Lonza Group AG (SIX:LONN) shares traded higher on Wednesday after the Swiss contract drugmaker reported a small revenue beat for 2025 and forecast core margin expansion for 2026 that exceeded market expectations.
Stay informed beyond the headlines with premium market insight, AI stock picks, and deep research tools from InvestingPro - 55% off today The company said revenue rose to CHF 7.62 billion in 2025, beating consensus estimates by 0.5%, with constant exchange rate growth of 17.3%. Core EBITDA came in at CHF 2.33 billion, above consensus by 3.8%, while the core EBITDA margin rose to 30.6%, compared with expectations of 29.6%.
For 2026, Lonza forecast constant exchange rate sales growth of 11% to 12% and said it expects its core EBITDA margin to exceed 32%, above the 31.7% consensus cited by RBC Capital Markets.
“We think that this is a very solid set of results, with minimum controversy, and that the solid revenue growth and better margin outlook should be taken well,” RBC Capital Markets analysts said in a note.
Revenue growth in 2025 was driven in part by the Vacaville acquisition, which contributed around CHF 0.6 billion in sales, alongside organic momentum across biologics and advanced synthesis platforms, according to the broker. Reported revenue growth was 16%.
Lonza’s core EBITDA margin expanded by 190 basis points year on year, reflecting operating leverage from maturing growth projects and improved asset utilisation, RBC said, despite dilution from earlier-stage investments.
Operating cash flow rose to CHF 545 million, supported by slightly lower capital expenditure and a CHF 290 million improvement in working capital.
Within its divisions, Integrated Biologics reported revenue of CHF 3.65 billion, slightly below consensus estimates, with constant exchange rate growth of 32.2%. Core EBITDA margin for the unit declined by 98 basis points to 35.3%, reflecting intentional margin dilution from growth projects and portfolio mix effects.
Advanced Synthesis delivered revenue of CHF 1.61 billion, beating consensus by 4.7%, with constant exchange rate growth of 22.4%.
The unit posted a core EBITDA margin of 41.8%, up 611 basis points year on year, driven by the ramp-up of multiple growth projects and demand for complex and highly potent active pharmaceutical ingredients.
Specialised Modalities posted revenue of CHF 1.03 billion, missing consensus by 2.2%, with constant exchange rate sales declining 3%. Core EBITDA margin for the unit was broadly flat at 17%. Lonza proposed a dividend of CHF 5 per share, in line with consensus expectations.
The company said capital expenditure is expected to normalise to 17% to 19% of sales in 2026, down from 19.6% in 2025, as its investment peak passes. It also flagged foreign exchange headwinds of around 2% to both sales and EBITDA next year.
Lonza reiterated that its Capsules and Health Ingredients business is now classified as discontinued operations, with the exit process advancing as planned.
