The logo of Swiss contract drug maker Lonza is seen at its headquarters in Basel, Switzerland October 1, 2020. REUTERS/Arnd Wiegmann/File Photo Purchase Licensing Rights
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Lonza Group AG
July 23 (Reuters) - Switzerland's Lonza (LONN.S)
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posted 23% growth in its half-year core profit on Wednesday, beating market expectations, driven by a strong performance in its contract drug manufacturing (CDMO) business and contributions from its Vacaville site in the U.S.
Lonza, which produces monoclonal antibodies used in a new class of Alzheimer's drugs, reported core earnings before interest, taxes, depreciation and amortization (EBITDA) of 1.1 billion Swiss francs (.39 billion).
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Analysts polled by Vara Research had forecast a core profit of 993 million francs.
Lonza had said in December it wanted to exit its capsules and health ingredients (CHI) business, as a decline in demand for pharmaceutical supplies since the end of the COVID-19 pandemic has been weighing on the group's performance.
The company is well on track with the internal preparations to carve out and exit the business, it said in Thursday's earnings statement.
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Lonza's finance chief Philippe Deecke said on a call with journalists that it was too early to estimate a value of a possible sale. According to analysts, such deal could be valued between 2 billion and 4 billion francs.
Lonza reported half-year sales of 3.6 billion francs, slightly ahead of the consensus estimate of 3.5 billion francs.
Sales in the CDMO business, which made up 86% of the group's sales, benefited from strong demand in mammalian, bioconjugates and small molecules technology platforms.
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Based on this, Basel-based Lonza raised its outlook for the CDMO business, expecting sales growth of 20-21% at constant exchange rates, versus close to 20% previously, and a core EBITDA margin of 30-31%, against a prior target of close to 30%.
Lonza also expects its second-half sales to be higher than in the first half of the year, as its delivery pipeline is more weighted towards the latter part of the year.
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The pharmaceutical supplier said it assumes a negative currency exchange effect of 2.5% to 3.5% on its annual sales and core EBITDA, mainly due to the weakening U.S. dollar versus Swiss franc.
Lonza makes roughly 66% of its sales in foreign currencies, of which the U.S. dollar represents the largest part.
( = 0.7936 Swiss francs)
(This story has been refiled to correct a typo in the headline)
Reporting by Isabel Demetz and Bernadette Hogg in Gdansk, editing by Milla Nissi-Prussak
Our Standards: The Thomson Reuters Trust Principles.
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