Lonza sees stable first quarter performance

23 April 2008 15:02  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--“The business situation is stable and calm,” Lonza chief executive Stefan Borgas said on Wednesday, commenting on a first quarter update from the Switzerland-based fine chemicals and biopharmaceuticals firm.

Lonza did not give any financial details in its earnings update but said that as expected strong financial and operational performance in the year-to-date was delivering further balance sheet improvements.

The vast majority of its businesses were unaffected by current economic uncertainties, the company said.

Borgas expressed concern over the negative impact of the weakening of the US dollar and pound sterling but said that Lonza would be able to compensate with its on-going efficiency improvement programmes.

Both currencies had lost almost 20% of their value against the Swiss franc compared with a year ago, he said. Around 50% of Lonza's sales are made in these curencies and the firm suffers translation effects.

Lonza was supported by commitment from customers particularly in the exclusive synthesis and biopharmaceuticals segment, the CEO added.

Asset utilisation in the segment was at good levels, and the current contract status supported mammalian cell expansion projects, Lonza said.

It had achieved strong sales and margin performance in its life science ingredients business with stabilised petrochemical raw material prices coupled with product price increases helping expand margins. The company remained concerned, however, about natural raw material cost increases.

Its microbial control business was being hit hardest by the weak US construction market and the weak dollar.

The turnaround in exclusive synthesis would help drive 2008 profitability, Borgas said.

Lonza expects operating profits growth in the high to mid teens until 2013.

Earnings per share growth, Borgas said, would be strengthened in 2008 by the successful sale of its minority stake in phthalic and maleic anhydride producer Polynt.

($1 = €0.63/Swfr1.0)

By: Nigel Davis
+44 20 8652 3214

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