Despite good revenue growth, we experienced a very challenging year regarding both profitability and cash flow. The Group’s sales amounted to €15.3 billion, which is a nominal increase of 11 per cent compared with 2021. At comparable exchange rates, sales increased by 7 per cent. However, operating profit decreased significantly, due to unprecedented increases in raw material and logistics costs as well as supply shortages. This in combination with a build-up of safety stock, resulted in a material decline in cash flow. The price increases required to compensate for cost inflation have been implemented gradually and during 2023 we expect to catch up.
The sanctions against Russia led Tetra Pak to exit the country after 62 years of presence. In our entire history, this is the first market to be exited. Sanctions have in the past exempted the food industry in order not to hinder the supply of basic food to ordinary consumers. We divested our business to local management and the new company now operates as an independent entity, under a new name and is not affiliated to Tetra Pak. During 2022, we donated €20 million in aid to Ukraine, and we did our utmost to help our Ukrainian customers to continue their operations.
Despite these challenges, we managed to deliver overall growth, particularly in India, Mexico, the Maghreb, and the middle East, while China declined as a result of COVID-19 lockdowns.
On behalf of the Board, I want to express our gratitude to our dedicated employees for the outstanding performance and their commitment during yet another challenging year.
Tetra Pak – strong revenue growth in a demanding market environment
Revenue rose to €12.5 billion which at comparable rates and scope is an increase of 8 per cent. Packaging solutions sales rose by 5 per cent, to deliver 193 billion packs globally, while Processing Solutions and Services grew by 8.1 per cent and 7.5 per cent respectively. For Services this followed 9 per cent growth the previous year – which is an outstanding achievement.
Automation and digitalisation are key drivers to further integrate and optimise our customers’ operations – to help them to take faster and more precise decisions, especially in terms of equipment operation and performance, facility operation and integration. An important step in this direction is our recently signed long-term development agreement with Accenture that will enable a step change in end-to-end automation.
We made good progress on our journey to develop the world’s most sustainable food package by testing a new fibre-based barrier with the aim to replace the aluminium layer – a first within food carton packages distributed under ambient conditions. We became the first carton company in the food and beverage industry to launch a cap made from certified recycled polymers. We also partnered with leading beverage brands across Europe to launch the world’s first tethered caps on carton packages, to help prevent litter. To advance carton collection and recycling, we invested over €20 million in different projects around the world.
In 2022, one of the biggest organisational transformations ever was completed that will fundamentally change the way we operate. This will enable us to optimise our operations, promote flexibility, ensure shorter lead-times and reduce costs.
During 2023, we forecast good revenue growth, significantly increased profitability and strong cash flow by effectively managing the supply chain, cost and pricing structure.
DeLaval – Fourth year of record sales
Total net sales amounted to €1.4 billion, which is an overall increase of 11 per cent. At comparable rates and scope, revenue increased by 8 per cent, which was equally distributed between capital equipment and aftermarket business. The growth of capital equipment was driven by Automated Milking Systems. However, a significant portion of the growth derived from price increases. The decline in operating margin was mitigated by the pruning of the product portfolio in recent years, productivity improvements and strong growth of our recently launched new products.
New products launched during the year included more versions of our E-series rotary milking parlour that provides even greater efficiency. We also introduced new improvements to our very successful robotic milking series VMS™ V300, as well as our revolutionary Evanza™ milking cluster, which is not only faster and more efficient, but is better for cows and farm employees.
At our demonstration farm, Hamra Farm in Sweden, the decision was taken to invest in a big state-of-the-art dairy with new barns, new automated milking robots and more digital solutions. The farm serves as a showcase and as an R&D centre where we test our products.
In early 2023, we divested DeLaval Cleaning Solutions in the US, as a result of our product portfolio review. There was no customer overlap with DeLaval’s customer base. In 2023, we expect continued net sales growth and improved profitability based on actions taken in 2022 and a solid order backlog.
Sidel – record high order intake
Revenue increased by 2 per cent to €1.4 billion thanks to favourable exchange rates. At comparable rates and scope, revenue decreased by 2 per cent. Following the pandemic, there has been a huge demand among food and beverage producers to invest in packaging equipment and increase their production capacity. Sidel therefore had a very high order intake, but the global shortage of components significantly hampered invoicing. Order intake for capital goods increased by 3 per cent, which slightly surpassed an already outstanding 2021. Even more encouraging was the increase in service sales, up 11 per cent at comparable rates, as our customers needed to maintain and improve their existing production lines. Despite the challenges, Sidel achieved a positive operating result, excluding restructuring costs. We can conclude that Sidel has managed to develop into a more robust company compared to previous macroeconomic crises.
Concerning innovations, we launched Aseptic PredisX4, which is an integrated blow-fill-cap solution that incorporates consolidated Predis™ dry preform sterilisation. We also developed 1 SKIN™, a label-less recycled PET bottle with a tethered cap and a unique streamlined design for sensitive beverages.
It is made from 100 per cent recycled PET (rPET) and was awarded Best in PET by the 2022 Global Water Drinks Award.
In early 2023, Sidel acquired Makro Labelling, Srl, an innovator and leader in modular labelling machines, based in Italy. Makro is the perfect complement to add to our existing labelling business, enabling us to offer a complete range of labelling technologies to customers, and broadening our reach within the Food, Home and Personal Care, and Wine and Spirits markets.
In 2023, we expect Sidel to grow sales, thanks to a solid order backlog, provided that components are available. An improvement in operating result is also forecasted.
Growth, sustainability and innovation – remains in focus for 2023
We forecast good revenue growth, but product volume growth will be more challenging given the decline in purchasing power among consumers globally. By introducing new innovative products, we are committed to supporting our customers in giving the retailers and consumers an outstanding offer – to ultimately enhance volume growth. In addition, we will continue our high investment levels in sustainability, digitalisation and a stronger local presence in certain markets.
The theme of this year’s report is food accessibility. For decades, our aseptic technology has made safe food accessible to more people around the globe, without the need for preservatives or refrigeration.
During 2023, we forecast good revenue growth, significantly increased profitability and strong cash flow as a result of measures taken in 2022 and a solid backlog.
Lars Renström