Business Description

Lonza Group AG is engaged in distributing and supplying pharmaceutical, healthcare, life science, and other products. It has three segments: Specialty Ingredients, Pharma & Biotech,  and Corporate. The Pharma & Biotech segment includes the development and manufacturing of biopharmaceuticals and custom active pharmaceutical ingredients, as well as formulation and delivery services. The Specialty Ingredients section consists of two divisions: consumer protection and consumer health. The Corporate segment covers functions such as accounting, legal, finance, communication technology, and human resource management. The company was established in Basel, Switzerland in 1897.

Key Financials

Revenue (US$ Mn):

• Lonza Group AG’s annual revenue for 2021 was US$ 4,808 Mn, a -18.76% decrease from 2020
• The annual revenue generated by Lonza Group AG in 2020 was US$ 5,918 Mn
• At an 8.31% increase from , Lonza Group AG’s annual revenue of US$ 6,096 Mn was indexed in 2019
• Lonza Group AG generated total revenue of US$ 5,629 Mn in 2018

Operating Income (US$ Mn):

• US$ 931 Mn was the operating income generated by Lonza Group AG in 2021
• Lonza Group AG’s operating income for 2020 was US$ 961 Mn, a -6.3% decrease from 2019
• From 2018’s operating incomes, Lonza Group AG registered a 12.46% increase in 2019, amounting to US$ 1,026 Mn
• An operating income of US$ 912 Mn was generated in 2018 by Lonza Group AG

Net Income (US$ Mn):

• Lonza Group AG’s net income for 2021 was US$ 3,221 Mn, a 247.46% increase from 2020
• The net income generated by Lonza Group AG in 2020 was US$ 927 Mn
• At a 16.98% increase from , Lonza Group AG’s net income of US$ 664 Mn was indexed in 2019
• Lonza Group AG generated a net income of US$ 568 Mn in 2018

Operating Margin %:

• 19% was the operating margin generated by Lonza Group AG in 2021
• Lonza Group AG’s operating margin for 2020 was 16%, a -3.57% decrease from 2019
• From 2018’s operating margins, Lonza Group AG registered a 3.7% increase in 2019, amounting to 17%
• An operating margin of 16% was generated in 2018 by Lonza Group AG

Gross Margin %:

• Lonza Group AG’s gross margin for 2021 was 38%, a -0.52% decrease from 2020
• The gross margin generated by Lonza Group AG in 2020 was 38%
• At a 0.79% increase from , Lonza Group AG’s gross margin of 38% was indexed in 2019
• Lonza Group AG generated a gross margin of 38% in 2018

SWOT Analysis

Strengths

Financial performance provides stability

During the review period, Lonza showed steady growth in its financial performance. The company’s revenue for FY2019 was CHF5,920 million, an increase of 6.8% compared to FY2018’s CHF5,542million. The increase in revenue was due in part to an 11% increase in sales of Pharma Biotech and Nutrition segments. This was due to increased demand for cell- and gene therapy capabilities, clinical research, manufacturing services and HPAPI manufacturing service, Lonza Capsugel offerings, and specialty polymer capsules. The company’s operating margin in FY2019 was 16.4%, as compared to a 15.2% operating margin in FY2018.

The company’s increased operating performance is a result of its focus on cost management. In FY2019, the net margin was 10.9%, as compared to 10.1% in FY2018. A strong financial performance allows the company to offer higher returns to shareholders and attract more investments. The company can also increase its revenue and profitability, which will allow it to allocate sufficient funds for expansion and growth.

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