ARJ Arch Chemicals

Swiss chemicals maker Lonza Group AG (LONN.VX) Wednesday reported a 28.1% drop in first-half net profit due to the strong Swiss franc, but said that revamp efforts, its recent acquisition of U.S. peer Arch Chemicals Inc (ARJ) and healthy industry demand should allow it to reach its full-year targets.

The Basel-based company said net profit for the six months to end-June fell to 97 million Swiss francs ($120.9 million) from CHF135 million a year earlier, slightly below analyst forecasts of CHF99 million. The strong franc, Lonza's reporting currency, also hit sales, which fell 8.3% to CHF1.19 billion from CHF1.30 billion. The figure also failed to meet views.

Lonza Chief Executive Stefan Borgas said that without the currency hit underlying growth was solid, and he was confident for the months ahead.

"Looking forward, our pipeline looks promising, our capacity utilization is improving and our growth projects are moving forward," he said. "I am particularly excited by the opportunities that our newly focused strategy will allow us to capitalize on, not least the offer for Arch which is proceeding to plan and we expect to complete later this year."

Lonza earlier this year had warned that the strong franc, which has risen sharply against the euro and the dollar during the ongoing sovereign debt crisis, would shave off around CHF70 million of its full-year profits. To reduce its dependence on Switzerland, where Lonza incurs a substantial part of its costs, it has agreed to buy U.S. biocides maker Arch Chemicals for $1.2 billion.

-By Goran Mijuk, Dow Jones Newswires, +41 43 443 80 47; goran.mijuk@dowjones.com

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