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Lonza raises its medium-term profit margin ambition

Lonza raised its medium-term core earnings margin ambition into the high thirties and set an organic sales-growth model of 10–13 per cent at constant exchange rates. The contract drug development and manufacturing group retained its annual outlook after third-quarter trading met expectations. Its continuing-business model excludes the capsules and health ingredients division.

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A large stainless-steel vessel connects by piping to a smaller process skid in a bright manufacturing hall.

Higher margin ambition for the manufacturing business

Lonza, the contract drug development and manufacturing group, raised its medium-term profitability ambition into the high thirties.[1], [2]

The target uses Lonza’s CORE measure of earnings before interest, tax, depreciation and amortization. Management expects growth in that measure to outpace sales growth. Its organic growth model targets average sales growth of 10–13 per cent over time at constant exchange rates. Capsules & Health Ingredients is excluded from the continuing manufacturing business model.[1]

Capital returns and cash generation gain targets

Lonza targets a return on invested capital of two to three times its current weighted average cost of capital. It also aims to improve free cash flow as a share of CORE earnings on average over time. Lonza retained its assumption for capital spending as a share of sales. The policy of maintaining or increasing the dividend per share remains in place.[1]

Quarterly trading leaves annual outlook unchanged

Third-quarter performance met expectations across the business platforms. Lonza retained annual constant-currency sales-growth guidance of 11–12 per cent and a CORE margin of 33–34 per cent. The company still expects currency movements to reduce annual sales growth by approximately 2–3 per cent. Its investor event was held at Vacaville in the US, a biologics manufacturing facility acquired from Roche in 2024.[1]

References

  1. News sourceLonzaLonza raises medium-term growth and margin ambitions↩1↩2↩3↩4
  2. News sourceInvesting.comLonza raises its medium-term profit margin target↩
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