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• Solid sales growth on comparable basis with stable market demand
• Portfolio management progressing well, first streamlining executed
• Significant free-cash flow generation despite dividend payment, with deleveraging fully on track as guided
• 15% EBIT growth delivered, based on a 2011 EBIT of CHF 292 million (before acquisitions)
• The Board of Directors is proposing a cash dividend of CHF 2.15 per share for 2012
• Sir Richard Sykes and Gerhard Mayr, Board members in office for many years, have decided not to stand for re-election at the next Annual General Meeting on 9 April 2013. The Board of Directors is proposing to elect Dr. Antonio Trius and Prof. Dr. Ing. Werner J. Bauer as new members

– In 2012 Lonza achieved solid sales growth on comparable basis with stable market demand. The principles of “Focus and Deliver”, which was initiated as management’s guiding principles at the beginning of the year, delivered positive results. Following the Arch acquisition revenues increased by 45.8% to CHF 3 925 million. Lonza’s broad technology toolbox attracted new customers in all areas and led to satisfactory capacity utilization at all sites. The volatile macroeconomic situation was challenging, but Lonza managed to balance most of the risks by delivering its extensive product portfolio to a diverse set of markets. The integration of the Microbial Control business acquired in October 2011 was implemented successfully and the new sector is consolidated on a full-year basis for the first time. Capital expenditure remained on a reduced level without jeopardizing growth projects and in accordance with guidance

Lonza CEO Richard Ridinger comments: “I’m pleased with the overall performance of the company. Despite the ongoing volatile and challenging macro-economic environment in 2012, we were able to generate a significant free cash flow, reduce the net debt by 13%, and meet our financial guidance by delivering an EBIT growth of 15%. Our Life Science Ingredients and Bioscience divisions had good results, somewhat above expectations. I am unsatisfied with the EBIT performance of our Custom Manufacturing division, although we experienced an intact market demand. Microbial Control performed as expected. It experienced a somewhat weaker fourth quarter 2012, which was mainly driven by the anticipation of the US fiscal cliff and inventory adjustments of customers. In 2013, we will take transformational steps to move from a product oriented to a market oriented organization. In doing so, we will adjust our manufacturing footprint, streamline our administrative infrastructure and review our go-to-market-approaches. This will also require some structural changes to the company.”

Financial Highlights 2012:

• EBIT increased to CHF 335 million by 28.4% (CHF 261 million after acquisitions) or 14.7% (CHF 292 million before acquisitions)
• Operational free cash flow significantly increased to CHF 506 million by 298.4%
• Net debt reduced from CHF 2.647 million to CHF 2.301 million by 13.1%, resulting in a gearing of 96% and a net debt/EBITDA  ratio of 3.35 (before restructuring and Arch integration charges)
• Net working capital in relation to sales decreased to 23.5% in 2012 (23.9% in 2011)
• Capital expenditure at CHF 310 million

Full financial figures can be found in the Full Year Report: http://www.lonza.com/en/about-lonza/investor-relations/financial-reports.aspx

Board of Directors: The Board of Directors is proposing a cash dividend of CHF 2.15 per share for 2012. Subject to approval by the Annual General Meeting, this dividend will be paid out of the reserves from capital contribution and free of Swiss withholding tax. Sir Richard Sykes and Gerhard Mayr, Board members in office for many years, have decided not to stand for re-election at the next Annual General Meeting on 9 April 2013. The Board of Directors is proposing to elect Dr. Antonio Trius and Prof. Dr. Ing. Werner J. Bauer as new members.

Dr. Antonio Trius brings long experience to the Board of Lonza in areas such as market positioning, portfolio management and the Personal Care industry. He was CEO of Cognis from 2001 to 2010. Prior to that he held various management positions with Cognis, Henkel and Pulcra. Since September 2011 he has been a Board member of Nubiola and since July 2012 a member of the Supervisory Board of Altana.

Prof. Dr. Ing. Werner J. Bauer brings broad knowledge in areas such as innovation, technology and production management. Since 2007 he has been Head of Innovation, Technology, Research and Development at Nestlé S.A. Prior to joining Nestlé in 1990 he was a Director at the Fraunhofer Institute and a Professor of Chemical Engineering at the Technical University in Hamburg. He is a Supervisory Board member of GEA-Group AG and of Bertelsmann SE & Co. KGaA. He is Chairman of the Board of Trustees of the Bertelsmann Foundation, of the Board of Galderma Pharma and of the Supervisory Board of Nestlé Deutschland AG.

Outlook: Lonza strengthened its market position and balanced its risk portfolio through a successful integration of the Microbial Control sector. Progress was achieved in strategic strengthening of the Custom Manufacturing sector with new technologies. In 2013, these two sectors will contribute to the company’s performance with new applications and new product approvals (e.g. in the areas of antibody drug conjugates, highly active pharmaceutical ingredients and peptides) as well as with broader product and service portfolios. Lonza expects increasing demand for agrochemical ingredients.

All businesses will generate significant free cash flow, enabling the company to reduce net debt as planned. Capital expenditure is forecasted to be approximately CHF 300 million in 2013, including maintenance capital expenditure.

This will lay the groundwork for a sustainable improvement in return on capital invested, which remains unsatisfactory. Therefore Lonza will continue to face transformational challenges in 2013. Following the productivity improvement program in Visp, Lonza is now in the process of reviewing its global manufacturing footprint. In doing so,best practices and productivity improvement opportunities will be identified and implemented throughout the organization. Additionally, Lonza will work on streamlining its administrative infrastructure. But business approaches, especially for all Lonza’s go-to-market processes, will be the center of attention for management. The organizational structure of the company will be adapted accordingly.

Lonza is well equipped for a successful future, given its excellent technology platforms, global footprint, broad high-quality product and service offerings as well as its diversified customer base and, of course, its committed and highly skilled workforce. The year 2013 is likely to bring further macroeconomic challenges but Lonza will be well positioned to tap into new opportunities. In 2013 Lonza expects further sales and EBIT growth and confirms the target of an EBITDA margin of 20% by 2015.