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 EBITDA margin in the high 20s.

• Strong commercial and operational performance in CDMO business; demand remains soft in Capsules & Health Ingredients and Bioscience.

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

Financial highlights

• CapEx as a percentage of sales expected to be slightly below the initial 25% guidance due to lower maintenance spending and customer-driven specification changes.

• 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.

• Vacaville acquisition's P&L impact for 2024 expected to be insignificant.

Outlook and guidance

• 2024 guidance reiterated: flat sales growth at constant exchange rates, Core EBITDA margin in the high twenties.

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

• Higher absolute CDMO sales expected at a lower margin compared to H1; H2 sales higher than H1, but CER growth lower due to a high base in H2 2023.

• Capsules and Health Ingredients and BioScience divisions expected to recover in 2025.