Lonza acquisitions contribute to nutrition results
nutrition activities and saw demand increase for its existing store
of healthy ingredients in 2006 - yet margins continued to slide.
Lonza's nutrition activities fall within its Organic and Fine Chemicals division, which reported a stable year with operating income of CHF130 m, similar to last year's level.
While sales were up 10.5 per cent on 2005 to CHF1.075 bn, operating margin slipped over one per cent to 12.1 per cent. This was explained by a "time lag between the increases in raw material and sales prices".
The Swiss company bolstered its nutrition offering during the year with the acquisition of the larch arabinogalactan (LAG) assets of US firm Larex Inc, now said to have been fully integrated into the Lonza fold and delivering sales slightly above expectations due to volume increases.
Details of the precise production increase were not available, but the 20,000 square foot manufacturing facility has the capacity to produce eight million pounds of the larch-derived branched polysaccharide each year.
LAG is used to boost the fibre content in foods and beverages and to have a beneficial effect on the gastrointestinal system - both areas of major interest in the healthy sector of the food industry.
The LAG acquisition, together with Lonza's late-2005 acquisition of microalgae DHA operator Nutrinova, marked a stride out from its previous stable of nutrition offerings consisting of vitamin B3, and the vitamin-like substance L-carnitine to food and supplement makers.
However the company said development in the DHA market in the US has been "hampered by intellectual property issues". The company has been embroiled in patent litigation with Martek, and the latest development saw a jury in the US District Court in Delaware find in Martek's favour in October.
A spokesperson for Lonza had not returned NutraIngredients.com's call prior to publication for an indication of whether Lonza is to appeal the decision.
On the nicotinates front, demand for food and pharma-grade vitamins remained strong and was sustained by a positive price development. Prices increased from 2005 in local currencies.
Sales of L-Carnitine for food and pharma also increased, mainly due to demand from the US, said the company, which has managed to defend its market share in the face of Chinese competition. It also offers a low-cost L-carnitine for the feed sector.
Overall, Lonza reported sales of a 15.8 per cent increase in EBIT to CHDF 344 m, and a 15.6 increase in sales to CHF 2.914 bn. The main driver behind these increases is said to be the continuing improvement in biopharmaceutical activities.
