Currency issues impacting API manufacturers’ bottom lines

- Last updated on GMT

Currency issues impacting API manufacturers’ bottom lines

Related tags: Euro, United states dollar, Lonza

API makers are looking for ways to slash costs and improve efficiencies to counter the impact currency fluctuations and other market challenges, earnings results from Lonza and BASF show.

Swiss-based Lonza posted a strong performance in its first half to June 30, but was hampered by market challenges like rising COGs (cost of goods) and currency fluctuations. Lonza said it is also working on further automation, adaptations to capacity offering in lower-margin assets and other portfolio changes. 

The currency issues come as Lonza has reduced its headcount by 88 from the end of 2014. A hiring freeze in specific areas aims to reduce the workforce naturally while balancing the Euro foreign exchange impact. 

"Over time these actions will lead to a reduction of 90 positions, and further efficiency and productivity measures will continue to be implemented,​" said the company. 

Since the acquisition of Arch Chemical, Lonza has improved its natural hedge globally from a sales-vs.-costs perspective for nearly all of its trading currencies, which, it says, has made the group less exposed than in previous years. 

However, the Visp location risks being less competitive due the Swiss franc-related fixed cost base. Lonza plans to improve productivity in its manufacturing and business services networks for the second half of 2015. 

BASF​ 

Germany’s BASF eurozone markets, meanwhile, have been able to benefit from lower oil prices and the weaker Euro in the first half of 2015. But in the US, the strong dollar dampened export volume. 

In its second quarter, the group slightly increased sales - through positive currency effects - with sales growing by 3% to €19.1bn despite overall lower sales prices. 

Set to impact 850 positions worldwide, the group is divesting parts of its active pharmaceutical ingredients portfolio​ to Siegfried Holding AG, as it aims to focus its pharmaceutical ingredients and services business on pharmaceutical excipients in future. The transaction is expected to close in Q4. 

Related topics: Ingredients

Related news