Financial Highlights1

1 Lonza believes that disclosing CORE results of the Group’s performance enhances the financial markets’ understanding of the company because the CORE results enable better comparison across years. See more in Supplementary Financial Information – CORE results

Sales

Lonza continuing operations excluding Water Care business as discontinued operations

5.5bn

in CHF

Sales million CHF
Historical Progression - sales (bar chart)

1Reported Pro-Forma full-year 2017 financial results (restated for IFRS 15) include Capsugel full-year 2017 financial results

2Lonza including Water Care business

3Lonza Continuing Operations excluding Water Care business as discontinued operations

CORE EBITDA

Lonza continuing operations excluding Water Care business as discontinued operations

1.5bn

in CHF

CORE EBITDA Margin

Lonza continuing operations excluding Water Care business as discontinued operations

27.3%

CORE EBITDA million CHF CORE EBITDA Margin in %
Historical Progression - CORE EBITDA and CORE EBITDA Margin (bar chart)

1Reported Pro-Forma full-year 2017 financial results (restated for IFRS 15) include Capsugel full-year 2017 financial results

2Lonza Continuing Operations excluding Water Care business as discontinued operations

CORE EBIT

Lonza continuing operations excluding Water Care business as discontinued operations

1.2bn

in CHF

CORE EBIT Margin

Lonza continuing operations excluding Water Care business as discontinued operations

21.0%

CORE EBIT million CHF CORE EBIT Margin in %
Historical Progression - CORE EBIT and CORE EBIT Margin (bar chart)

1Reported Pro-Forma full-year 2017 financial results (restated for IFRS 15) include Capsugel full-year 2017 financial results

2Lonza Continuing Operations excluding Water Care business as discontinued operations

CORE RONOA

Lonza continuing operations excluding Water Care business as discontinued operations

31.4%

ROIC

Lonza continuing operations excluding Water Care business as discontinued operations

8.0%

CORE RONOA in %
Historical Progression - CORE RONOA (bar chart)

1Reported to reflect adoptation of IFRS 15 and classification of Water Care business as discontinued operations

2Lonza Continuing Operations excluding Water Care business as discontinued operations

Capital Expenditures

Lonza including Water Care business

575mn

in CHF

CAPEX / Sales

Lonza including Water Care business

9.5%

Capital Expenditures million CHF CAPEX / Sales in %
Historical Progression - Capital Expenditures (bar chart)

1Reported to reflect adoptation of IFRS 15 and classification of Water Care business as discontinued operations

2Lonza including Water Care business

Net Debt / CORE EBITDA

Lonza including Water Care business

2.28x

ratio

Net Debt / CORE EBITDA ratio
Historical Progression - Net Debt / CORE EBITDA (bar chart)

1Reported to reflect adoptation of IFRS 15 and classification of Water Care business as discontinued operations

2Lonza including Water Care business

Countries Around the World

> 30

Employees End of 2018

15,375

Manufacturing and R&D Facilities

> 70

Active Patent Families

~ 630

Lonza is looking back at another successful year and is continuing on our trajectory of profitable organic growth. We reported a 9% organic (like-for-like) sales, 12% organic CORE EBITDA and 14% organic CORE EBIT growth. Having completed the first full year with Capsugel as a combined company, sales amounted to CHF 5.5 billion for 2018; and margins for Lonza further improved, resulting in a CORE EBITDA margin of 27.3% and a CORE EBIT margin of 21.0%.

All figures are for Lonza continuing operations (excluding the Water Care business unit) in reported currency and are compared with the same period in 2017 on a like-for-like basis (reported Lonza full-Year 2017 financial results including Capsugel 2017 financial results from 1 January 2017, restated to reflect adoption of IFRS 15).

On a segment level, Lonza Pharma & Biotech contributed significantly to Lonza’s 2018 performance with 14% organic sales growth and a 32.8% CORE EBITDA margin, especially driven by Clinical Development and Manufacturing and by Commercial Manufacturing in our biologics business.

Lonza’s Specialty Ingredients segment achieved 3.4% organic sales growth and a 22.1% CORE EBITDA margin, despite headwinds due to raw-material price increases, supply-chain challenges and negative cyclical impacts throughout 2018 as already communicated.

The Consumer Health division performed strongly with continued momentum, particularly in consumer health and nutrition, benefiting from synergies across nutritional ingredients, formulation capabilities, and dosage form offerings. The specialty portfolios in Consumer & Resources Protection also performed robustly. Cyclical and commoditized categories especially in the agricultural ingredients and wood protection businesses were negatively impacted by market developments in 2018; countermeasures have been initiated for operational and commercial improvements.

The strong results for the full-year 2018 show that growth and profitability in the healthcare businesses and in the specialty chemical portfolios balance the exposure to cyclicality in other more mature parts of our business.

