Lonza : Half-Year 2023 Results Report

Enabling a Healthier World

Half-Year Report

2023

Half-Year Report 2023

Contents

CEO Update	4
Financial Highlights	5
Biologics	6
Small Molecules	7
Cell & Gene	8
Capsules & Health Ingredients	9
Corporate	10
Outlook 2023 and Mid-Term Guidance 2024	11
Notes
Condensed Financial Statements	12
Selected Explanatory Notes	16
Forward-Looking Statements	23
Disclaimer	23

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Half-Year Report 2023

CHF 3.1 billion sales and 5.6% CER1 sales growth, corresponding to around 10% CER underlying sales growth2

CHF 922 million CORE EBITDA resulted in a margin of 30%

Good momentum in commercial

CDMO business

Group Outlook 2023 update: mid-to-high single-digitCER sales growth and 28 to 29% CORE EBITDA margin, reflecting slower growth than expected

in early-stage services and continued weak demand in the nutraceutical capsules market driving underutilization

Mid-Term Sales Guidance confirmed with updated margin range at 31 to 33%

1. Sales growth figures, expressed as a percentage (%), are at Constant Exchange Rate (CER)
2. H1 2023 sales growth against an elevated H1 2022 base set by high COVID-related sales and Allakos cancellation fee. It also includes other disclosed one-time effects in H1 2022 and H1 2023

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Half-Year Report 2023

CEO Update

Dear Stakeholders,

In the First Half of 2023, sustained demand for commercial CDMO services drove solid underlying sales growth in our Biologics division and a strong performance in our Small Molecules division. This robust commercial momentum more than offset post-pandemic mRNA sales, and the lower demand for early-stage services and nutraceutical capsules.

At a Group level, H1 2023 sales reached CHF 3.1 billion, with sales growth of 5.6% CER, and around 10% CER underlying sales growth. CHF 922 million CORE EBITDA resulted in a margin of 30%.

Representing around 70% of our CDMO business, our commercial offering is underpinned by partnership models and long-term contracts that provide a solid foundation for long-term stability and success. In H1 2023, performance in the Biologics division was supported by robust commercial growth across the Bioconjugates, Mammalian and Microbial business units. We also saw strong performance in the Small Molecules division, supported by high asset utilization and a focus on more complex and high value offerings.

In our Cell & Gene division, sustained performance in the Bioscience business unit was balanced by lower early-stage demand and some customer clinical-stage failures in the Cell & Gene Technologies business unit.

In the Capsules & Health Ingredients division, sales growth in pharma hard capsules was offset by lower demand for nutraceutical capsules.

CHF 765 million CAPEX was executed in H1 2023. In Visp (CH), two new bioconjugates manufacturing suites came online, alongside a clinical and commercial drug product manufacturing line. We also extended our Biologics Early Development Services (EDS) into the US market, with the opening of a new laboratory in Cambridge (US).

In June 2023, we entered into a collaboration agreement with Vertex to build a dedicated manufacturing facility for type 1 diabetes cell therapies at our site in Portsmouth (US), reflecting our confidence in the long-term commercial potential of this emerging modality.

Business highlights in H1 2023 also included the acquisition of Synaffix and its leading clinical-stage technology platform for the development of antibody-drug conjugates (ADCs). By integrating the Synaffix technologies into our existing offering, we can now provide a best-in-class service to customers who wish to rapidly discover, develop and commercialize their ADCs.

1 Definition of Scope 1 and 2 according to Sustainability Report, pages 33-34

We have also made significant progress in advancing our carbon reduction program over the course of the First Half. We have submitted a letter of commitment to the Science Based Targets initiative, with plans to reduce absolute Scope 1 and 2 greenhouse gas emissions1 by more than 40% by the end of 2030 (from a 2021 base). We have also signed a ten-year virtual power purchase agreement with solar energy company IGNIS to generate renewable energy equal to our electricity needs across Switzerland and the European Union.

Our business is well-positioned for success through our leading commercial offering and our ongoing growth program. In H2 2023, we will focus on ramping up our new assets in Biologics to support accelerated sales growth, as well as optimizing capacity utilization and driving continuous improvement initiatives across the network. Looking at the external environment in the Second Half, we anticipate continuing impacts from lower demand for early-stage services and nutraceutical capsules driving underutiliza- tion. In this context, we have updated our Outlook 2023 from high single-digit to mid-to-highsingle-digit CER sales growth, and from 30-31% to 28-29% CORE EBITDA margin. Mid-Term Sales Guidance is confirmed, with a margin range updated from 33-35% to 31-33%.

As I close, I would like to confirm that our Capital Markets Day will be held on 17 October 2023 in Visp (CH). Further details will be provided in the coming weeks. I look forward to welcoming many of our investors for a strategic update on our business and a tour of our facilities. In the mean- time, I thank our investors for their trust and our global colleague community for their continuing commitment to bringing innovative therapies to life for our customers and their patients.

Sincerely,

Pierre-Alain Ruffieux

Chief Executive Officer

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Half-Year Report 2023

Financial Highlights

For the Six Months Ended 30 June

IFRS Results

Million CHF	2023	Change	2022
		in %

Sales		3'078	3.2	2'982
EBIT		540	(16.3)	645
Margin in %		17.5		21.6
EBITDA		899	(3.7)	934
Margin in %		29.2		31.3
Profit for the period		411	(17.5)	498
EPS basic	(CHF)	5.54	(17.1)	6.68
EPS diluted	(CHF)	5.54	(16.9)	6.67

CORE Earnings1

Million CHF	2023	Change	2022
		in %

CORE EBITDA		922	(6.6)	987
Margin in %		30.0		33.1
CORE EPS basic	(CHF)	6.12	(16.0)	7.29
CORE EPS diluted	(CHF)	6.12	(15.9)	7.28
ROIC in %		8.7	(25.6)	11.7

Other Performance Measures

Million CHF	2023	Change	2022
		in %
Operational free cash flow (before acquisitions and divestitures)	(62)	(81.3)	(331)
Operational free cash flow	(156)	(53.4)	(335)
Capital expenditures (CAPEX)	765	(9.0)	841
Net debt / (net cash)	564		(186) 2
Debt - equity ratio	0.1		(0.0) 2
Net Debt / CORE EBITDA ratio3	0.3		(0.1) 2
Number of employees (Full-Time Equivalent)	17'896	4.3	17'154

1. For Lonza's definition of CORE results, also refer to the Alternative Performance Measures Brochure published in conjunction with this Half-Year Report
2. Net debt and related ratios are based on reported financial results as of 31 December 2022
3. Net debt/CORE EBITDA is calculated based on the CORE EBITDA of the last twelve months

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