Lonza Group AG

Lonza reported H1 2026 sales of CHF 3.4 billion, up 16% in constant exchange rates, with actual sales growth of 11.2% due to an FX headwind of almost five percentage points. CORE EBITDA reached CHF 1.2 billion, up 27.4% year over year, and the CORE EBITDA margin improved to 34.8%, up 4.4 percentage points versus H1 2025. Free cash flow rose to CHF 426 million from CHF 116 million, while CapEx was CHF 530 million, or 15.7% of sales, versus 21.2% last year. By platform, Integrated Biologics sales were CHF 1.87 billion with 10% CER growth and a 36% margin; Advanced Synthesis sales were CHF 834 million with 27.7% CER growth and a 48.1% margin; Specialized Modalities sales were CHF 553 million with 22.6% CER growth and a 28% margin. For full-year 2026, management reaffirmed CER sales growth of 11%-12% and raised CORE EBITDA margin guidance to 33%-34% from above 32%; it also said FX should be a minus two to minus three percentage point drag on growth for the year. Vacaville full-year 2026 sales are expected to be broadly flat versus 2025 at around CHF 0.6 billion.

Wolfgang Wienand emphasized that the quarter reflected strong demand, deep customer relationships, and disciplined execution across all three platforms. He repeatedly framed the business as having good visibility and tight control, and said the H1 result supports confidence in Lonza’s long-term model of low-teens average CER growth with expanding profitability and cash generation. His tone was confident and strategic, stressing that the company has completed its shift into a pure-play CDMO and is positioned to capture outsourcing demand across technologies and geographies.

Philippe highlighted that H1 growth was entirely organic, unlike H1 2025 which benefited from the Vacaville acquisition. He pointed to the 27.4% increase in CORE EBITDA, the 4.4-point margin expansion to 34.8%, and the rise in ROIC to 13.2% on an annualized basis, noting that the improvement was driven by operational execution, maturing growth projects, operating leverage, and favorable mix/phasing. He also said free cash flow improved to CHF 426 million, CapEx fell to 15.7% of sales, and working capital rose to 37.9% of sales due to higher receivables, which he expects to be temporary. He reiterated that investment intensity should stay in the mid-to-high teens as a percent of sales and that CapEx will be lumpy and may shift into 2027.

Analysts focused on CapEx phasing, the second-half revenue exit rate, modality mix, ROIC versus WACC, inventory levels, and whether CGT manufacturing and FDA 483 issues were resolved. Management said CapEx is inherently lumpy and should be viewed within the broader mid-to-high teens of sales corridor, while stressing that the business has good visibility and that the Stein scope change mainly adds a small amount of CapEx and delays start-up. On 483s and CGT, Philippe said manufacturing challenges were resolved, production resumed, and the 483 observations at key sites did not affect operations or revenue. Management also said no fundamental shift has been seen in outsourcing behavior, although spending may increasingly favor U.S. capacity, and said the second half will show more normalized growth and margins, especially in Advanced Synthesis.