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With the acquisition of Arch Lonza is now the global leader in two
attractive growing life science markets: Microbial Control and Custom
Manufacturing
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Revenues in 2011 before acquisition at CHF 2.505 mn (+5.6% in
constant exchange rates), EBIT before acquisition at CHF 292
million
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Foreign exchange negative impact of CHF 84 million due to strong
Swiss franc
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In 2012 the acquisition of Arch delivers overall earnings growth
which will translate into significant EPS growth as well
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The Board of Directors stresses focus and delivery in the years
ahead
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The Board initiates a change of leadership, and during the
transition, Rolf Soiron will co-ordinate the Management Committee
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The Board of Directors is proposing a cash dividend of CHF 2.15 per
share for 2011
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Margot Scheltema and Dr. Jörg Reinhardt proposed as new Board
members, Dame Julia Higgins will leave the board in line with statutory
regulations
Basel, Switzerland, 25 January 2012
Rolf Soiron, Chairman of the Board of Lonza, commenting on
today’s announcement, said:“With the acquisition of Arch in 2011 Lonza
achieved another step in its transformation towards a global Life Science
company. This continuous change characterized the past years and Stefan
Borgas has led this process as Lonza’s CEO. The Board of Directors of Lonza
expresses its gratitude for Stefan’s valuable contributions. In the
challenging years ahead Lonza will enter a period of focus and improvement of
return of capital. This led the Board ofdirector’s to the decision to
initiate a change of CEO. As Chairman of the Board I will lead the Management
Committee during the transition.”
Financial highlights before acquisition:
- Revenues at CHF 2.505 mn increased by 5.6% in constant exchange rates
- Solid EBITDA margins of 22.3% (24.0% in 2010), 23.6% in constant exchange
rates
- EBIT (in CHF mn) before acquisitions
- reported 292
- CORE 306
- Net debt at CHF 2.647 increased by 138.9% due to the acquisition
- Gearing increased to 112% at the end of 2011 from 46% at the end of 2010
- CHF 84 mn negative exchange rate impact on EBIT
- NWC as % of sales 23.9% (25.7% in 2010) RONOA at 9.0% (10.8% in 2010)
- Solid financing situation, supporting mid- and long-term growth
potential:
- Free cash flow from operating activities at CHF 171 mn (CHF 362 mn in
2010)
- CAPEX at CHF 267 mn (CHF 300 mn in 2010) Full
Full financial figures can be found in the Full Year Report
Operating Overview: Lonza delivered underlying revenue and
EBITDA growth at constant exchange rates due to high capacity utilization in
most business units. The company faced a number of significant headwinds such
as a foreign exchange impact of CHF 84 million due to strong Swiss franc,
higher and more volatile raw material prices especially in Life Science
Ingredients and the effect of a warning letter at our Hopkinton site.
Custom Manufacturing continued to benefit from demand for outsourcing from
pharmaceutical and biotech companies, particularly in Biological
Manufacturing where utilization rates were above 85%, excluding the new plant
in Singapore. Lonza’s recognized strengths led to an increase in the number
of contracts signed across all businesses, resulting in a substantially
improved project pipeline, especially in Custom Manufacturing.
The Microbial Control business experienced a slowdown in established markets,
starting in the third quarter of the year. This was partially offset by
revenue from new products and sales in new markets.
Lonza strengthened its position in emerging markets, for example through the
start-up of a joint venture with Fosun Pharmaceuticals in China and moving
the headquarters of our Life Science Ingredients division to Beijing in
China.
Board of Directors: The Board of Directors is proposing a
cash dividend of CHF 2.15 per share for 2011. As Lonza is able to pay this
dividend out of the reserves from capital contribution, it will be paid to
shareholders free of Swiss Withholding Tax.
Dame Julia Higgins will leave the Board in line with statutory regulations.
The Board of Directors is proposing to elect Margot Scheltema and Dr. Jörg
Reinhardt as new members at the next Annual General Meeting on 3 April 2012.
Margot Scheltema was Financial Director of Shell Nederland BV until the end
of 2008. She is Vice-Chair of Triodos Bank’s Supervisory Board and Chair of
Triodos Bank’s Audit and Risk Committee. She is a Member of the Supervisory
Board of ASR NV, TNT Express, Schiphol NV and of other institutions. She is
also an external Member of the Audit Committee of the Dutch state pension
fund ABP.
Dr. Jörg Reinhardt brings a broad range of experience to the Lonza Board,
having served invarious leading positions in the pharmaceutical industry.
Since 15 August 2010, he has been Chairman of the Board of Management of
Bayer HealthCare AG. From 2000 until 2010, Dr. Reinhardt served as Chairman
of the Board of Directors of the Genomics Institute of the Novartis Research
Foundation in La Jolla, California. The Lonza Board will be increased from
seven to eight members.
Outlook: In 2011, Lonza strengthened its overall business,
becoming the global leader in Microbial Control and Custom Manufacturing.
2012 will be again a challenging year for Lonza’s businesses. However, the
acquisition of Arch allows to expect overall earnings growth which will
translate into significant growth of EPS as well.
It will be enhanced by the synergy from the acquisition and measures to
improve productivity especially in Switzerland. The delivery of existing
growth projects (e.g. biosimilars, antibody drug conjugates, cell therapy,
etc.), the growing project pipeline and our investments into R&D will
support the growth of the basic business in the coming years.
Lonza’s new business structure will generate significant free cash flow
before acquisitions, enabling the company to reduce its net debt. Capital
expenditure is forecast to be below CHF 400 million (including maintenance
capital expenditure) in 2012.
