Lonza Group AG

Basis. FY2021–FY2023 are group figures including CHI (excluding LSI). FY2024–FY2025 are continuing operations excluding CHI for P&L lines. Balance-sheet lines are group-level (FY2025 CHI assets are in held-for-sale). The data comes from S&P/StockAnalysis standardized statements, Lonza FYR and AR financial highlights, and the FY2025 APM report.

Income statement

Notes on the income statement:

• FY2024 –18.4% AER is the CHI perimeter break. The FY2024 CER +1.3% is the continuing-basis growth (FY2025 FYR).

• FY2022 and FY2023 IFRS EBITDA are derived from reported EBITDA margins of 34.4% and 28.9% (Lonza AR2023 financial highlights).

• FY2021 net income includes the LSI disposal gain.

• FY2025 net income is a group loss. Continuing operations earned CHF 909m (+51% YoY). Discontinued operations lost CHF 1,184m, mainly a CHF 1,229m goodwill impairment on CHI (AR2025 consolidated statements).

• Company-defined EBIT (continuing) was CHF 908m in FY2024 and CHF 1,239m in FY2025 (FY2025 FYR). S&P's standardized operating income differs because of classification of certain items.

• CORE EPS (continuing) was CHF 15.08 basic / 15.03 diluted in FY2025, versus CHF 13.12 / 13.10 in FY2024 (Lonza FY2025 FYR). H1 2026 EPS was CHF 8.14 versus CHF 5.65 in H1 2025 (Simply Wall St summary of H1 2026 report).

Margins (%)

Revenue CAGR. FY2021–FY2025 reported revenue CAGR is ~4.8% (derived; distorted by the CHI exit). On a like-for-like CDMO basis, CER growth averaged in the mid-teens over 2021–2025. Detail: 20% (2021), 15.1% (2022), 10.9% (2023, group), 1.3% (2024, continuing), 21.7% (2025, continuing; low-teens organic ex-Vacaville).

Commentary. Profitability peaked in 2022 at a 32.1% CORE EBITDA margin. That year combined COVID mRNA volumes with high utilization. 2023 was the trough (29.8%, guided down twice): mRNA volumes rolled off, Moderna terminated, biotech funding was tight, capsule demand was weak, and large new assets started depreciating and ramping.

Since 2024 the continuing CDMO business has re-expanded margins steadily: 30.2% (FY2024), 31.6% (FY2025), 34.8% (H1 2026), and guidance of 33–34% for FY2026. The drivers are maturing growth projects, Advanced Synthesis mix and operating leverage, partly offset by Vacaville dilution.

The gap between IFRS and CORE EBITDA narrowed in FY2025: CHF 1,970m versus CHF 2,064m, a 1.4-ppt gap versus 3.7 ppts in FY2024. This reflects lower restructuring and divestiture charges, although one-off environmental and impairment costs persisted.

Balance sheet

Notes on the balance sheet. Short-term debt is the S&P short-term debt plus current portion of LTD, excluding leases. Lonza's own net-debt definition (AR2025 financial highlights) shows net cash in 2021–2022.

FY2025 goodwill and intangibles fell because CHI assets were reclassified to held-for-sale and goodwill was impaired. "Other current assets" of CHF 2,795m at FY2025 are mostly CHI assets held for sale. This also inflates FY2025 working capital.

H1 2026 balance sheet (30 Jun 2026, S&P): cash CHF 487m; total debt CHF 4,167m; equity CHF 8,152m; total assets CHF 18,258m.

Cash flow

Dividends paid are an analyst estimate: prior-year DPS multiplied by approximate shares outstanding. They are not company-reported cash-flow lines.

Lonza-defined cash metrics (FY2025 FYR):

• Operational free cash flow before acquisitions and divestitures, group: CHF 674m in FY2025 (+42.5%) versus CHF 473m in FY2024.

• CDMO free cash flow: CHF 545m in FY2025 versus CHF 313m, "nearly doubled."

• CapEx intensity: 30% of sales in 2022; 25% in 2023; 19.6% in 2025; 15.7% in H1 2026.

• H1 2026 FCF: CHF 0.4bn (+CHF 0.3bn YoY).

• S&P TTM to Jun 2026: OCF CHF 1,435m, CapEx CHF 1,228m, FCF CHF 207m.

Ratios

Notes on the ratios:

• ROE and ROA are derived from net income and year-end balances.

• The FY2024 and FY2025 net debt/CORE EBITDA ratios conflict between sources. The FY2025 FYR reports 1.4x (FY2025) and 1.5x (FY2024). The AR2025 historical table shows 1.6x and 1.7x. The difference is the perimeter of CORE EBITDA (continuing versus total group including CHI).

• The FY2024 cash conversion cycle and asset turnover are distorted: the P&L is restated to exclude CHI while the balance sheet still includes CHI.

Trend commentary. The defining financial feature of the period is a deliberate leveraging-up to fund capacity. Lonza went from CHF 958m net cash (2021, post-LSI) to CHF 3.26bn net debt (2025). The drivers were roughly CHF 7.5bn of cumulative CapEx over 2021–2025, the USD 1.2bn Vacaville acquisition, and about CHF 2.5bn of buybacks over 2021–2025 (net repurchases per S&P).

