Lonza’s Re-Positioning Continues to Drive Improving Results

In the first half of 2015, Lonza’s Specialty Ingredients and Pharma&Biotech segments both delivered a strong and improved performance and are on track to deliver their growth targets. Compared with the same period in 2014, sales growth of 6.1% to CHF 1,910 million in constant exchange rates (5.8% in reported currency) and CORE EBIT growth of 8.3% in constant exchange rates to CHF 261 million (7.9% in reported currency to CHF 260 million) are coming from improved operational performance and the implementation of market-driven activities.

“Our customer- and market-orientation, as well as our positioning as a high-quality, innovative and reliable supplier, are all gaining momentum now, as our strong overall results confirm,” said Richard Ridinger, CEO of Lonza. “This steady improvement gives us the stability to look at further optimization of our portfolio and our asset footprint, including consolidation of our expertise into specific sites.”

One of the key developments in the first half of 2015 was the Swiss National Bank’s lifting of the ceiling of the Swiss franc to the Euro. Since the acquisition of Arch Chemicals, Lonza has improved the natural hedge globally from a sales-versus-costs perspective for nearly all our trading currencies; so Lonza is less exposed from a Group point of view than in previous years. Remaining foreign-exchange effects are being managed through business performance and counter-measures.

In Visp (CH), however, Lonza risks being less competitive because of the Swiss franc-related fixed cost base there; so it has continued the existing Visp Challenge program started in 2012. The solid basis of this program allowed us to take a careful approach to the current challenges and to find dedicated, well-targeted measures, such as further automation, slight adaptations to its capacity offering in lower-margin assets and portfolio adaptations. Thus, the company implemented a hiring freeze in specific areas that will allow it to reduce the workforce through natural attrition and balance the Euro foreign exchange impact. Over time these actions will lead to a reduction of about 90 positions, and further efficiency and productivity measures will continue to be implemented.

Pharma&Biotech Segment

Pharma&Biotech substantially increased sales and CORE results compared with the same period last year. Ongoing strong momentum in commercial biologics over-compensated for the impact of restructuring activities in other areas. Bioscience Solutions also delivered a strong performance during the first half of 2015.

Lonza experienced firm market demand for commercial and clinical products, as well as for make-to-stock products. In addition to offering services to itsr customers in the company's multi-purpose plants, it now has begun offering suites with dedicated manufacturing capacity to give customers greater flexibility in determining production quantities and timings. Lonza's continuous quality updating not only supports our productivity targets, but also fulfills the company's customers’ requirements.