Nutrition, Life Sciences Feed Lonza's Big 2007 Growth

BASEL, SwitzerlandLonza's fiscal year 2007 ended with strong bottom line growth, including a 51-percent jump in net income to CHF 301 million (USD $275.8 million), which translated to CHF 408 million (USD $373.9 million) in earnings before income taxes (EBIT). The company's board proposed a CHF 1.75 (USD $1.60) per share dividend.

Lonza credited its inspired performance to portfolio changes and solid developments in all its business units, including nutrition ingredients, under the newly named life sciences division. Sales in this division increased by 5.6 percent to CHF 1.14 billion (USD $1.04 billion); excluding the impact of various currencies, sales grew 7.2 percent, due in large part to volume increases. Specifically, strong growth was achieved for nicotinates (vitamin B3) in both new pharmaceutical and food/feed applications. In addition, food/pharmaceutical-grade L-carnitine showed U.S. growth, but sales in Japan were below expectations due to a volatile beverages market. The nutrition business preserved both margins and return on net operating assets (RONOA), despite increased raw materials prices and stiff competition in many markets, including China. Factoring all the costs and increased expenses, EBIT increased by 7.7 percent to CHF 140 million (USD$128.3 million). The company noted capacity utilization and market shares in strategic business niches remained at high levels.

Lonza's nutrition segment faced challenges in fiscal 2007, especially with its DHA (docosahexaenoic acid) business, which suffered unfavorable court rulings on patent infringement charges in the United States and Germany. While Lonza is appealing both cases, it said it is prepared to conform to the judge's ruling as it enters the U.S. DHA market. In addition, the division spent part of 2007 starting a vitamin K3 operation in Shawinigan, Quebec, which is expecting to begin commercial sales during the first quarter of 2008. The company further noted its new larch arabinogalactan franchise, acquired from Larex in 2006, has been developing as expected.