Lonza Raises FY Outlook, Shares Surge 6.7%

Lonza's shares rose 6.7% after the Swiss life-sciences company raised its full-year expectations for its contract-drug-manufacturing business and reported first-half results that exceeded analysts' forecasts. The company now expects 20-21% sales growth and a 30-31% core Ebitda margin for the year, with sales higher in the second half. First-half sales reached 3.58 billion Swiss francs, up 17% YoY, and core Ebitda was 1.06 billion francs, up 19%.

Switzerland-based Lonza Group AG (LZAGF.PK) has reported robust first-half (H1) 2025 results, with a significant increase in profit and sales, driven primarily by its Contract Development and Manufacturing Organization (CDMO) business. The company's shares rose by 6.7% following the announcement, as investors reacted positively to the upgraded full-year expectations.

In the first half of 2025, Lonza reported a 29% growth in its profit, reaching 426 million Swiss francs, or 6.07 Swiss francs per share. This is a notable increase from the 330 million Swiss francs or 4.61 Swiss francs per share reported in the same period last year [1]. The company's core earnings per share (CORE EPS) climbed by 7% to 7.51 Swiss francs, compared to 7.02 Swiss francs in the first half of 2024 [1].

Half-yearly sales were up by 17% to 3.58 billion Swiss francs, on a constant exchange rate (CER) basis, reflecting a 19% growth from the same period in 2024 [1]. The CDMO business, which accounts for a significant portion of Lonza's sales, contributed substantially to this growth. The company's CDMO sales reached 3.1 billion Swiss francs, with a CER growth of 23.1% and a CORE EBITDA margin of 30.2% [2]. This performance is attributed to strong demand in mammalian, bioconjugates, and small molecules technology platforms [2].

The company's Capsules & Health Ingredients (CHI) business also showed improvement, with flat sales versus the first half of 2024 and an improved CORE EBITDA margin of 26.2% [2]. This business segment, which had been impacted by the decline in demand for pharmaceutical supplies during the COVID-19 pandemic, is now on track for recovery.

Looking ahead, Lonza has raised its full-year outlook for the CDMO business, expecting CER sales growth of 20-21% and a CORE EBITDA margin of 30-31%. The company also expects sales in the second half of 2025 to be higher than in the first half, with CORE EBITDA margins remaining steady across both periods [1]. For the CHI business, Lonza maintains its fiscal 2025 outlook, expecting low-to-mid single-digit CER sales growth and a CORE EBITDA margin in the mid-twenties [1].

The company's finance chief, Philippe Deecke, stated that it was too early to estimate a value of a possible sale of the CHI business, with analysts valuing such a deal between 2 billion and 4 billion Swiss francs [2]. Lonza is well on track with the internal preparations to carve out and exit the business [2].

Lonza's CEO, Wolfgang Wienand, commented, "The performance of One Lonza in the first half of 2025 is built on our position as a preferred CDMO partner for the biopharmaceutical industry and our ability to deliver at or above the commitments made to our customers" [3].

References:
[1] https://www.nasdaq.com/articles/lonza-group-h1-results-lifts-fy25-cdmo-sales-margins-outlook
[2] https://www.reuters.com/business/healthcare-pharmaceuticals/lonzas-tops-core-profit-forecast-driven-by-main-drug-manufacturing-business-2025-07-23/
[3] https://markets.ft.com/data/announce/detail?dockey=600-202507230030DGAP____ADHOC____adhoc_2173282_en-1