Lonza Earnings: Biologics Segment Benefits From Strong Commercial Demand, Positive Long-Term Outlook

Lonza reported half-yearly results in line with our expectations and management reiterated its outlook for 2024, which includes flat sales growth at constant currency and a core EBITDA margin in the high 20s. The flat sales growth reflects the impact of Moderna’s canceled contract for its covid vaccine. Lonza's biologics segment, which accounted for 56% of total half-yearly revenue, reported sales growth of 7.3% compared with the first half of 2023 thanks to strong commercial demand. Excluding covid-related sales in the first half of 2023, sales growth for the first half of 2024 would have been in the midteens compared with the prior year. Additionally, the biologics segment's core EBITDA margin of 34.8% was supported by a favorable product mix and strong operational performance, partially offset by ramp-up costs from new manufacturing investments. Investors reacted favorably to these results and sent the stock up 7%.