Restructuring to continue as Lonza achieves solid sales growth

Will review manufacturing footprint and administrative structure

Lonza’s Chief Executive Richard Ridinger will continue with his review of the Swiss drug ingredients manufacturer after return on capital invested remains ‘unsatisfactory’.

Reporting its financial results for 2012, Lonza said it achieved solid sales growth, with revenues up 45.8% to CHF3.9bn (€3.14bn; US$4.2bn). EBIT rose by 28.4% to CHF335m.

The company said its broad technology had attracted new customers in all areas and led to satisfactory capacity utilisation at all sites. Although the economic situation was challenging, Lonza said it managed to balance most of the risks by delivering its extensive product portfolio to a diverse set of markets.

Ridinger said he was pleased with the overall performance. ‘Despite the ongoing volatile and challenging macro-economic environment in 2012, we were able to generate a significant free cash flow, reduce the net debt by 13%, and meet our financial guidance by delivering an EBIT growth of 15%,’ he said.

The company’s Life Science Ingredients and Bioscience divisions had good results ‘somewhat above expectations’, but Ridinger said he was ‘unsatisfied’ with the EBIT performance of Lonza’s Custom Manufacturing division, which was hit by expenses at the new large-scale biological site in Singapore and a warning letter from the US FDA concerning the plant in Hopkinton, MA, US; Lonza expects this will be resolved during 2013 after a final FDA inspection. Microbial Control performed as expected, experiencing a weaker fourth quarter in 2012, owing to the anticipation of the US fiscal cliff and inventory adjustments of customers.

We met our financial guidance by delivering an EBIT growth of 15%

‘In 2013, we will take transformational steps to move from a product oriented to a market oriented organisation,’ added Ridinger. ‘In doing so, we will adjust our manufacturing footprint, streamline our administrative infrastructure and review our go-to-market-approaches. This will also require some structural changes to the company.’

Lonza has appointed Antonio Trius, formerly CEO of Cognis, to its Board of Directors. He brings experience of the Personal Care market, an area of increasing importance to Lonza’s Microbial Control business, particularly in additives for cosmetics and personal care products.

The company has also appointed Werner Bauer, formerly Head of Innovation, Technology, Research and Development at Nestlé and previously a Director at the Fraunhofer Institute and a Professor of Chemical Engineering at the Technical University in Hamburg to the Board.

In 2013 Lonza expects further sales and EBIT growth and confirms the target of an EBITDA margin of 20% by 2015.

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