Lonza Group (LONN) Q3 2024 TU earnings summary

Executive summary

• Q3 performance aligns with full-year trajectory; Q4 sales expected to accelerate due to batch release timing at year-end.

• 2024 outlook confirmed: flat sales growth at constant exchange rates and Core/CORE EBITDA margin in the high twenties (27%-29%).

• Strong commercial and operational momentum in Biologics, Small Molecules, and Cell & Gene; Capsules and Health Ingredients (CHI) and BioScience divisions continue to face demand softness.

• Growth projects progressing, including new facilities in Stein and Visp, Switzerland, and successful integration of the Vacaville, California site.

Financial highlights

• Sales of CHF 3.1 billion and CORE EBITDA of CHF 893 million reported for H1 2024.

• Productivity measures have partially offset margin impacts from lower demand and asset utilization in certain divisions.

Outlook and guidance

• 2024 guidance reiterated: flat sales growth at constant exchange rates, Core/CORE EBITDA margin 27%-29%.

• Higher absolute CDMO sales expected in H2, but at a lower margin compared to H1.

• Sales in H2 to be higher than H1, but CER growth lower due to high base in H2 2023.

• High level of contract signings expected across all CDMO businesses for the full year.

• CHI and BioScience units underperforming; recovery expected in 2025.