Lonza profit dives, CEO leaves
announced profits had fallen by 59 per cent on the previous year
and a 'major setback' in performance.
Forecasts for 2004 have been set at minimum levels as the Swiss firm looks at further cost-cutting measures. The L-carnitine maker has already reduced its workforce by 9 per cent since May 2003 but overcapacities in custom manufacturing and a lack of new drug approvals last year will require further efficiency drives.
Lonza said it would decommission fine chemical production facilities both in the US and EU to realign its capabilities to the current environment, which the company had expected to pick up in the second half.
The lack of demand in some major areas was evident in sales figures, down more than 10 per cent in almost all divisions, leading to a drop of 11.6 per cent in the group overall on the prior year to SF2,242 million.
In L-Carnitine, sales remained at the 2002 level however, despite increased competition from Asian countries. The ingredient received approval in Japan last year, opening new market opportunities.
Overall, operating income before non-recurring items fell 28 per cent to SF302 million as margins decreased to 13.5 per cent from 16.5 per cent in 2002.
Net income, impacted by one off charges of SF158 million from closing down plants during the year, came to SF91 million, a hefty 59 per cent drop on the previous year, and much worse than expected.
Gemuend, appointed in January 2002, said that given recent market developments a 'different type of leadership' is required to move the group forward. He will remain in his position until a successor is appointed.
The company meanwhile is taking a 'conservative and cautious view of its earnings guidance…setting minimum levels of expected returns, with operating income of SF225 million and earnings per share of SF3.00 for 2004'.
