Lonza Group (LONN) H2 2024 earnings summary

Executive summary

• Reported 2024 revenues of CHF 6.6 billion, nearly flat year-over-year (-0.2% CER), with strong CDMO growth offsetting declines in Capsules & Health Ingredients (CHI) and bioscience segments, and loss of COVID-related mRNA business.

• CORE EBITDA was CHF 1.9 billion at a 29.0% margin, supported by productivity and product mix; proposed dividend maintained at CHF 4.00 per share, a 44% payout ratio.

• Strategic focus on becoming a pure-play CDMO, with a planned exit from the CHI business due to limited synergies and different market dynamics.

• Major acquisition of Genentech's Vacaville biologics facility for CHF 1,435 million, significantly expanding US manufacturing capacity.

• Signed CHF 10 billion in new contracts in 2024, reflecting robust demand and pipeline.

Financial highlights

• IFRS sales: CHF 6,574 million (-2.1% YoY); CORE EBITDA: CHF 1,908 million (-4.6% YoY); margin: 29.0% (-0.8ppts YoY); EBIT: CHF 964 million (+9.5% YoY); Net income: CHF 637 million (-2.7% YoY).

• CORE EPS basic: CHF 15.03 (+8.2% YoY); EPS basic: CHF 8.93 (+0.6% YoY).

• Free cash flow reached CHF 473 million, driven by lower CapEx and strong operational performance.

• CapEx was CHF 1,417 million (22% of sales), with 60% allocated to growth projects.

• Net debt/CORE EBITDA: 1.5x, in line with target range; leverage supports BBB+ rating.

Outlook and guidance

• 2025 CDMO revenue expected to approach 20% CER growth, including CHF 500 million from Vacaville acquisition; core EBITDA margin to approach 30%.

• CHI business expected to return to low- to mid-single-digit CER sales growth and mid-20s EBITDA margin.

• New CDMO organizational structure to be operational from Q2 2025, with three integrated business platforms.

• FX impact on 2025 expected to be 0.0 to -1.0ppt on sales and CORE EBITDA; effective tax rate guided at 17-19%.

• Second half of 2025 anticipated to be stronger as new assets ramp up.