April 18, 2019 / 6:45 AM / 4 months ago

UPDATE 1-New Lonza CEO gets nasty surprise as China woes hit supply

(Adds details, comment from company)

ZURICH, April 18 (Reuters) - Lonza's freshly minted Chief Executive Marc Funk stuck to his full-year targets on Thursday despite unanticipated supply problems after a deadly Chinese explosion that required new cost-control measures at the Swiss drug ingredients maker.

Funk, a Lonza biotech boss who took over when ex-CEO Richard Ridinger unexpectedly resigned in January, still expects mid-to-high-single digit sales growth and a "sustained" core operating profit margin in 2019. The pharmaceuticals and nutrition unit had positive momentum in the first quarter, Lonza said.

Still, Lonza's specialty ingredients division, whose products include anti-microbials for paints, saw Q1 sales stagnate. The company blamed raw material shortages and supply-chain disruptions from the March 21 chemical plant explosion in Yancheng, China, that killed 62 people, as well as a Chinese anti-pollution campaign that has crimped supplies.

"The extent of the challenges...were not foreseen in January 2019," Lonza said, adding new cost-control measures were helping mitigate the division's problems.

Baader Helvea analysts said specialty ingredients' performance trailed expectations, but suggested investors focus on the pharmaceuticals unit's growth on which Lonza has staked its future, including by building a new Swiss factory whose 2020 capacity is 100 percent booked.

"This, together with a strong development in the consumer health business and further portfolio optimisation measures, are the most important news for Lonza's investment case," said Baader Helvea's Laura Lopez Pineda, who has a "buy" rating.

Its shares were indicated marginally lower in pre-market activity. (Reporting by John Miller; Editing by Michael Shields)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below