Lonza Group (LONN) H1 2024 earnings summary

Executive summary

• H1 2024 sales reached CHF 3.1 billion, up 1.8% at constant exchange rates, with CORE EBITDA of CHF 893 million and a margin of 29.2%.

• Robust CDMO performance offset by headwinds in Capsules & Health Ingredients (CHI) and Bioscience divisions.

• Free cash flow was CHF 296 million, supporting ongoing growth investments.

• The company confirmed its full-year outlook for flat sales growth at constant exchange rates and high 20s core EBITDA margin, as well as its upgraded midterm guidance following the Vacaville site acquisition.

• New CEO Wolfgang Wienand outlined operational and strategic priorities, emphasizing execution, integration of Vacaville, and long-term vision development.

Financial highlights

• Sales: CHF 3,057 million, up 1.8% CER, down 0.7% AER year-over-year.

• CORE EBITDA: CHF 893 million, margin at 29.2% (down 0.6–0.8 ppts year-over-year).

• Profit for the period: CHF 330 million, down 19.7% year-over-year.

• CORE EPS basic: CHF 7.03, up 2.0%; EPS basic: CHF 4.61, down 16.8% year-over-year.

• CAPEX: CHF 622 million (20.3% of sales), with about 65% allocated to growth projects.

Outlook and guidance

• 2024 outlook reaffirmed: flat CER sales growth and CORE EBITDA margin in the high twenties (27–29%).

• Sales growth expected to accelerate in H2 2024 due to batch releases and new facility ramp-ups.

• Biologics to benefit from ramp-up of growth assets; Small Molecules to see higher H2 sales with new HPAPI facility; CHI recovery anticipated in 2025.

• Mid-term (2024–2028): 12–15% sales CAGR in CER, 32–34% CORE EBITDA margin, double-digit ROIC, net debt/CORE EBITDA 1.5–2.0x.

• Ongoing pressure anticipated in the capsules business; continued focus on productivity and cost control.