Lonza raises core profit margin target after solid first half
Lonza's Financial Performance and Strategic Developments
By Bartosz Dabrowski and Kira Britten
Upgraded Profit Margin Guidance
July 22 (Reuters) - Switzerland's Lonza, the world's largest contract drug manufacturer, raised the full-year target for its core profit margin to between 33% and 34% on Wednesday, citing strong operational execution and contributions from maturing growth projects in the first half.
It had previously expected its core earnings before interest, taxes, depreciation and amortization margin to expand to more than 32% of sales this year.
First Half 2026 Results
Core EBITDA Growth
In the first half of 2026, Lonza's main contract drug manufacturing business saw its core EBITDA grow 27.4% in constant currency to 1.17 billion Swiss francs ($1.44 billion).
Strategic Focus and Business Divestment
Lonza is aiming to focus solely on contract manufacturing, having agreed to sell its capsule and health ingredients business to Lone Star Funds in May.
Analyst Expectations
Analysts had projected slightly lower EBITDA of 1.13 billion francs for the core business, a poll compiled by Vara showed.
Sales Performance
Sales in the January-June period grew 11.2% in constant currency to 3.37 billion francs, compared with 3.42 billion francs expected by analysts' consensus.
Outlook for the Remainder of the Year
Full-Year Expectations
Lonza said it expected the first-half performance to underpin another solid full-year result, even as growth and profitability are expected to moderate in the second half of the year due to the timing of business activities, particularly in its advanced synthesis unit, and tougher year-ago comparisons.
Biologics Manufacturing at Vacaville
The company said sales at Vacaville, its key biologics manufacturing site acquired from Roche in 2024, were also weighted towards the first half, reflecting production timing and phasing.
Sales Growth Forecast
It confirmed the forecast for full-year sales growth of 11% to 12% at constant exchange rates.
Expansion Initiatives
Antibody-Drug Conjugate Production
Stein Site Expansion
Lonza also said it would expand production capacity for antibody-drug conjugates at its Stein site in Switzerland, adding a commercial-scale filling line that is expected to be operational in 2030 under a long-term collaboration agreement with a major pharmaceutical company.
($1 = 0.8128 Swiss francs)
(Reporting by Bartosz Dabrowski and Kira Britten, editing by Milla Nissi-Prussak)
