Lonza Group Ag · SIX:LONN
Lonza — H1 2024 Earnings Presentation
33 slides from Lonza's earnings presentation, Jul 25, 2024
Slide 1: Half-Year Results 2024
Enabling a Healthier World Half-Year Results 2024 Wolfgang Wienand, CEO Philippe Deecke, CFO 25 July 2024 Business Use Only 1
Slide 2: Wolfgang Wienand Joins Lonza as CEO
Wolfgang Wienand Joins Lonza as CEO − CEO since 1 July 2024 − Previously CEO of the Swiss CDMO Siegfried, SIX: SFZN (since 2019, from 2010 first Chief Scientific Officer, then Chief Strategy Officer), before at Evonik Industries − Almost two decades of experience in the biopharma CDMO industry in Ge
Slide 3: Contents
Contents Group Overview Financial Summary Divisional Overview Concluding Remarks Q&A 3
Slide 4: Half-Year 2024 Group Overview
Half-Year 2024 Group Overview 4
Slide 5: Executive Summary
Executive Summary1 − Performance well on track to deliver Full-Year Outlook: Sales of CHF 3.1 billion and 1.8% CER sales growth − CHF 893 million CORE EBITDA resulted in a margin of 29.2% − Robust performance in CDMO business, with headwinds in the capsules business within the Capsules & Health Ingr
Slide 6: H1 Commercial Highlights
H1 Commercial Highlights Pipeline Momentum − Healthy levels of new contract CDMO signings in H1 2024 − Encouraging early phase enquiries for CDMO business Selected Signings − Cell & Gene Technologies signed a multi-year commercial supply agreement with a major customer − Multiple signings for Synaff
Slide 7: Acquisition of Genentech Vacaville (US) Site from Roche
Acquisition of Genentech Vacaville (US) Site from Roche − Acquisition extends high-quality manufacturing capacity for large-scale mammalian drug substance − New West Coast hub complements existing US site network − Integration activities remain on track, including anti- trust approval process − Stro
Slide 8: Continued Progress in ESG
Continued Progress in ESG − Near-term emissions reduction targets have been validated by the Science Based Targets initiative (SBTi) − New renewable energy certificate (REC) agreement will enable all current Lonza facilities in the US to achieve 100% renewable electricity from 2026 − the third year
Slide 9: Half-Year 2024 Financial Summary
Half-Year 2024 Financial Summary 9
Slide 10: Solid Performance Despite Market Headwinds in Bioscience and Capsules Businesses
Solid Performance Despite Market Headwinds in Bioscience and Capsules Businesses Financial Performance Summary in m CHF − Robust CDMO performance offset by softer performance in Bioscience and the capsules Change Change H1 2024 CER1 AER2 business of the Capsules & Health Ingredients division Sales 3
Slide 11: Strong Margin Despite Underutilization of CHI Assets
Strong Margin Despite Underutilization of CHI Assets CORE EBITDA Margin H1 2023 vs H1 2024 in % − High H1 2023 base from COVID-related mRNA sales and Codiak one-off in Cell & Gene 30.0 29.2 − H1 2024 margin supported by favorable mix in Biologics and Small Molecules − Margin also benefited from stro
Slide 12: Continued Progress on Growth Investments
Continued Progress on Growth Investments CAPEX Breakdown by Division H1 2024 Project Portfolio in m CHF in % − c.65% of CAPEX in growth 20% 622 − Ramp-up of new Visp (CH) facilities anticipated in Q4 2024 − FY CAPEX spend anticipated at around mid-twenties as % of sales − Internal return thresholds
Slide 13: Solid Cash Generation Supporting Growth Investments
Solid Cash Generation Supporting Growth Investments Operational Free Cash Flow1 in m CHF H1 2024 Change H1 2023 EBITDA 862 (37) 899 − Solid Free Cash Flow due to Change of net working capital (NWC) (276) 160 (436) timing of CAPEX investments and CAPEX (622) 143 (765) improved net working capital Oth
Slide 14: Half-Year 2024 Divisional Overview
Half-Year 2024 Divisional Overview 14
Slide 15: Strong Commercial CDMO Performance, Market Softness Impacts CHI and Bioscience
Strong Commercial CDMO Performance, Market Softness Impacts CHI and Bioscience Financial Results by Division H1 2024 − Biologics: good sales momentum, excluding 2023 Sales CORE Margin COVID-related mRNA sales. Margin improvement growth EBITDA change from favorable product mix, operational CER1 margi
Slide 16: Biologics Division Update
Biologics Division Update 1,709m +7.3%1 − Mid-teens sales growth in H1 2024, excluding 2023 COVID- Sales (CHF) related mRNA sales 594m − Healthy levels of new contract signings in H1 2024 +14.9% − Strong sales growth in Bioconjugates driven by commercial CORE EBITDA2 (CHF) demand − Margin supported
Slide 17: Selected Biologics Business Highlights
Selected Biologics Business Highlights − Continued strong demand in large scale with some signs of recovery in early-stage business Mammalian − Vacaville (US) acquisition scheduled to close in Q4 2024 − Decommissioning of Hayward (US) and Guangzhou (CN) close to completion − Continued strong demand
