October 27, 2008 / 6:37 AM / 11 years ago

UPDATE 2-Lonza says may miss target in 2008, shares tumble

* Analyst sees “soft” profit warning

* May not be able to offset economic slowdown in H2

* Shares fall 14 percent

(Recasts, adds CEO, analyst comment, share price)

ZURICH, Oct 27 (Reuters) - Lonza Group Ltd LONN.VX could miss its mid-term earnings target in 2008 and may not be able to offset weaker economic growth in the second half, the Swiss drugs industry supplier said on Monday, sending shares tumbling.

Chief Executive Stefan Borgas said he expected 2008 to be “at the low end of this guidance” of operating profit growth of mid- to high-teens on average, and possibly just under that range.

But Lonza, which has moved away from specialty chemicals to refocus on high-margin pharmaceutical ingredients, confirmed its target of average operating profit growth in the mid- to high-teens through to 2013.

By 1319 GMT, shares in the group had fallen 14.12 percent to 99.25 Swiss francs, having fallen to a new two-year low of 97.10 francs, and compared to a small 0.4 percent drop in the European healthcare index.

“We believe this is a soft profit warning,” said Kepler Capital Market analyst Florian Gaiser. “Looking to 2009, visibility is poor. Risk factors remain unchanged.”

“Overall, 2009-2010 numbers may need lowering by about 5-10 percent,” Gaiser said.

The group also said the financing difficulties of small and start-up customers were having some impact in Bioscience and Biopharma Services and it expected macroeconomic challenges to continue in 2009.

The group said its financial position had not been hit by the credit crunch due to its conservative strategy, adding its investment grade balance sheet enabled additional financing, even in the short term.

Lonza trades at nearly 15 times forecast 2009 earnings, according to Reuters data, and commands a premium to both the European pharmaceuticals .SXDP and chemicals .SX4P sectors due to its high-margin business and strong growth prospects. (Reporting by Andrew Thompson; Editing by Erica Billingham and David Cowell)

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