Lonza sees steady sales growth while profits boom

By Simon Pitman

- Last updated on GMT

Related tags United states dollar

Lonza has revealed full year results showing sales gains that helped to drive strong profit growth, despite the impact of REACH and negative currency exchange rates.

During 2010 sales grew by 3.3 per cent at constant exchange rates to reach CHF2.68bn (€2.07bn), a figure that represented a year on year decline of 0.4 per cent when factoring in the currency translations.

Net profits increased by a healthy 10.4 at constant exchange rates to reach CHF284m, which represented a 1.8 per cent gain with the currency translation.

The impact of REACH also affected the company’s EBITA which slipped 2.3 per cent, from CHF656m to CHF643m, while EBIT slipped 1.6 per cent to CHF374m – figures that again emphasised the impact of the strong Swiss Franc against international currencies.

New contracts and strong product pipeline

Discussing the results, Lonza Chief Executive Stefan Borgas said that some of the strongest gains has been made by its Microbial Control business, driven by a strong product line combined with a series of new contracts.

Part of these gains were made in the personal care segment, where there has been a big leap in demand for products such as anti-microbial handwashes.

During a press conference to announce the results, Borgas stated that the Microbial Control business is expected to continue to generate significant growth during the course of 2011.

The company also said that it benefited from improved capacity utilization in its biological manufacturing unit during the second half of the year.

Impact of REACH

However, the ingredients provider said that it had been impacted by compliance for Phase One of REACH. This meant additional costs as well as delays to its product pipeline, particularly for its pharmaceutical division.

Looking ahead, the company is expecting to build on the growth it has achieved during 2010, thanks to its successful move away from specialty chemicals to focus on specialty ingredients for the pharmaceutical and personal care markets.

"We have an increasing pipeline of promising products and have signed a lot of new contracts in 2010. We can plan ahead quite a number of years now because of new, signed contracts,"​ Borgas added.

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