#1Corporate Lonza Lonza Reports Best First Half in History with Continued Strong Momentum 2016 Half-Year Results - 20 July 2016 Richard Ridinger - CEO © Lonza Lonza#2Corporate Additional Information and Disclaimer Lonza Lonza Group Ltd has its headquarters in Basel, Switzerland, and is listed on the SIX Swiss Exchange. It has a secondary listing on the Singapore Exchange Securities Trading Limited ("SGX-ST"). Lonza Group Ltd is not subject to the SGX-ST's continuing listing requirements but remains subject to Rules 217 and 751 of the SGX- ST Listing Manual. Certain matters discussed in this presentation may constitute forward-looking statements. These statements are based on current expectations and estimates of Lonza Group Ltd, although Lonza Group Ltd can give no assurance that these expectations and estimates will be achieved. Investors are cautioned that all forward- looking statements involve risks and uncertainty and are qualified in their entirety. The actual results may differ materially in the future from the forward-looking statements included in this presentation due to various factors. Furthermore, except as otherwise required by law, Lonza Group Ltd disclaims any intention or obligation to update the statements contained in this presentation. Lonza Lonza Lonza onza 2016 Half-Year Results - 20 July 2016 onzo 2 Jul-16#3X- Table of Contents ■ Half-Year Results 2016 and Highlights ■ Segment Overview - Pharma & Biotech Segment Overview - Specialty Ingredients ■Reflection on the Last Four Years Outlook 2016 Lonza Half-Year Report 16 2016 Half-Year Results - 20 July 2016 3 Jul-16#4Corporate Half-Year 2016 - Best First Half in History ■ 20% CORE EBIT growth and 6% sales growth Lonza Both Pharma&Biotech and Specialty Ingredients segments improved their profitability Pharma&Biotech's outstanding operational performance across all assets bolstered the strong half-year results 2016 guidance raised: Double-digit CORE EBIT growth expected for 2016 Stable cash flow generation and de-leveraging ongoing ■ Net debt was further reduced by CHF 337 million 2016 Half-Year Results - 20 July 2016 4 Jul-16#5Corporate Half-Year 2016 Financial Highlights Lonza CHF mn HY 2016 HY 2015 Change YoY Sales 2,019 1,904 6.0% CORE EBITDA 447 391 14.3% CORE EBITDA Margin 22.1% 20.5% EBITDA IFRS 443 375 18.1% CORE EBIT 312 260 20.0% CORE EBIT Margin 15.5% 13.7% EBIT IFRS 292 1921 52.1% Profit for the Period 194 111 74.8% CORE RONOA 20.3% 16.1% Operating Free Cash Flow 2642 299 -11.7% Net Debt 1,505 1,842 -18.3% 1 Includes impairment of CHF 36 million, as well as settlement and write-offs of CHF 9 million related to the Kouřim site. 2 before acquisition CORE definition: see appendix Lonza 5 Jul-16#6HY 2013 HY 2014 CORE EBITDA (CHF million) CORE definition: see appendix Corporate Significant Improvement in Both Segments Pharma&Biotech Specialty Ingredients CHF mn HY 2016 HY 2015 % YoY Sales 838 754 11.1 CHF mn Sales HY 2016 HY 2015 % YoY 1,165 1,131 3.0 CORE EBITDA 226 182 24.2 CORE EBITDA 241 217 11.1 Margin 27.0% 24.1% Margin 20.7% 19.2% CORE EBIT 159 117 35.9 CORE EBIT 194 172 12.8 Margin 19.0% 15.5% Margin 16.7% 15.2% HY 2015 300 30% 300 30% 27.0% 24.8 % 23.8 % 24.1% 241 25% 25% 217 201 195 200 226 20% 200 20% 20.7% 182 167 19.2% 15% 18.2% 17.2% 15% 100 145 10% 100 10% 5% 5% 0 0% 0 0% HY 2016 CORE EBITDA margin (%) HY 2013 HY 2014 CORE EBITDA (CHF million) HY 2015 HY 2016 CORE EBITDA margin (%) 6 Jul-16 Lonza#7X- Table of Contents ■■Half-Year Results 2016 and Highlights Segment Overview - Pharma&Biotech ■ Segment Overview - Specialty Ingredients ■ Reflection on the Last Four Years Outlook 2016 Lonza