25-Jan-2023 - Lonza Group Ltd

Lonza Delivers Strong 2022 Performance

Growth investment continues

Lonza has reported sales of CHF 6.2 billion, sales growth of 15.0% AER2 (15.1%1 CER), and CHF 2.0 billion CORE EBITDA, resulting in a margin of 32.1%. These robust financial results are driven by strong underlying business performance and a COVID-related sales peak in 2022 which enhanced both sales and margin.

Lonza continued its accelerated investment program to support future growth, with CAPEX at CHF 1.9 billion (30% of sales). New CAPEX projects announced in 2022 included a ~CHF 500 million investment in a large-scale, commercial drug product facility in Stein (CH).

In 2022, Lonza continued to extend its broad and balanced portfolio of CDMO customer contracts, with approximately 115 new customers and approximately 375 new clinical and commercial programs. Lonza now serves more than 790 CDMO customers.

Lonza maintained momentum in its ESG ambitions in 2022. Year-on-year, the company achieved a 6%3 reduction in energy intensity, a 13%3 reduction in GHG emissions intensity, and a 10%3 reduction in water intensity.

Lonza provided its Outlook 2023 at high single-digit CER sales growth, which reflects strong underlying business performance, balanced by a reduction in COVID-related sales following the peak in 2022. A CORE EBITDA margin of 30 to 31% is supported by strong productivity and pricing, offset by residual inflation and the ramp-up of new assets. In 2023, Lonza plans to maintain CAPEX at 30% of sales. Lonza also confirmed its Mid-Term Guidance 2024.

Lonza's Board of Directors is proposing a dividend of CHF 3.50 per share, representing a year-on-year increase of 17% or CHF 0.50. Subject to approval at the upcoming Annual General Meeting, 50% of the dividend of CHF 3.50 per share will be paid out of the capital contribution reserve and will therefore be free from Swiss withholding tax.

Lonza intends to initiate the return of excess capital to shareholders through a share buyback of up to CHF 2 billion, based on its strong balance sheet and positive outlook. The share buyback will not impact Lonza’s capability to invest in organic growth and bolt-on M&A. Lonza remains committed to maintaining its strong investment grade rating. The buyback is expected to commence in H1 2023 and be completed in H1 2025. The program will be executed via a second trading line at the SIX Swiss Exchange and its implementation is subject to applicable regulatory requirements.

Pierre-Alain Ruffieux, CEO, Lonza, commented: “In 2022, we delivered a strong financial performance in line with Outlook. This reflects our resilient business model and sustained market demand, despite an uncertain macroeconomic environment. We have also maintained our ambitious approach to CAPEX investment to support our long-term growth.

“Looking to 2023, we will continue to grow the company while building our customer pipeline and driving operational excellence. We will remain focused on executing our growth plans and pursuing new projects. We are also pleased to confirm our Mid-Term Guidance 2024, supported by new capacity coming online and robust industry fundamentals. More widely, we will continue to build on our position as a leading CDMO player to capture value in the healthcare market.”

Divisional Overview

  • The Biologics division reported strong sales growth of 21.7%1, compared to Full-Year 2021, supported by a robust underlying business and a COVID-related sales peak in 2022. The business delivered a CORE EBITDA margin of 37.5%.
  • Small Molecules reported sales growth of 5.9%1, compared to Full-Year 2021, and a CORE EBITDA margin of 30.3%. This was supported by a solid base business and the ramp-up of new assets.
  • Cell & Gene reported sales growth of 13.6%1 compared to Full-Year 2021, and a CORE EBITDA margin of 16.7%. Bioscience delivered a strong performance, while Cell & Gene Technologies faced delays in clinical trials and customer product challenges.
  • In Capsules & Health Ingredients, sales growth of 5.9%compared to Full-Year 2021 was mainly driven by price increases and pharma demand. The division delivered a CORE EBITDA margin of 33.0%.

Sales growth figures, expressed as a percentage (%), are at Constant Exchange Rate (CER)
2 Actual Exchange Rate
3 Based on Q1-3 2022 data plus Q4 2022 estimates
4 Includes environmental remediation expenses of CHF 300 million, predominantly related to Gamsenried

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