Lonza wants to continue growing even after the end of the pandemic
Published: Friday, Jan 26th 2024, 13:41
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Corona has brought Lonza high revenues in recent years. Now that the pandemic is over, the pharmaceutical supplier is preparing for a year of transition. The question of under whose leadership Lonza will then enter the next growth phase has now been partially answered.
The Moderna contract for the active ingredient in the coronavirus vaccine has flushed around half a billion Swiss francs into Lonza's coffers for the last time in the 2023 financial year. Lonza received CHF 200 million of this as a "termination fee" because the Americans terminated the collaboration.
As a result, the Group increased its sales by 7.9 percent to 6.72 billion Swiss francs, as announced in a press release on Friday. Adjusted for currency effects, the increase was 10.9 percent.
End of the pandemic burdened
However, the end of the pandemic has not only affected Lonza in the form of a lack of vaccine orders - demand for capsules for nutritional supplements has also declined since then. At the same time, the rising interest rate environment is slowing down many research-based companies.
Lonza was therefore significantly less profitable in 2023: adjusted operating profit rose by "only" 0.2 percent to CHF 2.00 billion. The so-called core EBITDA margin decreased by 2.3 percentage points to 29.8 percent.
And net profit even fell by around half to 655 million. This was due to the closure of two smaller plants in the USA and China and the write-off of the Moderna plants that were no longer required. This resulted in a total of 439 million.
Transition year before new growth
However, Lonza is also focusing on growth without Moderna. To this end, the company has invested billions in expanding its capacities in recent years. In 2023, one in four francs of turnover was invested again.
Lonza wants to grow by 11 to 13 percent annually in local currencies by 2028. And the margin should rise back to the 32 to 34 percent range.
But first comes a year of transition: Lonza can make up for the lack of income from Moderna in 2024 with new projects - but nothing more. And because the order from the Americans was very lucrative, profitability is only in the "high 20 percent range".
Change in the Board of Directors
Albert Baehny, who has shaped the transformation of the Group from a chemical company to the world's leading supplier to the pharmaceutical, biotech and specialty chemicals markets in recent years, is now increasingly retiring from Lonza. Jean-Marc Huët from the Netherlands will replace him as Chairman of the Board of Directors at the Annual General Meeting next May.
"At some point, I wanted to have more time for myself, for my family and my hobbies," explained the 71-year-old in an interview with AWP. "At that age, that's allowed," he added.
It seems only a matter of time before the Frenchman can also pass on his second post: The search for a new CEO is progressing rapidly and Lonza intends to announce the name of the new boss in two to three months.
Stock market cheers
The stock market reacted positively to the figures, which were well above expectations: Lonza shares jumped by almost 14 percent to 420 Swiss francs by around 1 pm. Investors were also reassured by the fact that the financial targets were confirmed this time after a series of profit warnings.
The fallen star of the stock market is thus out of the price slump - but there is still plenty of room for improvement. At the height of the "corona boom", the shares still cost 785 francs.
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