Lonza to buy back $2.17 billion worth of shares, backs mid-term growth

By Ludwig Burger and Tristan Chabba

(Reuters) -Lonza on Wednesday said it will buy back shares worth 2 billion Swiss francs ($2.17 billion), despite an expected drop in annual margins, as the Swiss drug contract manufacturer backed its growth prospects for the near future.

Lonza expects its 2023 core earnings before interest, depreciation and amortization, or EBITDA margin, to slip between 30% and 31%, down from 32.1% in 2022, as last year's boost from COVID-19 vaccine manufacturing services waned.

The Basel-based company, however, reiterated a target of 33%-35% for 2024 marginsand announced a 17% rise in its annual dividend.

"We are also pleased to confirm our Mid-Term Guidance 2024, supported by new capacity coming online and robust industry fundamentals," chief executive Pierre-Alain Ruffieux said in a statement.

The firm, which is in a multi-year investment push to assist drug developers as they bet on new therapeutic proteins, as well as cell and gene therapies, also reported an almost 20% jump in core 2022 EBITDA of 2.0 billion Swiss francs, slightly ahead of market expectations.

With a net cash position of 186 million francs, its financial buffer was large enough for building new plants, seeking bolt-on takeover opportunities and the distribution of cash among shareholders, Lonza said.

Some analysts have expressed concerns over the negative impact of higher energy prices, costly domestic production from a recent surge in the value of the Swiss franc, and a decline in income from producing COVID-19 vaccines for Moderna.

The Swiss group forecast sales growth in the "high single-digit" adjusted for currency swings, a slow-down from the 15.1% rise it saw last year.

($1 = 0.9223 Swiss francs)

(Reporting by Ludwig Burger in Frankfurtby and Tristan Chabba in Gdansk; Editing by Paul Carrel and Nivedita Bhattacharjee)