Key Figures Lonza

Pro-Forma Results

Pro-Forma Results1 Continuing Business

million CHF

 

2018

 

Change in %

 

2017
2restated

 

 

 

 

 

 

 

1

Restated to reflect adoption of IFRS 15 and classification of Water Care business as discontinued operations

2

Reported pro-forma full-year 2017 financial results (restated for IFRS 15) include Capsugel full-year 2017 financial results. This explanation applies to the terms «pro-forma,» «like-for-like» and «organic,» which are used as synonyms throughout this report

Sales

 

5,542

 

9.0

 

5,083

 

 

 

 

 

 

 

CORE EBITDA

 

1,511

 

12.0

 

1,349

Margin in %

 

27.3

 

 

 

26.5

 

 

 

 

 

 

 

Result from operating activities (CORE EBIT)

 

1,165

 

14.1

 

1,021

Margin in %

 

21.0

 

 

 

20.1

CORE Earnings

CORE Earnings1 Continuing Business

million CHF

 

 

2018

 

Change in %

 

2017
2restated

 

 

 

 

 

 

 

 

1

In the CORE results for the items «EBITDA,» «Result from operating activities (EBIT)», «Profit for the period» and «Earnings per share», the impact of amortization of acquisition-related intangible assets, impairment and reversal of impairment of assets, results from associates and other special charges / income from restructuring are eliminated «CORE RONOA» does not include acquisition-related intangible assets

2

Restated to reflect adotpion of IFRS 15 and classification of Water Care

3

Includes the favorable impact of CHF 187 million resulting from the tax reforms in the United States and Belgium

Core EBITDA

 

 

1,511

 

26.3

 

1,196

Margin in %

 

 

27.3

 

 

 

26.3

 

 

 

 

 

 

 

 

Result from operating activities (CORE EBIT)

 

 

1,165

 

28.9

 

904

Margin in %

 

 

21.0

 

 

 

19.9

 

 

 

 

 

 

 

 

CORE profit for the period

 

 

899

 

21.5

 

3740

 

 

 

 

 

 

 

 

CORE EPS basic

CHF

 

12.03

 

10.7

 

310.87

CORE EPS diluted

CHF

 

11.98

 

11.1

 

310.78

 

 

 

 

 

 

 

 

Core RONOA in %

 

 

31.4

 

4.7

 

30.0

IFRS Results

IFRS Results Continuing Business

million CHF

 

 

 

2018

 

Change in %

 

2017
1restated

 

 

 

 

 

 

 

 

 

1

Restated to reflect adotpion of IFRS 15 and classification of Water Care

2

Includes the favorable impact of CHF 187 million resulting from the tax reforms in the United States and Belgium

Sales

 

 

 

5,542

 

21.9

 

4,548

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

1,429

 

31.8

 

1,084

Margin in %

 

 

 

25.8

 

 

 

23.8

 

 

 

 

 

 

 

 

 

Result from operating activities (EBIT)

 

 

 

842

 

25.1

 

673

Margin in %

 

 

 

15.2

 

 

 

14.8

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

659

 

(1.1)

 

2666

 

 

 

 

 

 

 

 

 

EPS basic

 

CHF

 

8.80

 

(10.0)

 

29.78

 

 

 

 

 

 

 

 

 

EPS diluted

 

CHF

 

8.77

 

(9.6)

 

29.70

Other Performance Measures

Other Performance Measures Continuing Business

million CHF

 

2018

 

Change in %

 

2017
1restated

 

 

 

 

 

 

 

1

Restated to reflect adotpion of IFRS 15 and classification of Water Care

Operational free cash flow (before acquisitions)

 

884

 

34.3

 

658

 

 

 

 

 

 

 

ROIC in %

 

8.0

 

(4.8)

 

8.4

 

 

 

 

 

 

 

RONOA in %

 

12.1

 

23.5

 

9.8

Other Performance Measures Lonza Group

Other Performance Measures
Lonza Group incl. Discontinued Operations

million CHF

 

2018

 

Change in %

 

2017
1restated

 

 

 

 

 

 

 

1

Restated to reflect adotpion of IFRS 15 and classification of Water Care

Operational free cash flow (before acquisitions)

 

848

 

37.0

 

619

 

 

 

 

 

 

 

Operational free cash flow

 

820

 

(130.5)

 

(2,691)

 

 

 

 

 

 

 

Net debt

 

3,534

 

(6.1)

 

3,762

Debt – equity ratio

 

0.56

 

(8.2)

 

0.61

Net debt / CORE EBITDA ratio

 

2.28

 

(15.6)

 

2.70

 

 

 

 

 

 

 

Number of employees

 

15,375

 

5.2

 

14,618