Returns compressed as the asset base grew faster than earnings: PP&E rose 77% from 2021 to 2025. They are now inflecting:

• CapEx intensity is normalizing toward the mid-to-high-teens range of the CDMO Organic Growth Model.

• The FY2026 CORE EBITDA margin is guided at 33–34%.

• The CHI proceeds (CHF 1.7bn upfront) should take leverage "well below" the target range (6 Mar 2026 release).

The FY2025 statutory loss is purely a non-cash CHI write-down and does not reflect continuing-business economics.

Management guidance (FY2026, as of 22 Jul 2026):

• CER sales growth of 11–12%;

• CORE EBITDA margin of 33–34% (raised);

• FX headwind of –2 to –3% on sales;

• CapEx intensity in the middle of the mid-to-high-teens range;

• H2 growth and margins lower than H1 because of AS phasing, Vacaville shutdown and a higher prior-year base;

• CHI (discontinued): mid-single-digit CER growth; closing before YE2026, then a CHF 500m buyback.

Consensus expectations: about 10.8% p.a. revenue growth and about 20% p.a. EPS growth over three years; average target CHF 688 (S&P/StockAnalysis).

Bull case:

1. Margin structurally re-based upward. CORE EBITDA margin moved from 29.8% (2023) to 34.8% (H1 2026). AS runs at 41–48% and SM recovered to 28% in H1 2026. As Visp large-scale and Vacaville fill under the five-plus commercial contracts and the multi-billion-CHF US collaboration, operating leverage could push group margins toward the mid-30s sustainably. CapEx intensity falling to the mid-to-high teens would turn FCF (CHF 545m CDMO in FY2025) into a compounding story.

2. Geopolitics favour Lonza. As the largest US biologics CDMO with Swiss-based ADC integration, Lonza is a prime beneficiary of supply regionalization and of US customers de-risking from Chinese CDMOs. WuXi-type peers face structural headwinds.

3. Pure-play re-rating and optionality. The CHI exit removes a sub-30%-margin, lower-growth business. It brings CHF 1.7bn upfront plus upside to at least CHF 3bn total, funds bolt-ons and a CHF 500m buyback, and simplifies the equity story toward premium CDMO multiples.

Bear case:

1. Growth decelerates sharply in H2 2026 and 2027. H1 2026 was flattered by phasing and a low base. Vacaville is flat and goes into shutdown, AS margins normalize, and the shares fell about 4% on H1 results despite a margin beat. With low-teens organic growth as the model, a forward P/E of about 28x and EV/EBITDA of about 18x leave little room for a miss.

2. Capital intensity and returns remain mediocre. S&P-basis FCF was negative every year from 2021 to 2025. TTM ROIC is about 11% against a WACC of about 8%. Statutory ROE has been single-digit or negative since 2023. The Capsugel round-trip shows a history of capital misallocation, and Vacaville's full potential is a next-decade story.

3. Execution and leadership risk persists. Cell & Gene performance has been volatile. Big pharma's US in-house CapEx wave and Samsung's capacity build could erode utilization and pricing. Board and executive renewal is rapid (average board tenure about 1.3 years; new CCO from 2027) during a period of complex separation and large project delivery (Stein 2028/2030, Visp 2028).

Concluding analyst verdict.

Lonza enters late 2026 as a cleaner, more profitable and more strategically coherent company than at any point in the past decade. The CHI sale, three smaller divestments and the One Lonza reorganization have turned a conglomerate-tinged supplier into a pure-play CDMO.

The evidence of operating improvement is concrete:

• continuing sales grew 21.7% CER in FY2025;

• the CORE EBITDA margin moved from 30.2% to 31.6%, then to 34.8% in H1 2026, with full-year guidance raised to 33–34%;

• the Advanced Synthesis platform now earns returns rivalling the best in contract manufacturing.

Lonza's strategic positioning is unusually strong. It combines the broadest modality coverage in the industry, the largest US biologics footprint at a time when customers want regional supply, and a vertically integrated Swiss ADC chain backed by customer commitments.

The equity case is not without friction. Statutory returns have lagged the narrative, and S&P-basis free cash flow was negative throughout 2021–2025 as about CHF 7.5bn went into CapEx and a large acquisition. Management's own guidance implies a visibly weaker second half. At about 28x forward earnings and about 18x EV/EBITDA, the shares already discount a good part of the margin story. The July 2026 sell-off on a margin beat shows how sensitive the stock is to growth cadence. Leadership and board renewal has been rapid, and Cell & Gene and Vacaville still need to prove their economics.

Overall, Lonza looks like a high-quality compounder in transition from build to harvest. The decisive variable for the next 12–24 months is cash conversion, not growth. If CapEx intensity normalizes to the mid-to-high teens while margins hold in the 33–35% band, operational FCF should step up materially and justify the premium. The CHI proceeds and buyback provide downside support. The verdict is constructive, with valuation-driven patience. The data supports a positive fundamental stance, but entry discipline around H2 2026 phasing and the first pure-play FY2027 guidance is warranted.

All figures are from public sources as cited and are current as of 7 October 2026.