We are looking back at another successful year. Lonza (with Specialty Ingredients reported as discontinued operations) achieved CHF 4.5 billion in sales, CHF 1.4 billion in CORE EBITDA, and CHF 1.1 billion in CORE EBIT for the full-year 2020. These strong results reflect the continued positive momentum of the pharma and biotech business. We delivered on our guidance with 12.0% sales growth in constant currency (7.2% in reported currency). Our CORE EBITDA margin was 31.2%, resulting in a small margin decline of 50 bps which was anticipated and reflects the investments behind our growth initiatives.
The Swiss Franc appreciation against all our major currencies had a major impact on reported sales and led to a significant difference between the sales growth in constant currency and reported currency. However, balance sheet hedges and natural hedges mitigated the FX impact on margins.
Two other important KPIs - earnings per share (EPS) and return on invested capital (ROIC) - have seen an increase in 2020. We are pleased to have achieved a strong 6.9% year on year increase of diluted CORE EPS (CHF 12.19 for 2020) and a 9.6% ROIC, 40 bps ahead of the previous year. These strong results reflect our positive profit performance and an exceptionally low 8.8% tax rate – 1.1 pts below the prior year.
The tax rate was positively impacted by a combination of country profit mix and favorable one-time effects, including the impact of the adoption of Swiss tax reform, fully effective in 2020. We will now guide a tax rate for Lonza, excluding the Specialty Ingredients segment, of around 16% – 18% going forward.
In 2020, we increased the level of capital expenditure (CAPEX) investments to 19.7% of sales. Around 70% of our CAPEX was deployed on growth projects across businesses and geographies to drive long-term business growth. Examples include clinical mammalian capacity in Guangzhou (CN), mid-scale mammalian capacity in Portsmouth (USA), and different mammalian clinical and commercial modular facilities as part of our Ibex® Solutions in Visp (CH). All of these investments continue to build our enterprise value, as they carry attractive rates of return and ROIC levels of more than 30% after operations ramp-up. In addition, many of these investments are made against already partially or fully contracted commercial programs, leading to lower investment risk.
We have achieved an operational free cash flow before acquisitions of CHF 504 million in full-year 2020, resulting in a 36% increase versus the prior year, despite the higher levels of CAPEX investment. This exceptional result reflects the strong EBITDA improvement, continued tight net working capital management – which remained at around 16% of sales – and increased customer funding for some of the investment initiatives. With the positive cash flow result and the higher CORE EBITDA, our Net Debt to CORE EBITDA ratio decreased to 1.63 times2 by the end of 2020. We remain fully committed to maintaining our investment-grade rating, which is now more strongly underpinned by the favorable net leverage metrics.
All figures refer to Continuing Business, excluding the Specialty Ingredients business that was reclassified to discontinued operations
Based on Lonza Group figures, including the discontinued operations
Chief Finance Officer (CFO)
In a uniquely challenging year, our business has delivered a strong financial performance while effectively executing on key growth projects. By completing the carve-out and commencing the sale of LSI, we were able to focus on investing in our Pharma, Biotech and Nutrition portfolio while optimizing our productivity and cash management.
We continued to keep the bar high for the return on our growth capex initiatives. Once sales for these new assets ramp-up, the expected ROIC is typically more than 30%, helping us achieve our mid-term target of double-digit ROIC. Our cost and cash optimization programs have also helped us to partially fund these investments.
In the uncertain market conditions arising from the COVID-19 pandemic, we have also worked to safeguard our liquidity through increased committed bank facilities and the extension of debt maturity. We also undertook the refinancing of CHF 1 billion, which included a EUR 500 million inaugural Eurobond issuance, the first ever launched with a 100% virtual communication to our investor community.
We remain confident that we can maintain our strong momentum in the future. This confidence is reflected in our revised Mid-Term Guidance for 2023 and in our more granular external reporting, which will be updated to include divisional performance in the future. In order to achieve our Mid-Term Guidance, we will continue investing ambitiously in opportunities to support future growth while optimizing performance across the business.
Lonza provides the following Outlook for Full-Year 2021:
Lonza confirms its Mid-Term Guidance 2023:
Outlook 2021 and Mid-Term Guidance 2023 are based on the present business composition, existing visibility and constant exchange rates. While the businesses have shown a strong levels of resilience during the pandemic, all forecasts should continue to be treated with some caution at this time of global uncertainty arising from the COVID-19 pandemic.