Lonza Group AG

Lonza reported H1 2026 sales of CHF 3.4 billion, with CER sales growth of 16% versus H1 2025; actual sales growth was 11.2%, reflecting an FX headwind of almost five percentage points. CORE EBITDA was CHF 1.2 billion, up 27.4% year over year, and the CORE EBITDA margin was 34.8%, up 4.4 percentage points. Free cash flow rose to CHF 426 million from CHF 116 million in H1 2025, and CapEx was CHF 530 million, equal to 15.7% of sales. By segment, Integrated Biologics posted sales of CHF 1.87 billion and a 36% margin, Advanced Synthesis sales of CHF 834 million and a 48.1% margin, and Specialized Modalities sales of CHF 553 million 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%. They also said FX should be a minus 2 to minus 3 percentage point headwind for the year.

Wolfgang Wienand emphasized that the quarter reflected broad-based demand, disciplined execution, and better-than-expected performance across all three platforms. He framed the H1 results as proof that the One Lonza strategy and operating model are working, pointing to stronger margins, better cash generation, and a completed transformation into a pure-play CDMO. His tone was confident and steady, with repeated comments that visibility is strong and the company has a tight grip on the business.

Philippe highlighted that H1 growth was entirely organic and that the stronger reported sales growth in H1 2025 had included Vacaville acquisition contribution. He said margin expansion came from maturing growth projects, operating leverage, better mix, and cost discipline, while ROIC increased to 13.2%, almost three percentage points higher year over year; he also said Lonza is probably close to 2x WACC, though it is not guiding on ROIC. On cash, he pointed to free cash flow of CHF 426 million versus CHF 116 million last year, CapEx of CHF 530 million, and trade working capital at 37.9% of sales, which he expects to be temporary and still improvable.

Analysts focused on CapEx phasing, revenue visibility into H2 and 2027, modality mix, ROIC versus WACC, inventory levels, and whether cell and gene issues or FDA 483 observations had been resolved. Management said CapEx is naturally lumpy and should be viewed in the mid-to-high teens as a percentage of sales over time, with Stein’s scope change adding only small extra CapEx but extending timing. They also said visibility for the rest of the year is very good, that H2 will show more normalized growth and margins, and that cell and gene production has resumed; the company said the operational issues were not caused by the 483 observations and that none of the 483s affected operations or revenue.