Swiss ingredients supplier Lonza has met its Q3 targets for 2012 and EBIT for the year is on track to reach 10%-15% above that of 2011, despite what it described as “difficult macroeconomic challenges”.
“The third quarter was characterised by ongoing Focus & Deliver initiatives throughout the company. Underlying business growth is on track with newly signed contracts and increasing market demand for our new technologies,” said ceo Richard Ridinger. “While we are making progress with our short term cost reduction programmes, we were also able to drive our deleveraging with the long term refinancing of our bridge loans.”
The company’s Microbial Control business, which includes Personal Care, delivered according to expectations in the third quarter. Within Personal Care, the Preservatives business showed strong Q3 performance, while the Anti-dandruff business achieved target levels. However Lonza’s Specialty Ingredients business was slightly behind forecast.
The company said the integration of the business is on track to deliver synergies of $50m by the end of year two and additional revenues of $40m by year three through cross-selling activities. Ninety percent of all synergy measures have been implemented and innovation projects based on the newly combined portfolio are making good progress, it added.
Demand in Custom Manufacturing was steady with good capacity utilisation in both chemical and biological plants. In addition, the outsourcing trend resulted in newly signed contracts and large scale peptide manufacturing contracts have been secured for 2013.
The company’s VispChallenge programme is expected to deliver productivity improvements of CHF100m by 2015 at Lonza’s largest production site in Visp, Switzerland. This will include optimising the product portfolio and streamlining service, structure and processes. The measures will include a reduction of 400 staff positions over 24 months.
“These measures will help increase profitability and make Visp a competitive site,” Ridinger said.
Following the Visp improvement programme, the company will review its global manufacturing footprint and introduce similar improvement programmes to its other sites.