Lonza Raises 2016 Outlook as Profit Jumps on Savings, Demand

  • Company sees profit increasing by double-digit amount
  • First-half profit jumps 20%, beating analyst estimates

Lonza Group AG raised its guidance for 2016 after demand for the Swiss company’s drug ingredient manufacturing services grew and savings bolstered margins in the first half.

Earnings before interest and taxes is expected to rise by a double-digit percentage over the course of the year, the Basel-based company said in a release on Wednesday. That’s double the pace it predicted earlier. First-half ebit increased 20 percent to 312 million francs ($316 million). Analysts had predicted 292 million francs.

“These strong half-year results have pushed us to an intermediate sprint towards our ambitious goals,” Chief Executive Officer Richard Ridinger said in the release.

Lonza wet the appetite of investors earlier in the year, saying it expected its pharmaceutical and biotech division to continue to grow strongly after a record first quarter. Having completed the bulk of a restructuring program, Ridinger is looking to expand into drug development services and may turn to acquisitions to achieve that goal, according to JP Morgan Cazenove.

Shares of Lonza jumped 5.4 percent to 178.50 francs as of 9:18 a.m. in Zurich.

Ridinger has created large hubs, including a facility in Singapore, to service pharmaceutical companies that have outsourced production, as well as active ingredients for pesticides and other chemicals.

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