Outlook & Mid-Term Guidance
In 2019 Lonza will focus on the thorough execution of our growth initiatives in what is expected to be a year of significant investments. Lonza is also factoring into our outlook the continued macro-economic uncertainty and some potential ongoing headwinds in the cyclical categories of our Specialty Ingredients businesses.
Based on these assumptions, Lonza is providing the following outlook for full-year 2019:
- Mid-to-high-single digit sales growth
- Sustained high CORE EBITDA margin level
In addition, Lonza will accelerate the review of its current portfolio to further strengthen the company’s position along the Healthcare Continuum®. At the same time, Lonza will continue to focus on operational and commercial excellence while investing in innovation and growth, especially in the biologics businesses. Lonza will also be continuing to implement measures to counter the cyclical-exposed businesses. An update on outlook will be provided with the Q1 Qualitative Business Update 2019.
The Outlook for 2019 is based on the present business composition for Lonza continuing operations (excluding the Water Care business unit), the present macro-economic environment, current visibility and constant exchange rates. It is a next step toward achieving our Mid-Term Guidance 2022. After becoming fully operational, all investments previously announced are expected to accelerate top-line growth and profitability to contribute to our mid-term targets.
Divestment of Water Care Business
On 1 November 2018, Lonza announced that we had entered into a definitive agreement with Platinum Equity to sell Lonza’s Water Care business and operations for USD 630 million.
Lonza decided to divest the Water Care business as part of our long-term strategy to grow sustainably along the Healthcare Continuum® and to focus all growth initiatives and investments on its core businesses.
Consequently, Water Care is being classified as an asset held for sale according to IFRS 5 «Non-Current Assets Held for Sale and Discontinued Operations»; and it is reported accordingly in the full-year 2018 results. The divestment of the Water Care business has an impact on Lonza Group and on our Specialty Ingredients segment only. The Pharma & Biotech segment is not affected. Further information can be found in the Financial Report.
« The divestment further strengthens our strategic focus on our three core pillars – Pharma & Biotech, Consumer Health and Consumer & Resources Protection – within the Healthcare Continuum®. »
Richard Ridinger, CEO of Lonza
Mid-Term Guidance 2022
To reflect the divestment of its former Water Care business unit and to emphasize Lonza’s focus on growth along the Healthcare Continuum® Lonza provided an adjusted Mid-Term Guidance 2022 in March 2019. The adjustment consists of excluding the Water Care Mid-Term Guidance from the Lonza Group financial projections prepared in 2017. The Water Care Mid-Term Guidance was disclosed at Lonza’s Capital Markets Day 2018.
In addition, Lonza is reflecting not only the Water Care divestment but also the latest strategy development. The Mid-Term Guidance 2022 was first issued in 2017. The adjusted Mid-Term Guidance demonstrates our focus on growing our businesses along the Healthcare Continuum® while continuing to aim for operational excellence, productivity improvements and attractive margins.
The adjusted Mid-Term Guidance for Lonza’s continuing operations (excluding the Water Care business unit) is the following1:
- Sales of CHF 7.1 billion
- CORE EBITDA margin of 30.5%
- CORE RONOA 35%
- Double-digit ROIC
1Lonza’s Mid-Term Guidance for the Group is based on the present business composition, the present macro-economic environment, current visibility and constant exchange rates
At Lonza’s Capital Markets Day in September 2018, the growth trajectory by business was outlined2:
2Lonza’s Mid-Term Guidance for segments and divisions is based on the 2018 business composition, macro-economic environment, current visibility and constant exchange rates
Lonza plans to re-invest parts of the proceeds of the Water Care disposal into the Healthcare Continuum® with expected higher returns to deliver more shareholder value. Lonza will continue to focus on deleveraging as has already been communicated.
« A highlight of 2018 was clearly our Capital Markets Day in September, where we had the chance to discuss our growth trajectory toward and beyond 2022. We emphasized that we are focusing our investments and initiatives on our core markets along the Healthcare Continuum®. »
Richard Ridinger, CEO of Lonza