Zurich, Jan 24 - Full-year net profit at Swiss pharmaceutical industry supplier Lonza Group rose 18 percent, beating analysts' expectations, due to strong demand for its biopharmaceutical products.
Profit for 2006 rose to 222 million Swiss francs ($178.7 million) from 188 million francs in the previous year, Lonza said on Wednesday. It compared to average expectations for a net profit of 212 million francs, according to a Reuters poll of 10 analysts.
Lonza, which has reoriented itself away from specialty chemicals in recent months with a series of deals to strengthen its high-margin biopharmaceutical business, said it expected sales growth of 8 to 12 percent per year and operating profit growth in the mid to high teens.
"Sales and EBIT turned out very strong," said Alexandre Pasini, analyst at bank Vontobel. "It's a bit disappointing that the EBIT margin stagnated."
The company posted earnings before interest and taxation (EBIT) of 344 million francs and the operating margin was maintained at 11.8 percent.
It had previously said it expected 2006 EBIT of about 335 million francs, while analysts' average expectations had been 332 million francs.
Full-year sales were up 16 percent to 2.91 billion francs, also ahead of analysts' average forecasts of 2.78 billion francs.
"On the whole the accounts confirm that the company is in a strong growth trend," Pasini said.
SIGNIFICANT VALUE
Lonza, based in Basel, Switzerland, is one of the world's biggest suppliers to the pharmaceutical, healthcare and life sciences industries, providing active ingredients to the biotechnology sector.
Its shares have risen almost 5 percent so far this year, just ahead of a 2.4-percent increase in the DJ Stoxx European chemicals index and roughly in line with the European pharmaceuticals sector.
Last year Lonza concluded a series of agreements with drugs firms, including scooping up two units from Cambrex Corp. and buying a biotech manufacturing plant from Genentech Inc..
It also listed its Polynt SpA unit on the Italian stock exchange, part of a shifting of Lonza's business away from the traditionally low-margin specialty chemicals products, which have been hit by higher raw materials prices and increasing competition from Asia/Pacific.
The move into life sciences "is expected to create significant value and increase Lonza's presence in high-margin, high-growth business," the company said in a statement.
Lonza said the costs integration of acquisitions and one-time charges for strategic profits will be about 35 million francs in 2007. The company sees annual overall investment of 350 to 500 million francs in the coming years.