Lonza results beat expectations

Lonza has its main chemical manufacturing plant at Visp in the Rhone valley (Lonza) lonza.ltd

The Basel-based chemical and biotechnology company, Lonza, has reported an 18-per-cent rise in net profit in 2006, beating analysts' expectations.

Profit rose to SFr222 million ($178 million) from SFr188 million in 2005, while turnover was up by 15.6 per cent to SFr2.91 billion.

Lonza said it expected sales growth of eight to 12 per cent over the next few years and operating profit growth in the mid to high teens.

The company has repositioned itself away from speciality chemicals in recent months with a series of deals to strengthen its high-margin biopharmaceutical business.

It concluded agreements with drugs firms, including scooping up two units from Cambrex and buying a biotech manufacturing plant from Genentech.

It also listed its Polynt SpA unit on the Italian stock exchange – part of a shifting of Lonza’s business away from the traditionally low-margin speciality chemicals products, which have been hit by higher raw materials prices and increasing competition from the Asia-Pacific region.

In a statement, Lonza said biopharmaceuticals would make up 90 per cent of its sales in 2007.

An analyst from Bank Vontobel said turnover and operating profit growth was impressive.

“On the whole the accounts confirm that the company is in a strong growth trend,” Alexandre Pasini said. Analysts had expected profits of around SFr212 million.

swissinfo with agencies

Key facts

2006 financial results:
Sales – SFr2.91 billion (+15.6%)
Net profit – SFr222 million (+18%)
Proposed dividend – SFr1.50