Lonza Group (LONN) H2 2024 earnings summary

Executive summary

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

• CDMO business achieved low-teens growth (adjusted for 2023 mRNA base), with a core EBITDA margin of 29% (CHF 1.9 billion), supported by productivity and product mix.

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

Financial highlights

• 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).

• Free cash flow reached CHF 473 million, driven by lower CapEx and working capital changes.

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

• Net debt: CHF 2,859 million; net debt/CORE EBITDA ratio: 1.5x, in line with target range.

• Proposed dividend of CHF 4 per share, representing a 44% payout.

Outlook and guidance

• For 2025, CDMO revenues expected to approach 20% growth, with core EBITDA margin nearing 30%, including Vacaville acquisition impact.

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

• New organizational structure for CDMO business 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 than the first, as new assets ramp up.