Lonza's FY18 profit falls 21% to 559m Swiss francs; names Marc Funk as new CEO

SWISS drug ingredients maker Lonza Group's fiscal 2018 net profit fell 20.9 per cent to 559 million Swiss francs (S$757.4 million) from the previous year's 707 million francs, on the back of higher expenses and loss from discontinued operations. (See amendment note)

Earnings per share shrank 27.9 per cent to 7.51 francs from a year-ago 10.42 francs.

Excluding a 96 million loss from the water care business, which Lonza is selling and has classified as discontinued operations, continuing operations would have posted a profit of 659 million francs, down 1.1 per cent year-on-year, before adjusting for minority interests. In November 2018, Lonza said it would divest its water care business to US investment company Platinum Equity for US$630 million in a bid to strengthen the group's focus on its healthcare business. The transaction is expected to close in the first quarter this year, the company said.

Core profit from continuing operations, which excludes one-offs and certain non-operational items, was 899 million francs for the year ended Dec 31, 2018, up 21.5 per cent compared to 740 million francs a year ago. Core undiluted earnings per share were 12.03 francs, up from 10.87 francs last year.

Sales rose 21.9 per cent to 5.54 billion francs from 4.55 billion francs last year, thanks to a 14 per cent organic sales growth in its pharma and biotech segment, and positive momentum in its consumer health division.

Lonza's board has proposed a dividend of 2.75 Swiss francs per share for 2018, subject to approval at the firm's upcoming annual general meeting to be convened on April 18.

Looking ahead, while Lonza noted that there may be macroeconomic uncertainty and potential headwinds in the cyclical parts of its specialty ingredients businesses, the company is expecting mid-to-high-single digit sales growth and a sustained core EBITDA (earnings before interest, tax, depreciation and amortisation) margin level for 2019.

For the mid-term 2022, the company continues to expect sales of 7.5 billion francs and core EBITDA margin of 30 per cent.

Seperately, Lonza, which has a secondary listing in Singapore and a primary one on the SIX Swiss Exchange, announced that chief executive Richard Ridinger will be retiring after seven years with the company.

Mr Ridinger will be succeeded by Lonza's chief operating officer of its pharma and biotech division, Marc Funk, effective March 1.

To ensure a seamless transition of leadership, Mr Ridinger will remain with the firm until end-April, and be available to Lonza in an advisory capacity until the end of 2019, the company said.

Amendment: An earlier version of this story said that Lonza's profit fell 1.1 per cent to 659 million francs in 2018. The story has been clarified to explain that those figures referred to profit from continuing operations, and not net profit.