July 22, 2009 / 5:10 AM / 10 years ago

UPDATE 2-Lonza H1 profit falls 33 percent, meets forecast

* H1 net profit 118 mln Swiss francs, vs forecast 117 mln

* Confirms mid-term outlook

* Reiterates will not meet profit growth forecast this year

(Adds detail)

By Sam Cage

ZURICH, July 22 (Reuters) - Swiss drugs industry supplier Lonza’s LONN.VX first-half net profit fell 33 percent to 118 million Swiss francs ($111 million), hit by the recession and start-up costs of new plants and in line with forecasts.

Lonza on Wednesday confirmed a mid-term target of average operating profit growth in the mid to high teens on average until 2013 and reiterated it did not expect to meet that this year, despite an expected stronger second half.

The Basel-based group has moved away from specialty chemicals to focus on higher-margin pharmaceutical ingredients, helping shield it from problems affecting companies like Clariant CLN.VX, including low cost competition from Asia.

Lonza’s chief executive told Reuters last month the second half would be stronger and possibly contribute two thirds of its full year earnings before interest and tax (EBIT). [ID:nLB784917]

The group said on Wednesday EBIT development in the first half had been slightly better than budgeted and it saw a stronger EBIT contribution in the second half.

It now trades at about 14 times forecast 2010 earnings, a premium to Clariant at about 10 and also more expensive than traditionally defensive drugmakers like Novartis NOVN.VX and Roche ROG.VX.

Sales fell 9 percent to 1.33 billion francs, hit by a series of manufacturing plant start ups and lower orders at the custom manufacturing business, which supplies pharmaceuticals and biotech companies, and were roughly in line with forecasts.

The group had been expected to post a net profit of 117 million francs for the first half, according to a Reuters survey of six analysts. Sales were seen at 1.38 billion francs. [ID:nLG99998] (Editing by Dan Lalor) ($1 = 1.068 Swiss francs)

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