Slide 18: Small Molecules Division Update
Small Molecules Division Update 402m +2.5%1 − Continued strong commercial demand for highly potent Sales and complex offerings (CHF) − H1 sales growth lower than Full-Year expectations, due to 135m -4.3% campaign timing CORE EBITDA2 − Solid CORE EBITDA margin supported by favorable product (CHF) mix
Slide 19: Cell & Gene Division Update
Cell & Gene Division Update 331m -6.6%1 − Robust underlying sales and margin performance in Cell & Gene Sales (CHF) Technologies was offset by headwinds in the Bioscience business. Excluding the one-off impact from the Codiak termination in H1 62m 2023, the division grew 10% -15.1% − Cell & Gene Tec
Slide 20: Capsules & Health Ingredients (CHI) Division Update
Capsules & Health Ingredients (CHI) Division Update 540m -6.1%1 − Recovery in demand for nutraceutical capsules, dosage form Sales (CHF) solutions, and health ingredients after 2023 destocking − Weak pharma capsule business due to customer destocking 134m -30.2% − Successful deployment of next gener
Slide 21: Future Margin Recovery from Improved Pharma Demand and Asset Utilization
Future Margin Recovery from Improved Pharma Demand and Asset Utilization Hard Empty Capsules Demand Evolution − US demand recovery since mid 2023 Mid 2022 − Price pressure arising from industry excess capacity and NUTRA qualification of alternative suppliers COVID-19 Demand Increase − From 2025, 3%
Slide 22: Summary and H2 Priorities
Summary and H2 Priorities 22
Slide 23: Reconfirmed Outlook 2024 and Mid-Term Guidance
Reconfirmed Outlook 2024 and Mid-Term Guidance Sales Outlook 2024 H2 2024 Performance Drivers Flat CER Sales Growth − Group sales are expected to be higher in H2 versus H11, reflecting timing of batch releases and ramp-up of new facilities in Biologics and Small Molecules Margin Outlook 2024 − Ongoi
Slide 24: Board Update and CEO Priorities
Board Update and CEO Priorities 24
Slide 25: New Chairman, Board Governance Update, and Two New Board Nominees
New Chairman, Board Governance Update, and Two New Board Nominees − Jean-Marc Huët elected as Chairman of the Board of Directors on 8 May 2024 − Board updates to enhance governance will be effective from 1 August 2024: − Nomination and Compensation Committee divided in two: a Nomination and Governan
Slide 26: In H2 2024, Focus will be on Short-Term Priorities Laying the Foundations for Long-Term Success
In H2 2024, Focus will be on Short-Term Priorities While in Parallel Laying the Foundations for Long-Term Success Lay the foundations key drivers for long-term success − Mission, vision, values − Unified corporate strategy as guidance for divisional strategies − Unified corporate culture geared to o
Slide 27: Q&A
Q&A 27
Slide 28: Appendices
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Slide 29: Negative Currency Impact in H1 2024 due to CHF Appreciation Against Major Currencies
Negative Currency Impact in H1 2024 due to CHF Appreciation Against Major Currencies in 2023 Currency impact on sales Impact in %pts (2%) (3%) (2%) (1%) − Around 60% of Group sales in foreign currency (mainly USD and EUR) Impact in bn CHF (0.0) (0.0) − Margin well protected from natural (0.1) hedge
Slide 30: Half-Year 2024 Financial Highlights (1/2)
Half-Year 2024 Financial Highlights (1/2) CHF million HY 2024 HY 2023 YoY (in %) Sales 3,057 3,078 (0.7) CORE EBITDA 893 922 (3.1) Margin in % 29.2% 30.0% EBITDA 862 899 (4.1) Margin in % 28.2% 29.2% EBIT 534 540 (1.1) Margin in % 17.5% 17.5% ROIC in % 8.6% 8.7% Net Financial Result (139) (41) n/a T
Slide 31: Half-Year 2024 Financial Highlights (2/2)
Half-Year 2024 Financial Highlights (2/2) CHF million HY 2024 HY 2023 YoY (in %) CORE EPS basic (CHF)1 7.03 6.89 2.0 EPS Basic (CHF) 4.61 5.54 (16.8) CORE EPS Diluted (CHF)1 7.02 6.89 1.9 EPS Diluted (CHF) 4.61 5.54 (16.8) Change of Net Working Capital (276) (436) 36.7 Capital Expenditures 622 765 (
Slide 32: Event Calendar and Contacts
Event Calendar and Contacts Upcoming Roadshows Investor Inquiries: 26 July 2024 ZKB, Zurich Daniel Buchta 29-30 July 2024 UBS, New York Head of Investor Relations 6 August 2024 Bank of America, London 13 August 2024 Deutsche Bank, Frankfurt M +41 61 316 2985 14 August 2024 Stifel, Copenhagen daniel.
Slide 33: Additional Information and Disclaimer
Additional Information and Disclaimer Lonza Group Ltd has its headquarters in Basel, Switzerland, and is difficulty to maintain relationships with employees, customers and listed on the SIX Swiss Exchange. It has a secondary listing on the other business partners; and changes in the political, socia