Lonza to Cut Jobs at Swiss Factory to Boost Profits

(Corrects currency in second paragraph.)

Lonza Group AG (LONN) said it plans to cut 500 jobs, including 400 at a Swiss site that manufactures chemical intermediates and active pharmaceutical ingredients.

Most of the job losses will come from internal transfers, natural attrition, early retirements and by not extending temporary contracts, the Swiss supplier to the pharmaceutical industry said today in a statement. The Visp, Switzerland site will cut 400 jobs over 24 months to save 100 million Swiss francs ($108 million). A further 100 jobs will go following a review of corporate functions, Lonza said.

“These measures will help increase profitability and make Visp a competitive site,” Chief Executive Officer Richard Ridinger said. Visp currently employs 2,890, according to Lonza’s website.

Ridinger needs to reduce $1.38 billion in debt acquired in Lonza’s takeover of Arch Chemicals Inc. in October 2011. Pressure to make cheaper ingredients for large pharmaceutical customers like Roche Holding AG (ROG) and Novartis AG (NOVN), combined with high development costs at the Visp site, has eroded margins.

Lonza said today performance in the third quarter had been on an “expected level despite difficult macro-economic challenges” and said business is on track to meet 2012 targets. The company said July 25, it wants to deliver growth in earnings before interest and tax of 10 percent to 15 percent compared with 2011.

Lonza, based in Basel, said Arch has reduced the company’s reliance on custom manufacturing and made it the world’s largest producer of microbial control products such as water treatment chemicals for swimming pools.

The company’s share price has fluctuated since June on speculation that it would be acquired by BASF SE (BAS) or Saudi Basic Industries Corp. (SABIC) There aren’t and haven’t been any talks to take over Lonza, Chairman Rolf Soiron told SonntagsZeitung in an interview Oct. 28.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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