Lonza to Cut Jobs at Swiss Manufacturing Site in Savings Bid

Lonza Group AG said it plans to cut 500 jobs, mostly at a Swiss site that manufactures chemical intermediates and active pharmaceutical ingredients, and is evaluating further job cuts worldwide.

Lonza is seeking deeper cost savings from its global manufacturing base and may be able to give details next year, Chief Executive Officer Richard Ridinger said on a call, adding that the Basel-based company may comment at a later date on streamlining management.

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 and Novartis AG, combined with high development costs at the Visp site, has eroded margins.

“Visp has real problems,” Martin Schreiber, an analyst as Zuercher Kantonalbank said by phone.

Lonza shares dropped as much as 1.4 percent and traded 1.2 percent lower at 47.10 francs as of 11:32 a.m in Zurich.

Visp Losses

Most of the job losses at will come from internal transfers, natural attrition, early retirements and by not extending temporary contracts, the Swiss supplier to the pharmaceutical industry said today.

The Visp site will cut 400 jobs over 24 months to save 100 million francs ($108 million) as competitive pressure and Switzerland’s costly franc mean Lonza is unsatisfied with the operation’s profitability, Ridinger said. A further 100 jobs will go following a review of corporate functions, Lonza said. Visp currently employs 2,890, according to Lonza’s website.

Lonza said it’s on track to meet 2012 targets as third quarter performance was on an “expected level despite difficult macro-economic challenges.” 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 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 or Saudi Basic Industries Corp. There aren’t and haven’t been any talks to take over Lonza, Chairman Rolf Soiron told SonntagsZeitung in an interview Oct. 28.

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