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07/17/2002
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| Basel - Lonza Group's net income for the first half of 2002 increased to CHF 161 million, 5.2% up on the previous year, driven by continuing advances in the Exclusive Synthesis & Biotechnology Division, and improved profitability in Organic Fine & Performance Chemicals and Polymer Intermediates. |
These improvements, combined with the impact of the completed share buy-back program, pushed earnings per share 16.5% above the prior year to CHF 3.24.
The full versions of the half-year report 2002 are available in the download area |
Financial highlights first half-year
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million CHF
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2001
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2002
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Net sales
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1'263
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1'291
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Change in %
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2.2
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EBITDA
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286
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303
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Change in %
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5.9
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EBITDA margin in %
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22.6
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23.5
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Operating income
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205
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217
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Change in %
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5.9
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Operating margin in %
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16.2
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16.8
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Operating income from divestitures
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18
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0
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Change in %
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(100.0)
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Operating income Group
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223
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217
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Change in %
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(2.7)
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Pre-tax earnings
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204
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207
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Change in %
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1.5
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Net income
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153
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161
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Change in %
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5.2
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Cash flow
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256
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247
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Change in %
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(3.5)
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Net Debt
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838
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1'004
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Debt - equity ratio
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0.50
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0.88
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Change in %
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76.0
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Earnings per share
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2.78
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3.24
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Change in %
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16.5
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Number of employees
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6'083
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6'321
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Change in %
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3.9
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Life Sciences Operations (former continuing operations)
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million CHF
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2001
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2002
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Net sales
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912
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976
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Change in %
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7.0
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EBITDA
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237
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252
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Change in %
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6.3
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EBITDA margin in %
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26.0
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25.8
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Operating income
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176
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184
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Change in %
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4.5
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Operating margin in %
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19.3
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18.9
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Overview
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Group Sales increased by 2.2% to CHF 1 291 million. Group operating income of CHF 217 million is below last year's result of CHF 223 million due to the sale of the Energy business in December 2001, which provided CHF 18 million in the first semester 2001. On a comparative basis, Group operating income increased by 5.9% from CHF 205 million to CHF 217 million. Our life sciences operations (the former Continuing Operations) increased sales by 7.0% to CHF 976 million in the first six months of 2002 and reached an operating income of CHF 184 million, 4.5% up on the prior year. Polymer Intermediates (former classified as Discontinuing Operations) achieved reduced sales of CHF 315 million, but increased operating income by 13.8% to CHF 33 million.
Our biotechnology activities showed the expected healthy growth in sales and operating income, while the Exclusive Synthesis business faced a competitive environment, with increased pressure on plant loading and margins. The Organic Fine and Performance Chemicals businesses achieved an increase in profitability based on continual improvement of the operating performance of the plants and a decrease in some raw material costs. The Polymer Intermediates business recovered further due to the positive effect of the realignment of market players in Europe and stable demand in most industrial applications.
Another share buy-back program was completed in February 2002, as a result 4 810 070 shares or 8.7% of the share capital was cancelled. In June Lonza issued a 2% Convertible Bond and in parallel submitted a public offer to repurchase 2 222 222 of the outstanding registered shares of Lonza Group for CHF 118 per share to fulfill the conversion rights. The issue of this convertible bond is designed to improve the efficiency of the Group's capital structure by increasing the amount of leverage and offer an attractive investment opportunity for fixed-income-
oriented investors. The Group's net debt position increased to CHF 1 004 million. The Group's net financial expenses decreased to CHF 7 million compared with CHF 16 million in the same period of last year. The tax rate of 23% for the first half is at the low end of Group targets, with full-year rates expected to be slightly higher. As a result, net income improved to CHF 161 million, representing a 5.2% increase over 2001.
Capital expenditure of CHF 120 million was above the prior year, whilst cash flow of CHF 247 million was slightly below last year's level by 3.5%. |
Industrial sales by division first half-year
Operating income by division first half-year
Strategic Reorientation and Divestments
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As previously announced, Lonza Group divested its Energy activities at the end of last year. After concluding discussions with potential buyers on the sale of Lonza's Polymer Intermediates business, the Board of Directors has now decided to postpone the previously announced divestiture of this business. The Board reviewed the terms of the transaction and came to the conclusion that the deal value did not adequately reflect the current performance and future prospects of this business. Therefore, despite Lonza's clear strategic commitment to focus on the life sciences, the Polymer Intermediates business will be retained as a separate division with the aim of further enhancing its performance and obtaining the fair market value in a divestiture or alternative exit strategy at the appropriate time. This decision is based on economic considerations only and does not imply any deviation from Lonza's life science strategy.
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Targets 2005 for the Life Sciences activities
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(not including Polymer Intermediates)
On the basis of Lonza's technological strengths and market positions, combined with the growth opportunities afforded by the dynamics of our markets and our ongoing expansion projects in Biotechnology, we have set a number of ambitious targets to be reached by end of 2005: |
Outlook
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Despite the softness of the global economy and barring any further substantial deterioration in trading conditions, the Group believes that it will be able to improve on its 2001 performance.
Martin Ebner Chairman
Markus Gemuend Chief Executive Officer |
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