Half-Year Report 16 2016 Half-Year Results - 20 July 2016 7 Jul-16#8Corporate Pharma&Biotech Financials HY 2016 Lonza Key Figures CORE EBITDA and Margin Progression 300 30% CHF mn HY 2016 HY 2015 % YOY 27.0% 24.8% 23.8% 24.1% 25% Sales 838 754 11.1 200 226 20% 182 15% CORE EBITDA 226 182 24.2 167 145 100 10% Margin 27.0% 24.1% 5% CORE EBIT 159 Margin 19.0% 117 15.5% 35.9 0 0% HY 2013 HY 2014 HY 2015 HY 2016 CORE EBITDA (CHF million) CORE EBITDA margin (%) ■Strong performance driven by outstanding operational performance across all assets ■Particular momentum coming from the Commercial Mammalian Manufacturing business ■Made-to-stock Bioscience Solutions business with strong growth in sales and profits ■Excellent performance expected to continue also in the second half CORE definition: see appendix 2016 Half-Year Results - 20 July 2016 8 Jul-16#9Corporate Pharma&Biotech - Commercial Manufacturing Lonza Pharma& Biotech B2B PHARMA & BIOTECH Commercial Manufacturing, Clinical Development Services, Products (Consumables, Tests, Media, Equipment) Commercial Manufacturing ■ Outsourcing and dual-sourcing trend by the industry is fully intact ■Sales growth again driven by high demand in mammalian manufacturing ■The customer base has broadened further with new contracts of significant length being signed ■Manufacturing of 20 commercial biologics drug substances Jul-16 2016 Half-Year Results - 20 July 2016 9#10Corporate Pharma&Biotech – Clinical Development and Bioscience Lonza Pharma& Biotech B2B 4 & BIOTECH PHARMA& Commercial Manufacturing, Clinical Development Services, Products (Consumables, Tests, Media, Equipment) Clinical Development Services ■Clinical Development & Licensing (CDL) business ahead of market growth benefiting from continued strong demand for tier 1 CMO development and manufacturing services ■ Emerging Technologies with strong growth success of changing business models seen in the long-term agreement with bluebird bio, Inc. ■New Drug Product Services facility is set to open its doors in Basel in the fourth quarter of 2016 Bioscience Solutions / Products ■Market demand favorable; delivered solid growth compared with the same period last year 10 Jul-16 2016 Half-Year Results - 20 July 2016#11X- Table of Contents ■■Half-Year Results 2016 and Highlights Segment Overview - Pharma & Biotech Segment Overview - Specialty Ingredients ■ Reflection on the Last Four Years Outlook 2016 Lonza Half-Year Report 16 2016 Half-Year Results - 20 July 2016 11 Jul-16#12Corporate Specialty Ingredients Financials HY 2016 Lonza Key Figures CORE EBITDA and Margin Progression 300 30% CHF mn HY 2016 HY 2015 % YOY 241 217 25% Sales 1,165 1,131 3.0 195 201 200 20% 20.7% 19.2% CORE EBITDA 241 217 11.1 18.2% 15% 17.2% 100 10% Margin 20.7% 19.2% 5% CORE EBIT 194 Margin 16.7% 172 15.2% 12.8 0 0% HY 2013 iHY 2014 HY 2015 HY 2016 CORE EBITDA (CHF million) CORE EBITDA margin (%) Sales development in line with plans; progress resulted from focus on higher-value activities, product mix and portfolio optimization, as well as operational and value-chain improvements ■ Highly specialized part of Specialty Ingredients businesses experienced robust growth momentum, over-compensating for the seasonality in Agro and Feed markets in the second quarter CORE definition: see appendix 2016 Half-Year Results - 20 July 2016 12 Jul-16#13Corporate Specialty Ingredients - Consumer Care Lonza Consumer Care B2B SPECIALTY INGR Personal Care, Homecare, Hygiene, Nutrition Steady Growth with Improvement of Portfolio to Higher Value ■ Hygiene business experienced good demand and increased market acceptance of new and innovative