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Lonza continued to grow during the Corona crisis and posted significantly higher profits in fiscal 2020.
Once again, the driving force was the pharmaceutical division. After the sale of the chemicals business, Lonzanoch wants to be significantly more profitable.
In 2020, sales rose 3.2 percent to 6.19 billion Swiss francs, Lonza announced Wednesday. The end result was a net profit of 871 million francs, 15 percent more than the previous year. From this, shareholders will receive a dividend of CHF 3 per share, 25 cents more than the previous year.
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The highlight at Lonza is and will continue to be the pharmaceutical business. The company manufactures active ingredients for drugs on behalf of the pharmaceutical company or for vaccines for the American company Moderna.
In the pharmaceutical segment, sales increased 7.3 percent to 4.51 billion Swiss francs and operating profit from “Basic EBITDA” increased 4.7 percent to 1.410 billion Swiss francs. The margin was a high 32.1 percent. With the planned sale of the chemicals business, Lonza will now focus solely on this area.
The combined chemicals business in the “Specialty Ingredients” division, which produces disinfectants and preservatives for wood, among other things, will likely be sold in the first quarter of 2021, according to Lonza. Here sales fell 3.4 percent to 1.68 billion francs, while operating profit increased 12.6 percent to 322 million. The corresponding margin was 19.2 percent.
Without the chemicals division, the “new” Lonza should grow significantly faster and generate more profits than the old company. The company is targeting double-digit sales growth by 2023 and the operating profit margin is expected to increase from 33 to 35 percent.
Along the way, Lonza expects sales growth at constant exchange rates in the low double-digit percentage range by 2021. The core EBITDA margin should be between 33 and 35 percent in line with medium-term targets. by 2023.
Lonza shares are not doing well after the year
Lonza shares tend to be rejected on Wednesday after annual figures and are even one of the biggest losers among the former. In initial reactions, analysts certify that the group has a more or less solid set of figures for 2020, but experts do not seem that convinced, even with the outlook.
In the early afternoon, Lonza shares on the SIX fell 4.6 percent at times to 572.40 francs.
Experts complain that the company really doesn’t want to commit to the margin requirements for the new financial year. Instead, Lonza is referring to the medium-term goals for 2023. Analysts apparently also expected more in terms of selling specialty ingredients.
Morgan Stanley analyst James Quigley believes current consensus estimates are likely to be revised down by around 3 percent. In the second half of the year in particular, Lonza was unable to fully meet core EBITDA expectations, he explains. Furthermore, the communication could not find any clarifying information on the expected benefit of Modern cooperation. A topic that should be of great interest to many investors.
Lonza determines a selection of potential LSI buyers
Pharmaceutical supplier Lonza is driving sales for its chemicals division. After the first expressions of interest from potential buyers in 2020, the company has now identified a short list of bidders, the company said Wednesday.
Lonza now anticipates the sale of the specialty chemicals business, which began in the summer, by the first quarter of 2021. The divestment will allow Lonza to focus on its core healthcare business, it said.
Lonza had already set up a new organizational structure in advance, which came into effect on January 1. Lonza’s business is now divided into four main divisions. In the course of the reorganization, Claude Dartiguelongue, Gordon Bates and Jean-Christophe Hyvert will also be appointed to the management of the company.
ra / rw
Basel (awp)
