Lonza Group AG : Lonza Continues its Transformation Towards a Global Life Science Leader
January 25, 2012 at 12:32 pm IST
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01/25/2012
Lonza Continues its Transformation
Towards a Global Life Science Leader
• With the acquisition of Arch Lonza is
now the global leader in two attractive
growing life science markets: Microbial
Control and Custom Manufacturing
• Revenues in 2011 before acquisition
at CHF 2.505 mn (+5.6% in constant
exchange rates), EBIT before
acquisition at CHF 292 million
• Foreign exchange negative impact of
CHF 84 million due to strong Swiss
franc
• In 2012 the acquisition of Arch
delivers overall earnings growth which
will translate into significant EPS
growth as well
• The Board of Directors stresses focus
and delivery in the years ahead
• The Board initiates a change of
leadership, and during the transition,
Rolf Soiron will co-ordinate the
Management Committee
• The Board of Directors is proposing a
cash dividend of CHF 2.15 per share for
2011
• 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 of director'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:
o Free cash flow from operating
activities at CHF 171 mn (CHF 362 mn in
2010)
o CAPEX at CHF 267 mn (CHF 300 mn in
2010)
Full financial figures can be found in
the Full Year Report:
http://www.lonza.com/group/en/company/news/reports.html
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 in various 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.
About Lonza
Lonza is one of the world's leading
suppliers to the pharmaceutical,
healthcare and life science industries.
Products and services span its
customers' needs from research to final
product manufacture. It is the global
leader in the production and support of
active pharmaceutical ingredients both
chemically as well as
biotechnologically. Biopharmaceuticals
are one of the key growth drivers of
the pharmaceutical and biotechnology
industries. Lonza has strong
capabilities in large and small
molecules, peptides, amino acids and
niche bioproducts which play an
important role in the development of
novel medicines and healthcare
products. Lonza is also the world
leader in microbial control providing
innovative, chemistry-based and related
solutions to destroy or to selectively
inhibit the growth of harmful
microorganisms. Its activities
encompass the areas of water treatment,
personal care, health and hygiene,
industrial preservation, materials
protection, and wood treatment. In
addition, Lonza is a leader in
cell-based research, endotoxin
detection and cell therapy
manufacturing. Furthermore, the company
is a leading provider of value chemical
and biotech ingredients to the
nutrition and agro markets.
Lonza is headquartered in Basel,
Switzerland and is listed on the SIX
Swiss Exchange and secondary listed on
the Singapore Exchange Securities
Trading Limited ("SGX-ST"). Lonza is
not subject to the SGX-ST's continuing
listing requirements. Lonza is subject
to the listing rules of the SIX Swiss
Exchange, which do not have specific
requirements equivalent to the listing
rules of the SGX-ST in respect of
interested person transactions,
acquisition and realizations, and
delisting. In 2011, the company had
sales of CHF 2.69 billion. Further
information can be found at
www.lonza.com.
Further information
Lonza Group Ltd
Head of Corporate Communications
Dominik Werner
Tel +41 61 316 8798
Fax +41 61 316 9798
dominik.werner@lonza.com
Lonza Group Ltd
Investor Relations
Dirk Oehlers
Tel +41 61 316 8540
Fax +41 61 316 9540
dirk.oehlers@lonza.com
Lonza Group Ltd
Media Relations
Melanie Disa
Tel +1 201 316 9413
Fax +1 201 696 3533
melanie.disa@lonza.com
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Lonza Group AG is one of the world leaders of the development, production and marketing of chemical products. Net sales break down by family of products and services as follows:
- bio-pharmaceuticals (55.4%): exclusive syntheses, microbiological fermentation products , mammalian cell cultures, etc.;
- capsules and dosing solutions for biopharmaceuticals, drugs and nutrition products (17.3%). In addition, the group offers nutritional ingredients;
- small molecule drug substances (13.4%);
- technologies and platforms for manufacturing processes and production of cell and gene therapies (10.4%);
- other (3.5%).
Net sales are distributed geographically as follows: Switzerland (17.4%), Europe (31.7%), the United States (31.8%), the Americas (3.2%), Japan (8.1%), Asia (7.5%) and other (0.3%).