Lonza reports strong 2020 performance

Published: 29-Jan-2021

Lonza results mainly reflect Pharma Biotech & Nutrition (LPBN) performance, as Specialty Ingredients (LSI) is reported as a discontinued operation

Lonza has reported strong sales of CHF 4.5 billion, sales growth of 12.0%, and CHF 1.4 billion CORE EBITDA, resulting in a margin of 31.2%. The results mainly reflect the Pharma Biotech & Nutrition segment (LPBN), which delivered 12.2% sales growth and a CORE EBITDA margin of 32.1%. The LSI segment, reported as a discontinued operation, delivered a strong performance with 3.4% sales growth alongside an improved 20.3% CORE EBITDA margin.

Throughout 2020, Lonza maintained business continuity during the COVID-19 pandemic with minimal impacts to operations and supply. Lonza’s sustained contribution to controlling the pandemic saw agreements signed with many customers to manufacture vaccine candidates, treatments and therapies related to COVID-19. Production of the drug substance for Moderna’s COVID-19 Vaccine is underway at both Lonza Portsmouth (USA) and Lonza Visp (CH) sites.

Progress has been made in the divestment of the LSI segment. Following initial expressions of interest from potential buyers in 2020, a shortlist of bidders has been selected and a deal is expected to be signed in Q1 2021. The sale will allow Lonza to focus on its core healthcare business while delivering value to shareholders.

A new organisational design came into effect on 1 January 2021, in which Lonza’s businesses are organized into four main divisions and five functions. Financial reporting will be updated to include divisional performance in the future. Alongside this, effective 1 April 2021, three new members (Claude Dartiguelongue, Gordon Bates and Jean-Christophe Hyvert) have been appointed to Lonza’s Executive Committee to reflect the new structure of the business and ensure divisional representation.

Lonza’s Guidance for Full-Year 2021 is low double-digit CER sales growth and improved CORE EBITDA margin, both in line with the 2023 Mid-Term Guidance trajectory. While the businesses have shown strong levels of resilience during the pandemic, all forecasts should continue to be treated with some caution at this time of global uncertainty arising from the COVID-19 pandemic.

Lonza Pharma Biotech & Nutrition (LPBN) Segment Overview

The LPBN segment demonstrated resilience to the impacts of COVID-19. Facilities remained open and supply chains were managed to ensure business continuity. The business worked diligently to expand service offerings to customers while investing in production capacity in response to continued demand.

  • Small Molecules delivered high single-digit growth and improved margin, while winning new projects and launching new service offerings. Investment to increase capacity and support customers in early phase development is planned.
  • Biologics saw mid-teens sales growth driven by new customers and programs and lower operating margin for 2020, reflecting the impact of operational expenses behind the ramp up of growth projects. Further capacity expansion is planned across drug substance and drug product services.
  • Cell & Gene Therapy expanded its service offerings, while working to grow its vein-to-vein supply network for cell and gene therapy customers. The business reported strong sales growth, well ahead of the market.
  • Bioscience is focused on improving its customer experience and operational efficiency. In 2020 it achieved high single-digit sales growth and strong margin improvement, driven by efficiency gains.
  • Capsules & Health Ingredients grew high single-digit, benefitting from increased demand for nutritional supplements caused by the pandemic. It has approved new capacity investments to meet sustained and high levels of customer demand in the future.

Group Financial Summary Continuing Business

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