Lonza Starts 2017 with Outstanding First Quarter

Strong start in Q1 paves way for double-digit organic sales growth for first half year
CORE EBIT growth expected to be even stronger than sales growth for first half of 2017
Pharma&Biotech with strong performance in revenue and profitability
Specialty Ingredients with robust growth and profitability improvement
Outlook 2017 upgraded


During the first quarter of 2017, Lonza achieved another record quarter in terms of sales and earnings. The healthy overall company performance resulted from particularly strong performance in the

Pharma&Biotech segment and continued robust growth in the Specialty Ingredients segment.

“Following the record results last year, we have been able to continue our success into 2017. The major drivers were again the businesses along the entire healthcare continuum,” said Richard Ridinger, CEO of Lonza. "We are using this strong momentum to make the necessary investments into future-oriented projects that will continue to bring us closer to the goal of becoming a leading supplier within the healthcare continuum and our various specialty ingredients markets. The expected close of the Capsugel acquisition in Q2 will help us to get there faster.”
 
Pharma&Biotech Segment
 
The Pharma&Biotech segment’s sales growth was driven by strong demand in Mammalian Manufacturing and in Clinical Development and Licensing. The strategic partnership that was established with Sanofi in the first quarter of 2017 for the construction of a large-scale biologics production facility was a further proof-point of the trust Lonza enjoys among its customers. The ground-breaking for the Lonza/Sanofi facility in Visp (CH) is planned for the second half of the year.  
 
The Bioscience Solutions business was slightly softer due to quality issues at our Walkersville, MD (USA) facility; associated with these quality issues, Lonza received a warning letter on 24 April 2017 from the US Food and Drug Administration (“FDA”) relating to technical issues involving for example validation and aseptic process simulations. Lonza takes this issue seriously, and has already started to address all issues raised by the FDA. Lonza expects minimal financial impact on its overall 2017 Pharma&Biotech segment performance.
 
The Pharma&Biotech chemical business has picked up well as expected earlier – a real turnaround has taken place. 
 
Specialty Ingredients Segment
 
Lonza’s Specialty Ingredients segment delivered robust results in most markets, with improved profitability in the first quarter.
 
Consumer Care experienced a positive start to the year, thanks to the increased focus on consumer health and nutrition. The InterHealth acquisition, which was completed in September 2016, has already had the expected positive impact by complementing Lonza’s offerings in this sector.
 
Ongoing demand in the Hygiene business and the continued momentum in vitamin B3 solutions are further accelerating performance in those areas.
 
Agro Ingredients growth continues to be softer due to the reduced demand patterns that are persisting in the market. The feed additives and molluscicides businesses continue to develop well.
 
Coatings and Composites reported overall strong sales growth, mainly in Performance Ingredients and Wood Protection.
 
The Industrial, Commercial, Municipal and Surface Water (ICMS) business experienced a favorable quarter, further reducing seasonality effects due to weather. The growth of this part of the Water Treatment business is expected to continue.
 
Outlook 2017
 
With this positive start into 2017, and based on the sound foundation laid in 2016, Lonza is upgrading its outlook for 2017. The outlook is on a Lonza standalone basis:
 
·         Sales growth upgraded from mid-single digit growth to high-single digit growth

·         CORE EBITDA above CHF 1 billion

·         Double-digit CORE EBIT growth significantly above sales growth

·         CORE RONOA above 21.5%
 
This outlook is based on the present macro-economic environment, current visibility and constant exchange rates for the most important currencies in which Lonza is trading.

Lonza intends to provide an update of the mid-term guidance as part of the half-year results report on 26 July 2017, assuming a closing of the Capsugel deal within Q2 2017.
 
Ordinary Annual General Meeting
 
The shareholders of Lonza Group AG are gathering today to decide on numerous agenda items including the re-elections of Board of Directors members, the election of Albert Baehny to the Board of Directors, the approval of the proposed dividend distribution, various compensation votes, the ordinary capital increase, the creation of authorized capital and the amendment of conditional capital. The results will be published after completion of the AGM.
 
The Board of Directors is proposing an increased cash dividend of CHF 2.75 per share for 2016. Subject to the approval at the Annual General Meeting, this dividend will be paid out of the reserve capital contribution and will be free from Swiss withholding tax.
 
Lonza Additional Information and Disclaimer
 
Lonza Group Ltd has its headquarters in Basel, Switzerland, and is listed on the SIX Swiss Exchange. It has a secondary listing on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Lonza Group Ltd is not subject to the SGX-ST’s continuing listing requirements but remains subject to Rules 217 and 751 of the SGX-ST Listing Manual.
 
This announcement may include statements that are, or may be deemed to be, “forward-looking statements.” These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “outlook,” “paves way,” “believes," “estimates,” “plans," “projects," “anticipates," “expects," “intends," “may," “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.
 
Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Lonza Group Ltd’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Lonza Group Ltd’s business, results of operations, financial position, liquidity, prospects, growth or strategies. Forward-looking statements speak only as of the date they are made.
 
Each of Lonza Group Ltd, BofA Merrill Lynch, UBS, and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement, whether as a result of new information, future developments or otherwise.
 
Disclaimer
 
This announcement is not an advertisement and not a prospectus and not an offer of, or a solicitation of an offer to buy, securities to U.S. persons or in any jurisdiction, including in or into the United States, Canada, Japan or Australia, where such offer or solicitation is unlawful. This announcement is not an offer to sell, or a solicitation of an offer to purchase, any securities of Lonza Group Ltd, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or investment decision.
 
The contents of this announcement have been prepared by and are the sole responsibility of Lonza Group Ltd. None of BofA Merrill Lynch, UBS, or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Lonza Group Ltd and/or its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available, or for any loss, whether arising from any use of this announcement or its contents or otherwise arising in connection therewith.
 
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The securities to which this announcement refer have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. There will not be a public offering of securities in the United States.
 
This announcement is not an offering circular within the meaning of article 652a of the Swiss Code of Obligations, nor is it a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or a prospectus under any other applicable laws.
 
This communication does not constitute an "offer of securities to the public" within the meaning of Directive 2003/71/EC of the European Union (the "Prospectus Directive") of the securities referred to herein in any member state of the European Economic Area (the "EEA"). Any offers of the securities referred to in this announcement to persons in the EEA will be made pursuant to an exemption under the Prospectus Directive, as implemented in member states of the EEA, from the requirement to produce a prospectus for offers of the Securities. In the United Kingdom, this announcement is directed exclusively at Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) who fall within Article 49(2)(A) to (D) of the Order, and (iii) to whom it may otherwise lawfully be communicated, and any investment activity to which it relates will only be engaged in with such persons, and it should not be relied on by anyone other than such persons.