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Investing.com -- Lonza Group AG (SIX:LONN) shares rose over 3% on Wednesday after the company reported stronger-than-expected H1 2025 results and raised its full-year guidance for its Contract Development and Manufacturing Organization (CDMO) business.
Revenue reached CHF 3.58 billion, up 19% at constant exchange rates (CER) and exceeding the CHF 3.50 billion consensus estimate.
Core EBITDA climbed 18.6% to CHF 1.06 billion, ahead of consensus (CHF 993 million), with a margin of 29.6%, up 0.4 percentage points year-on-year.
Net profit rose 29.1% to CHF 426 million, while basic EPS increased from CHF 4.61 to CHF 6.08. Core diluted EPS improved 7% to CHF 7.51. EBIT grew to CHF 617 million from CHF 534 million.
Capital expenditures rose to CHF 672 million (vs. CHF 622 million), and net debt increased to CHF 3.6 billion, lifting the net debt-to-core EBITDA ratio from 1.5 to 1.7.
Operational free cash flow fell 36.1% to CHF 189 million before acquisitions and 52.4% to CHF 141 million after acquisitions. ROIC edged down to 8.4% from 8.6%.
Lonza raised its FY25 CDMO sales growth guidance to 20–21% CER (previously “approaching 20%”) and its core EBITDA margin target to 30–31% (from “approaching 30%”). H2 2025 sales are expected to exceed H1, with similar margins.
FX headwinds are now expected to impact full-year sales and EBITDA by -2.5% to -3.5%, compared to -2% previously.
Integrated Biologics posted CHF 1.8 billion in revenue, up 39.3% CER, and Core EBITDA of CHF 653 million, yielding a 36% margin.
Growth was driven by strong demand and contributions from the Vacaville site. No new Q2 contracts were signed, but Lonza expects further deals soon.
Advanced Synthesis reported CHF 677 million in sales, up 18.3% CER, with EBITDA rising 42.2% to CHF 273 million.
Margin improved to 40.3% (from 33.4%), reflecting strong demand for complex small molecules.
Specialized Modalities underperformed, with revenue falling 9.2% CER to CHF 474 million.
EBITDA dropped 33.9% to CHF 82 million, and margin declined to 17.3% from 23.4%, due to weaker microbial and CGT performance. Recovery is expected in H2, especially Q4.
Capsules & Health Ingredients (CHI) delivered flat sales at CHF 523 million, but Core EBITDA rose to CHF 137 million, with the margin improving to 26.2% (+1.4 pts). Capsules showed sequential growth; pharma demand is expected to recover in H2.
Jefferies and Morgan Stanley (NYSE:MS) both cited strength in Biologics and Synthesis, with Jefferies highlighting high utilization in small-scale assets.
Analysts expect further upside from operational execution and potential contract wins, despite biotech funding and FX risks.