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(Bloomberg) -- Lonza Group AG, the world’s largest custom manufacturer of drug-ingredients, said it achieved a goal for margin improvement one year ahead of schedule, while the removal of a cap on the Swiss franc has clouded the outlook.
Earnings before interest and taxes increased 8.9 percent to 475 million francs ($545 million), the Swiss company said. That compares with an estimate from analysts of 472.9 million francs. Profitability reached 20.4 percent of sales, exceeding a margin goal set for the end of 2015.
Chief Executive Officer Richard Ridinger, approaching his second anniversary in the role, is in the final stages of a three-year overhaul that’s included plant closures, disposals and other efficiency moves. Lonza paid $1.35 billion for Arch Chemicals to expand in ingredients to combat bacteria, used in water additives, detergents and cosmetics.
“We are reevaluating our outlook and provide guidance at a later stage,” Ridinger said on a call. “These new challenges for our Swiss based assets are manageable.”
The Swiss National Bank’s surprise decision last week to abandon the cap on the franc exchange rate has put added pressure on Lonza’s manufacturing site in Visp, Switzerland, where the company was first founded. Products from Visp, which include aroma chemicals and health-food ingredients, compete globally. The SNB’s move could reduce earnings per share by 30 percent in 2015, according to Fabian Wenner, an analyst at Kepler Cheuvreux.
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