Lonza to boost nutrition portfolio with new investment in China

By Stephen Daniells

- Last updated on GMT

Related tags: Niacin, Omega-3 fatty acid, Investment, Lonza

Swiss chemicals group Lonza has announced a strategic investment of
$200m in its operations in China, with the investment boosting all
the business including its rapidly expanding nutrition business
portfolio.

The company is already the world-leading producer of vitamin B3, Niacinamide, produced in Guangzhou City, and recently acquired Nutrinov'a DHA omega-3 business.

"This project will mark another important milestone in Lonza's long-term strategic plan. It is a key element in achieving the targeted growth for Lonza,"​ said CEO of Lonza, Stefan Borgas.

The plan will see the group invest $200m over the next three to five years in all areas of the business, with new developments in the field of nutrition expected to emerge from the pipeline: Worldwide, the company is reported to have 26 projects underway involving new intermediaries for applications in a number of industries, including food, and a further 13 projects are looking to improve existing products and develop new technologies for L-Carnitine and niacin, fatty amines, fatty esters, biocides.

The China investment will continue the ten-year old operations in the Nansha Guangzhao province. Lonza recently completed a new R&D complex in the region, which will participate in developmental activities for intermediates and active ingredients for the pharmaceutical and fine chemicals industries, which contains the companies nutrition business portfolio.

"We firmly believe that this region offers cutting-edge technology platforms, manufacturing excellence, and a competitive cost environment which complements Lonza's other international sites,"​ said Borgas.

The company's new niacinamide plant in Nansha, China, went on stream during Q3 2005 and niacinamide sales for food and pharmaceutical use, as well as for animal feed, were strong in 2005.

The recent addition of the DHA business is said to be 'synergistic' with the current L-Carnitine and niacin lines and will further strengthen the existing distribution channels worldwide.

In January, the company reported a 38.8 percent increase in operating income in 2005, but margins for its nutritional products have been eroded by high costs.

The organic fine and performance chemicals unit reported sales of CHF 892 million (€575.8 million) for the 12 month period - 5 per cent up on 2004's CHF 852 million (€549.9 million). Operating income was also up, by 2 per cent, to CHF 127 million (€81.9 million). However the division's operating margins slightly decreased from 14.6 to 14.2 per cent.

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