Lonza shares soar - Lifts 2018 outlook as Capsugel integration ‘exceeded expectations’

By Nathan Gray

- Last updated on GMT

iStock / Davizro
iStock / Davizro
Swiss pharmaceutical and nutritional ingredients maker has upgraded its growth targets for 2018 on the back of a better-than-expected integration of Capsugel and ‘buoyant demand’ in key areas.

Shares in the Swiss supplier soared by more than 6% on Wednesday as it set out ambitious growth targets and beat market expectations in its first half (H1) reporting - with earnings up 29% on the previous year, beating expectations.

"The strong organic sales growth and margin improvements – particularly in our businesses along the healthcare continuum – helped us achieve a positive Half-Year 2018 result, which is why we are updating our outlook for the full year,"​ said Richard Ridinger, CEO of Lonza. "We look back at a successful first year after acquiring Capsugel and see that integration is progressing better than planned, operational and commercial synergies are starting to materialize and healthcare continuum offerings are becoming even stronger."

Indeed, one year on from the closure of the Capsugel acquisition, Lona H1 sales amounted to CHF 3.1 billion – with further improved margins that resulted in a CORE EBITDA margin of 26%.

In addition to it’s the strong performance and benefits of integration with Capsugel, Lonza said its newly formed Consumer Health division performed extremely well while its Pharma & Biotech division ‘continued to build on buoyant demand.’

Nutrition drivers

The Basel-based company noted that within its Specialty Ingredients segment, the newly formed Consumer Health division performed ‘extremely well’ – driven by robust momentum for nutritional ingredients and supplement delivery forms.

With 7.6% organic growth in sales (to CHF 536 million) for H1 and an ‘outstanding’ 28.5% CORE EBITDA margin, consumer health was a key driver of Lonza’s positive performance.

The strong performance was aided by the new business structure, which compbines Lona’s and Capsugel’s historic consumer health divisions into one – such integration ‘exceeded expectations for performance and synergistic potential’, said the company.

Outlook upgraded

As a result of exceeding its H1 expectation Lonza has upgraded its expectations for full-year sales to mid-to-high single digit growth from its previous forecast of mid- single digit growth.

“Lonza expects to continue its momentum in H2 2017; however, results will then be compared with an exceptionally strong H2 2016,”​ the company said.

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