solutions based on new formulations ■High-end Personal Care portfolio is growing well, driven by good ongoing momentum Vitamin B3 and L-Carnitine in nutritional applications enjoyed solid market demand ■Efforts will be focused on formulation development and strengthening our consumer value proposition and claim support 2016 Half-Year Results - 20 July 2016 13 16 Jul-16#14Corporate Specialty Ingredients - Agro Ingredients Lonza Agro Ingredients B2B SPECIALTY INGRE Agro-chemical and Fermentation Active Ingredients, Fertilizers, Advanced Intermediates, Animal Nutrition Ingredients - First Half Better than Expected – But Dampened Outlook for Coming Quarters Anticipated ■Solid start into first quarter of current year, softer demand in second quarter, as expected Slowdown based on over-stocking in end markets and reduced investments by agrochemical industry ■Molluscicides experienced solid growth in our global expansion target areas, especially in Southeast Asia, South Africa and Latin America 14 2016 Half-Year Results - 20 July 2016 Jul-16#15Corporate Lonza - Specialty Ingredients – Coatings & Composites Coatings & Composites B2B SPECIALTY INGREDIENTS Metal, Plastics, Carbon, Wood, Performance Ingredients Steady Growth Driven by Specialties ■Solid market demand across most offerings, especially in electronics and aerospace industry Wood Protection business in North America led way with sales growth in solid wood preservation markets, fueled by strong U.S. and Canadian economies ■Diacon and Zelam contributed topline sales in mold control and engineered wood preservation markets; integration on track 2016 Half-Year Results - 20 July 2016 Jul-16 16 15#16Corporate Specialty Ingredients - Water Treatment Lonza Water Treatment B2B / B2C SPECIALTY Residential INGRE Industrial, Commercial, Municipal, Surface Water Good Start into U.S. Pool Season ■ Good performance compared with last year - even with Memorial Day being one week later than last year and with severe weather conditions in the Midwest 16 2016 Half-Year Results - 20 July 2016 Jul-16 66#17X- Table of Contents ■Half-Year Results 2016 and Highlights Segment Overview - Specialty Ingredients. Segment Overview - Pharma & Biotech ■ Reflection on the Last Four Years Outlook 2016 Lonza Half-Year Report 16 17 Jul-16 2016 Half-Year Results - 20 July 2016#18CEO Richard Ridinger Looking Back After 1,541 Days in Office 66 With Lonza, I joined a company with many great strengths and assets, such as excellent technology platforms, a global footprint, high-quality product offerings, a broad customer base and, of course, a highly committed and skilled workforce. While the overall strategy remains absolutely valid, I have identified a number of key opportunities that will help the company to return on a profitable growth path. Lonza June 2012 " 2016 Half-Year Results - 20 July 2016 18 Jul-16 11#19Steady and Continued Improvement from Half-Year 2012 to 2016 Lonza CORE RONOA in % CORE EBITDA margin in % 22.1 20.3 19.8 20.4 20.5 17.0 16.1 14.5 11.8 10.9 HY 2012 HY 2013 HY 2014 HY 2015 HY 2016 Net Debt/EBITDA HY 2012 HY 2013 HY 2014 HY 2015 HY 2016 Net Debt in CHF million 3.4 3.3 2.8 2.4 1.8 HY 2012 HY 2013 HY 2014 HY 2015 HY 2016 2'531 2'417 2'113 1'842 1'505 HY 2012 HY 2013 HY 2014 HY 2015 HY 2016 2016 Half-Year Results - 20 July 2016 119 Jul-16#20X- Table of Contents ■■Half-Year Results 2016 and Highlights Segment Overview - Specialty Ingredients. Segment Overview - Pharma&Biotech ■Reflection on the Last Four Years ■ Outlook 2016 Lonza Half-Year Report 2016 Half-Year Results - 20 July 2016 16 20 1120 Jul-16#21Corporate Outlook 2016 Raised 