Lonza (AO) | Buy | Strong H1 execution prompts margin guidance upgrade

Research evidence excerpt

Lonza (AO) | Buy | Strong H1 execution prompts margin guidance upgrade

(former Small Molecules and Bioconjugates) sales bounced by c. 28% at CC to c. CHF834m (+23% reported on

FX headwinds), driven by continued strong demand across both Small Molecules and Bioconjugates, supported by good

operational execution at increased asset utilisation, a favourable portfolio mix and a low prior year base. This was well above our

expectations at CHF770m. Core EBTIDA increased by 47% YOY to CHF401m, also well ahead of our estimate at CHF335m on the

back of much better margins (+6.8pps YOY to 48% vs. our 44%), driven by strong operational execution, operating leverage and

efficient growth project ramp-ups.

Specialised Modalities (former Cell & Gene division, and mRNA, Microbial, and Bioscience) continues with its recovery, growing by

c. 23% at CC to CHF553m (+17% reported on FX headwinds), which was also well above our CHF520m estimate. Microbial

experienced strong growth from a lower prior year base, favourable phasing and a successful customer-related plant adaptation.

Bioscience sustained healthy growth, and Cell & Gene showed a strengthened operational performance towards the end of H1

2026, which is expected to support growth in H2. Core EBITDA increased by 89% YOY to CHF155m on the back of a favourable

portfolio mix effect and cost discipline. This was also well above our CHF109m forecast.

Capsules & Health Ingredients business continues to be considered as discontinued operations until the closure of the already

announced majority stake disposal, when it will be accounted as minorities, but it performed better than expected, with a

contribution of CHF23m (vs. our CHF16m estimate).

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