Note 11 – Trade Receivables

million CHF










Receivables from customers





Allowances for credit losses










The Group’s credit risk is diversified due to the large number of entities comprising the Lonza customer base and the dispersion across many different industries and regions. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. At 31 December 2018, there were no significant concentrations of credit risk. The maximum exposure to credit risk is equal to the carrying amounts.

Reconciliation of Changes in Allowance Accounts for Credit Losses

million CHF










Balance at the beginning of the year










Increase in provision for credit losses





Disposal provision for credit losses





Reclassification to assets held for sale





Balance at the end of the year





In general, Lonza does not require collateral in respect of trade and other receivables, but uses credit insurance for country risk where appropriate.

Accounts Receivable Securitization Programs

In 2017 and 2018 Lonza maintained two securitization programs for its US businesses, one with PNC Bank, National Association and another with Wells Fargo Bank, N.A. In October 2018, Lonza did not renew the securitization program with PNC Bank and the contract was terminated.

Under the programs, Lonza sells certain U.S. and Canadian trade accounts receivable to Wells Fargo Bank, N.A. (for the Capsugel business) and used to sell trade accounts receivable to PNC Bank (for the Arch Chemicals business and Lonza Walkersville Inc.) through two wholly owned subsidiaries, Capsugel Funding LLC and Arch Chemicals Receivables LLC.

The amount of receivables that are eligible for funding under the programs is subject to change based upon the level of eligible receivables, with a maximum amount of USD 55 million (2017: USD 105 million) at 31 December 2018.

Under the programs, the payment by PNC Bank and Wells Fargo Bank, N.A. for a portion of the purchase price is deferred until the transferred underlying receivables have been completely settled. Lonza’s maximum exposure related to the receivables sold is equal to the deferred purchase price component, which is substantially higher than the average expected credit loss on the receivables. As a result, Lonza continues to recognize all of the transferred receivables in the consolidated balance sheet.

As of 31 December 2018, the consolidated balance sheet includes receivables which Lonza sold to Wells Fargo Bank, N.A. for which it obtained funds of USD 55 million (2017: USD 69 million, including USD 17 million related to the PNC program). These are disclosed as other current liabilities (note 16).