July 23, 2008 / 5:49 AM / 12 years ago

Lonza profit rises, shares hit by cautious forecast

ZURICH (Reuters) - Swiss drugs industry supplier Lonza LONN.VX reported a better-than-forecast 83 percent rise in first-half net profit on Wednesday, boosted by a one-off gain, but shares fell on a cautious outlook.

Net profit rose to 267 million Swiss francs ($262.8 million), boosted by a 91 million gain from the sale of its remaining stake in Polynt SpA. In a Reuters survey, four analysts had on average forecast net profit of 245 million.

Lonza, which has moved away from specialty chemicals to refocus on high-margin pharmaceutical ingredients, confirmed its forecast, saying it still expects operating profit to grow in the mid- to high teens through to 2013.

“The economic and financial market situation are taking their toll,” Landsbanki Kepler analyst Florian Gaiser said. “The full-year guidance is maintained ... indicating a weaker H2 will follow.”

Lonza shares fell 4 percent to 145.90 francs by 1059 GMT, as traders took profit after the stock hit an all-time high earlier in the session on the impressive profit numbers.

“These are convincing figures,” analysts at Bank Wegelin said. “The life-science strategy continues to pay off and the efficiency improvement programme also seems to work.”

Lonza said its first-half performance was “on track despite currency and raw material challenges.”

But the Basel-based company, a leading supplier of active ingredients to the pharmaceuticals, healthcare and life science industry, said it remained concerned about raw material prices.

It was able to pass on higher raw material costs to customers during the first half and will still be able to during the rest of 2008, but those costs “remain a concern,” said Chief Executive Stefan Borgas.

During the first six months of the year, the group’s operating profit grew by 15.9 percent. Sales rose to 1.463 billion francs, from 1.374 billion in the first half of 2007.

Shares in Lonza have outpaced the European healthcare sector with an 11 percent rise this year.

The shares trade at about 17.5 times expected 2009 earnings, according to Reuters data, a premium of more than 40 percent to the European healthcare index.

Additional reporting by Peter Maushagen and Sam Cage; Editing by Quentin Webb/Elaine Hardcastle

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