Lonza Group (LONN) Investor Update summary

Strategic vision and organizational transformation

• Introduced the 'One Lonza' vision, positioning the company as a pioneer and world leader in the CDMO industry, emphasizing a unified strategy, culture, and operational excellence.

• Defined the 'Lonza Engine' as a unique set of strengths: high-performance teams, scientific and digital ecosystem, customer partnerships, execution excellence, and scalable growth capabilities.

• Announced a major organizational reshaping into three business platforms—Integrated Biologics, Advanced Synthesis, and Specialized Modalities—removing the business unit layer for greater synergy, scalability, and customer experience.

• Decided to exit the Capsules and Health Ingredients (CHI) business to focus on core CDMO activities and high-value modalities.

• Leadership changes and deep stakeholder engagement implemented to align with the new structure and support the transition.

Market outlook and growth strategy

• CDMO market expected to grow 8%-10% annually, with Lonza targeting an additional 2%-3% growth through differentiation and risk diversification.

• Growth driven by increasing outsourcing from pharma to CDMOs, expansion across modalities and geographies, and a balanced customer base split between Big Pharma and Biotech.

• Lonza aims for low-teens organic CER sales growth over time, with core EBITDA growth ahead of sales.

• Vacaville acquisition to contribute CHF 500 million in 2025, with steady utilization and margin improvement expected through 2028.

• M&A will play a disciplined, value-focused role, prioritizing bolt-on, high-quality assets.

Financial framework and capital allocation

• Financial model centers on growth-led value creation: invest in growth, drive margins, generate cash, and allocate capital efficiently.

• CapEx to trend toward mid- to high-teens % of sales, with growth investments in the low-teens % range.

• Dividend policy maintained: commitment to maintain or increase dividends annually, with a payout ratio of 35-45%.

• Surplus capital will be returned to shareholders if no attractive growth opportunities are found.

• Targeting mid-teens ROIC over time as asset portfolio matures.