We experienced continued resilience of the Group and we are pleased to report that all three industry groups exceeded expectations given the specific conditions they operated under. The Group’s net sales amounted to €13.8 billion, which is a nominal increase of 4.7 per cent compared with 2020, despite the strengthening of the Euro, especially versus the US dollar. At comparable exchange rates, sales increased by 5.1 per cent. However, operating profit decreased, due to unprecedented increases in raw material costs, supply shortages and logistic costs partly mitigated by price increases and structural cost reductions. The Group generated a strong cash flow, thanks to lower working capital and lower cash outflows on business acquisitions.
“We are ramping up our investment levels as we are launching significant investments in sustainability, digitalisation, and stronger local presence in certain markets to provide even greater levels of service.”
We did not experience any significant negative impact due to the pandemic but rather saw growth in many markets, particularly in China, India, Vietnam and the US. Despite the disruption brought about by the pandemic, we managed to support customers in various ways to mitigate the impact in their operations. The rapid progress in utilising digital tools and remote working continued. Digitalisation has allowed us to install and validate customer equipment and quickly solve customer problems – all remotely. Efficiencies and new ways of working driven by the response to COVID-19 are expected to continue after the pandemic.
On behalf of the Board, I want to express our gratitude to our dedicated employees for the outstanding performance and their commitment during a challenging year.
Tetra Pak – Strong growth of packing material
Total net sales amounted to €10.8 billion, which is an overall increase of 4.1 per cent excluding currency effects compared with 2020. Packaging Solutions sales rose by close to 5 per cent, with the number of packs increasing by a similar amount, ending the year with 193 billion packs.
Processing Solutions net sales increased by 0.5 per cent, while orders received were at an all-time high, securing a solid backlog. The Services business recorded net sales growth of 9 per cent, which was a great achievement, considering the effect of restrictions on the movement of people.
We continued to lead the sustainability transformation within the industry, achieving many new milestones. Our packages are today made from around 70 per cent renewable materials, which means a lower climate impact compared with other packaging solutions. Together with our partners, we continue to drive recycling and circularity through a range of activities across the value chain in markets around the world, including co-investments in increased recycling capacity, validation tests for non-foil packaging and a switch to paper straws in the EU.
To improve the availability of ‘smart’ packaging for the food and beverage industry, we installed a new digital printer in the US. In 2021, we delivered over 1.2 billion connected packages with unique QR codes to enable traceability and unique consumer interactions. Other innovations included new high-speed packaging lines that can produce up to 40,000 packages per hour.
The pandemic has proved the resilience of Tetra Pak as a company, but also highlighted how we can become an even more dynamic, productive and capable company. We are now laying the foundations for the next chapter of the 70-year Tetra Pak story, with a new operating model that will fundamentally change how we operate. This will enable us to optimise our operations, promote flexibility, ensure shorter lead times and reduce costs.
In 2022, we expect to see good top-line growth across all our businesses, supported by visible improvements in priority areas such as quality and sustainability. However, key supply shortages such as for semiconductors create uncertainty and require us to be far more agile to address customer demand.
DeLaval – Third year of record sales and profitability
Total net sales amounted to €1.2 billion, which is an overall increase of 5.5 per cent excluding currency effects compared with 2020. Our business was driven by a strong global market demand for milk, with an increase in the home consumption of dairy products that more than compensated for the effects of schools and restaurants being in lock down around the world. Sales of our rotary parlours grew by almost 50 per cent, primarily driven by strong demand in China and the US, where customers invested in new capacity to meet the growing demand for milk. In China, the increased self-sufficiency of milk production imposed by the authorities, played an important role. We also saw a strong demand for DeLaval VMS™ V300 and V310, our robotic milking systems, as well as our various inService™ concepts where our subscription models grew significantly for dairy consumables. Automatic milking became even more relevant during the pandemic given the difficulties of having personnel on farms.
New ways of working were introduced to keep farms running and maintain their operations. For example, we installed and commissioned equipment at dairy farms remotely through digital tools and advice from engineers thousands of miles away – something that would have been inconceivable just a few years ago. Several new products were launched in 2021. The work to invent truly sophisticated digital services with sensor technologies also progressed well.
After 18 years of outstanding performance as CEO, Joakim Rosengren decided to step down. He was succeeded by Paul Löfgren, who is a seasoned industrialist with a broad experience that has worked at DeLaval for the last 10 years.
Our innovative product portfolio in combination with the subsidy programmes that remain in place in the EU until mid-2022 mean that we anticipate continued growth.
Sidel – Strong recovery exceeding expectations
Sidel exceeded expectations in net sales, order intake, operating profit and cash flow in 2021. Net sales amounted to €1.4 billion, an increase of 13 per cent at comparable exchange rates and the service growth of 12 per cent was quite an achievement. Through an efficiency programme, we managed to substantially reduce costs and thereby improve operating profit. Order intake increased by 42 per cent for capital goods and 11 per cent for services. The packaging market started to rebound in the fourth quarter of 2020 and the positive trend continued throughout 2021, with consumer demand back to 2019 levels for most categories. Health and nutrition remain a priority for consumers, which boosted demand for products like flavoured water and dairy. The interest in ‘water on the go products’ also returned as well as aseptic bottles for healthy products, especially in the US. In terms of packages, PET enjoyed a strong demand with a particular interest in recycled (rPET). In 2021, demand for both PET and can exceeded 2019 levels.
During the pandemic, we accelerated our application of digital services with the launch of the Evo-ON® digital suite and remote services for the installation and servicing of machines at customer sites. We have developed a new aseptic PET line solution that lowers the CO2 footprint through a more efficient use of resources and new bottle washers that allow less water and chemical use. Sidel has also set up a pilot-scale PET recycling line in Octeville, France, to support customers with the transition from PET to rPET (recycled PET).
In 2022, we expect sales to remain unchanged, despite a large backlog, due to the shortage of electronic components.
Growth, sustainability and innovation – remain in focus for 2022
Several of our customers are struggling with subdued growth and profitability due to changing consumer behaviour, combined with the inflationary effects of the pandemic. Our commitment is to support our customers to introduce more innovative products at competitive prices – to ultimately generate growth for them. Indeed, innovation is the foundation for our long-term success in our industries. We are ramping up our investment levels as we are launching significant investments in sustainability, digitalisation, and stronger local presence in certain markets to provide even greater levels of service.
The consequences of lack of semi-conductors, higher raw material prices and inflation makes it impossible to fully determine but the impact on customer demand and supply chains will be material.
We expect that the world will have to live with the effects of the pandemic during 2022 and forecast that sales will see mid-single-digit growth while operating profit will decline somewhat as we have not yet fully compensated for the material cost inflation.
The theme of this year’s Annual Report is Sustainable Food Systems. Creating sustainable food systems has long been our mission and we offer some of the most sustainable processing and packaging solutions on the market – in terms of climate impact, biodiversity, circularity and food waste – and we are committed to making our offerings even more sustainable. We also enable farmers to do more with less and reduce the environmental impact of every litre of milk they produce.
Lars Renström