Investing.com -- Swiss drugmaker services group Lonza raised its mid-term profitability goal on Wednesday, targeting a core EBITDA margin in the high thirties, and said third-quarter performance was in line with expectations.
Lonza said the upgrade was based on stronger operational and financial performance, successful execution of growth projects and attractive future market opportunities. It announced the changes at a Capital Markets Day held at its Vacaville, California, site.
Core EBITDA is Lonza's own profit measure, and the company said it expects it to grow faster than sales. Lonza did not give the previous margin target in the release.
Lonza also said it expects organic sales growth in the low teens, or 10% to 13%, on average over time at constant exchange rates. It added that the margin gains are being helped by maturing growth projects, better operational, commercial and capital spending performance, and continued control of overhead costs.
The company added two new goals to its growth model. It aims for a return on invested capital of two to three times its current cost of capital, which it measures as of 2026. It also aims for free cash flow, measured as a share of core EBITDA, to improve on average over time.
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Lonza said all of its business platforms performed in line with expectations in the third quarter. It kept its full-year 2026 outlook, which it raised after the first half, of 11% to 12% sales growth at constant exchange rates and a core EBITDA margin of 33% to 34%.
The company also repeated that it expects currency movements to reduce 2026 sales growth by about 2% to 3%.
Its Capsules & Health Ingredients business also performed in line with expectations in the third quarter. Lonza said it still expects mid-single-digit sales growth at constant exchange rates and further margin expansion for the full year.
Lonza said it has completed its transformation into a focused contract development and manufacturing company in less than two years. This followed its exit from the Capsules & Health Ingredients business and other divestments.
In March 2026, Lonza agreed to sell 60% of Capsules & Health Ingredients to Lone Star Funds. The deal is expected to close before the end of 2026.
"The transformation into a pure-play CDMO has created a stronger, more integrated global organization that is delivering for our customers across all Business Platforms," CEO Wolfgang Wienand said.
Lonza said it still expects capital spending to fluctuate around the mid-to-high teens as a percentage of sales. It remains committed to a progressive dividend, meaning it will maintain or raise the dividend per share each year, in line with a capital allocation framework it first shared in 2024.
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