Lonza Records 9% Growth in Life Science Ingredients Sales

Demand for vitamin B3 products was quite strong, especially for food-grade niacin, and nicotinates for feed applications. Pharmaceutical-grade niacin did not reach target levels.

23/07/08 Lonza Group Ltd has announced its financial results for the first half of 2008 ended on 30 June 2008. In this period, sales grew by 13.0% to CHF 1 463 million based on continuing operations. EBIT grew by 15.2% to CHF 235 million and EBIT margins increased by 1.3 percentage points to 16.1% of sales compared to the same period last year.

Life Science Ingredients delivered a strong first-half performance, with sales growth of 9.0% in local currencies and an increase in margins, EBIT and RONOA. Key business drivers include:

Demand for vitamin B3 products was quite strong, especially for food-grade niacin, and nicotinates for feed applications. Pharmaceutical-grade niacin did not reach target levels. The scheduled maintenance shut down of the niacin plant in Visp (CH) reduced product availability temporarily.

Nutritional supplements produced a positive first-half performance, with strong sales of Carnipure in food and pharmaceutical applications, specifically for functional foods and dietary supplements. Coca-Cola Japan launched Aquarius Zero in the first half, a new sports drink containing Carnipure.

Price pressure from Asian competitors continued. The feed-grade L-carnitine product lines performed well, especially in the pet food segment. Both the FiberAid and ImmunEnhancer product groups continued to grow, but slower than expected.

In other product areas, sales of DHA (docosahexaenoic acid) are at the expected levels following the outcome of the legal proceedings in the USA and Germany. New markets are being developed successfully in Asia. Sales of Meta metaldehyde, a specific molluscicide, exceeded last year’s volumes in the first six months of 2008, despite competition and alternative products in the market.

With the acquisition of S.A.M. Electron Technologies in Canada in 2007, Lonza has established the capabilities to develop a future position in vitamin K3 for animal nutrition. The Shawinigan (CA) site underwent process improvement programs in the first half of the year. Chromium-free K3 is in high demand and Lonza is selling limited volumes under the brand Pro-K.