H1 2010: Lonza Reports Improved Order Placement and Contract Signing

Lonza has announced sales of CHF 1,301 million for H1 2010, which was similar level to H1 2009 (-2.1%). The company said this was due to an expectedly weak first quarter in custom manufacturing. The company saw its EBIT increase by 6.1% to CHF 173 million and net profit increased by 14.4 % to CHF 135 million. Lonza's re-engineering project fully on track to deliver all results by March 2011.

Lonza said it has delivered a solid business performance in all sectors despite volatility in the area of exchange rates, uncertainties in customers' innovations and fluctuation in non-pharmaceutical markets in the first half of 2010.

Demand for life science ingredients products improved compared with 2009. Increasing margin pressure in some areas was more than offset by volume growth. Visibility improved thanks to firmly placed orders and new contracts signed in custom manufacturing. Overall, new contracts and orders were at a considerably higher level than a year ago, driving stronger business growth in the second half of the year and through 2011. Increased capacity utilization in large-scale biological manufacturing is a consequence of firm order placements since March.

However, de-stocking in custom manufacturing continued in the first half, and volatility is expected to continue, especially for the small-scale business. Bioscience overall is on track; the decline in sales is due to the expected underutilization in Therapeutic Cell Solutions. Demand from academia and industry has improved but is not yet fully recovered, with companies still reducing R&D budgets.

In an environment of ongoing market volatility and macro-economic uncertainties, the company said it was able to stabilize the business. Lonza's life-science strategy will continue to deliver long-term growth through an increased project pipeline, new signed contracts and an intact outsourcing trend, and investments in plants and technologies.