients for all technologies and for products in clinical
development and in commercial manufacturing. That ongoing interest and our
recognized quality and compliance standards ensure good utilization of most of our
Custom Development Services experienced
continued interest from customers across all regions and technologies for
development and clinical manufacturing services. In our Bioscience Solutions
business, we further improved our performance and increased our presence in
China and APAC, while funding in Japan and European markets remained low.
Research Products experienced first signs of a global recovery and was ahead of
target in many regions, while Testing Solutions performed according to budget
results for the first quarter are all fully on track, showing benefits from our
improvement projects emphasizing organic growth and quality matters. Lonza’s
financial situation remains solid.
Based on constant exchange rates, we are on track to deliver sales
growth in 2015. Despite foreign exchange rate and raw material volatility, we
are planning for CORE EBIT growth of at least 5% as a result of portfolio
optimizations and further operational productivity improvements. Ongoing
enhancements of the worldwide production network are expected to lead to a
further improved CORE RONOA of >15%.
Our mid-term priorities for Specialty
Ingredients will be to expand our global reach, become more operationally
efficient and transfer technology know-how out of the Pharma&Biotech
toolbox across the businesses and segments in order to capitalize on synergies.
For Pharma&Biotech our mid-term
priorities will be to realign business models to satisfy customers’ future
needs. We also plan to reduce capital intensity, as well as reduce volatility
and de-risk our portfolio further.
Assuming current macro-economic environment,
constant exchange rates and anticipated worldwide growth rates:
We expect that our
CORE EBITDA will approach CHF 1 billion in 2018. This assumption is based on
our efforts to further optimize our portfolio, strengthen customer orientation,
implement cross-business synergies, improve productivity and focus on new and
We are also targeting
CORE RONOA of 20% in 2018 (14.3% in 2014) and sales growth of low to mid-single
digits on average per year until 2018. That growth will come from new
technologies, further productivity improvements and expanded global reach, as
well as more service-business offerings and additional innovative products.