January 27, 2012: On the release of its final-year results for 2011, Lonza has stated that with its acquisition of Arch Chemicals the company has achieved another step in its transformation towards being a global life science company, with a leading position in the growing markets of microbial control and custom manufacturing.
“This continuous change has characterised past years and Stefan Borgas has led this process as Lonza’s CEO,” stated Rolf Soiron, Chairman of the Board of Lonza. “In the challenging years ahead Lonza will enter a period of focus and improvement of return on capital. This led the Board of Directors to the decision to initiate a change of CEO. As Chairman of the Board I will lead the Management Committee during the transition.”
Revenues in 2011 before the acquisition were CHF 2.505 million (+5.6% in constant exchange rates), and EBIT before acquisition was CHF 292 million. Foreign exchange had a negative impact of CHF 84 million due to the strong Swiss franc. The company said that in 2012 the acquisition of Arch Chemicals will deliver overall earnings growth that will translate into significant EPS growth as well. The Board of Directors is proposing a cash dividend of CHF 2.15 per share for 2011.
Lonza said its revenue and EBITDA growth were due to high capacity utilisation in most business units, compensating for a foreign exchange impact of CHF 84 million due to the strong Swiss franc, higher and more volatile raw material prices, especially in life science ingredients, and the effect of a warning letter at its Hopkinton, Massachusetts, USA site.
The company said that custom manufacturing continued to benefit from demand for outsourcing from pharmaceutical and biotech companies, particularly in biological manufacturing where utilisation rates were above 85%, excluding the new plant in Singapore. Lonza’s recognised strengths led to an increase in the number of contracts signed across all businesses, which it said resulted in a substantially improved project pipeline, especially in its Custom Manufacturing business.
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.
The company strengthened its position in emerging markets, one example being the start-up of a joint venture with Fosun Pharmaceuticals in China and moving the headquarters of its Life Science Ingredients division to Beijing, China.
Lonza said its future growth will be enhanced by the synergy from the acquisition of Arch Chemicals and measures to improve productivity, especially in Switzerland. It said the delivery of existing growth projects, including in biosimilars, antibody drug conjugates and cell therapy, the company’s growing project pipeline, and its investments in R&D will support the growth of the basic business in coming years, and that its new business structure will generate significant free cash flow before acquisitions,
enabling Lonza to reduce its net debt. Capital expenditure is forecast to be below CHF
400 million (including maintenance capital expenditure) in 2012.
Lonza is a leading supplier to the pharmaceutical, health care and life science sectors, with products spanning customer needs from research to final product manufacture. The company is a leading global supplier of active pharmaceutical ingredients (APIs) produced both chemically aand biotechnologically. It has strong capabilities in large and small molecules, peptides, amino acids and niche bioproducts. It is also a global leader in microbial control providing chemistry-based and related solutions to destroy or to selectively inhibit the growth of harmful microorganisms. Its activities cover the areas of water treatment, personal care, health and hygiene, industrial preservation, materials protection, and wood treatment.
The company is also a leader in cell-based research, endotoxin detection and cell therapy manufacturing, and a leading provider of high-value chemical and biotech ingredients to the nutrition and agrochemical markets.
Lonza is headquartered in Basel, Switzerland and is listed on the SIX Swiss Exchange and has a secondary listing on the Singapore Exchange Securities Trading Limited.
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