Net profit increased 14.4 per cent to CHF135m, up from CHF118m a year ago, but this was driven by lower costs, not increased sales. Total sales dipped by 2.1 per cent to CHF1301m.
The drop in sales was primarily caused by a weak first quarter at the custom manufacturing unit, the largest division, where revenues dropped by 6.8 per cent to CHF658m. This was due to low first quarter capacity utilisation at sites in Portsmouth, UK and Hopkinton, Massachusetts, US.
Demand up on nutritional ingredients
However, the firm said sales increased by 6 per cent in its Life Sciences division, to reach CHF536m. Improved volumes for nicotinates (vitamin B3) contributed to the increase, with demand for the ingredients “increasing substantially” in comparison with the first half of 2009.
Earlier this year, Lonza’s board of directors approved a new vitamin B3 plant in Nansha, China, which will be adjacent to its existing site in the region. This is expected to add an additional 15,000 metric tonnes to its manufacturing capacity, which will help meet an anticipated double-digit growth in demand for the ingredient in the region.
Lonza also said that construction of its new L-carnitine plant in Nansha is on schedule, with start-up expected in the fourth quarter of 2010. A new intermediates plant in Visp came on stream in June this year, which produces starting material for the L-carnatine plant in Nansha.
The firm said that its R&D projects in the lifescience ingredient field “stayed at a high level” during the first half of this year. However, overall, higher raw material costs, unfavourable exchange rates and increased competitive activities continue to pressure margins in the sector.