2016 Outlook ■■With this positive first half of 2016 and the good momentum expected to continue into the second half of the year, Lonza is raising its guidance for CORE EBIT growth and now expects a double-digit improvement in CORE EBIT for the full year of 2016. Full-Year 2016 - Guidance Raised ■New: CORE EBIT double-digit growth for 2016 ■CAPEX in 2016 is expected to be above 2015 level due to the strong demand particularly in Pharma&Biotech and the larger number of growth projects. ■ However, the strong cash flow generation is expected to further reduce net debt significantly by the end of fiscal year 2016. 2016 Half-Year Results - 20 July 2016 Lonza Jul-16 265 21#22Corporate Outlook 2018 - Confirmed 2018 Mid-Term Outlook Based on the present macro-economic environment and current visibility, as well as the strongly improved results during the first half of 2016, Lonza is re- confirming the 2018 outlook of: CORE EBITDA approaching CHF 1 billion in 2018 CORE RONOA of 20% in 2018 ■Sales growth of low- to mid-single digit on average per year until 2018 Lonza 2016 Half-Year Results - 20 July 2016 Jul-16 215 22#23Capital Markets Day 2016 Lonza 26-27 October 2016 Portsmouth, New Hampshire (USA) ■ Agenda: Dinner with Executive Committee Strategy and Business Update Specialty Ingredients: ■"Extending Lonza's Role in the Healthcare Continuum" Pharma&Biotech: "From Gene to Patient" ■"Mammalian Update" → Register today! nza Lonza 23 2016 Half-Year Results - 20 July 2016 Jul-16#24Corporate Calendar of Events & Contacts ■■ 27 Oct 2016 Third-Quarter 2016 Business Update ■ 27 Oct 2016 Capital Markets Day in Portsmouth, NH (USA) ■25 Jan 2017 Full-Year 2016 Results ■■ 25 Apr 2017 ■ 26 Apr 2017 Annual General Meeting, Basel First-Quarter 2017 Business Update 27 Jul 2017 Half-Year 2017 Results Dirk Oehlers Investor Relations T +41 61 316 8540 F +41 61 316 9540 [email protected] Marco Ferraro Investor Relations T +41 61 316 8832 F +41 61 316 9540 [email protected] 2016 Half-Year Results - 20 July 2016 Lonza Jul-16 264 24#25Appendices Lonza 2016 Half-Year Results - 20 July 2016 Jul-16 26 25#26Corporate Half-Year 2016 Financial Highlights Lonza CHF mn Sales CORE EBITDA CORE EBITDA Margin 447 HY 2016 2,019 HY 2015 1,904 Change YoY 6.0% 391 14.3% 22.1% 20.5% CORE EBIT CORE EBIT Margin EBITDA EBITDA Margin 312 260 20.0% 15.5% 13.7% 443 375 18.1% 21.9% 19.7% EBIT EBIT Margin Financing Costs Tax Rate Profit for the Period EPS (CHF) Basic EPS (CHF) Basic CORE 292 1921 52.1% 14.5% 10.1% -51 -56 19.2% 19.0% 194 111 74.8% 3.70 2.12 74.5% 4.02 3.18 26.4% Operational Free Cash Flow 2642 299 - 11.7% Change in Net Working Capital - 59 15 Capital Expenditures - 151 -96 57.3% CORE RONOA 20.3% Net Debt 1,505 Number of Employees 9,931 16.1% 1,842 9,721 - 18.3% 2.2% Lonza 2016 Half-Year Results - 20 July 2016 Jul-16 20 26 1 Includes impairment of CHF 36 million, as well as settlement and write-offs of CHF 9 million related to the Kouřim site. 2 before acquisition CORE definition: see appendix#27Corporate CORE Results as Defined by Lonza Lonza Lonza believes that disclosing CORE results of the Group's performance enhances the financial markets' understanding of our company because the CORE results enable better comparison across years. Therefore, the CORE results exclude exceptional items such as restructuring charges, impairments and amortization of acquisition-related intangible assets, which can differ significantly from year to year. For this same reason, Lonza uses these CORE results in addition to IFRS as important factors in internally assessing the Group's performance. 2016 Half-Year Results - 20 July 2016