Home Annual report Tetra Pak Comments by the CEO

Comments by the CEO

“2020 highlighted the essential role food packaging plays in feeding the world – by helping to keep food safe, nutritious and available for people everywhere – in a responsible, sustainable way.”

A challenging year that validated our purpose and strategy

2020 was a truly unprecedented year, as COVID-19 affected business operations and communities worldwide. Despite the disruptions brought about by the pandemic, it strengthened our sense of purpose and role in society like never before – to help keep food safe, nutritious and available for people everywhere.

Throughout the crisis, we are unrelenting in our commitment towards our promise to protect what’s good, focusing on two priorities: to protect people, including our own employees and those of our customers and stakeholders – as well as to protect food, by helping our customers maintain continuous food supplies.

The pandemic also validated our business model and strategy, and demonstrated how resilient our supply chain is – from packaging and equipment, to spare parts and services. We took extraordinary measures to ensure that our operations continued throughout 2020, providing uninterrupted supplies of packaging material and spare parts to our customers.

We quickly adapted to the pandemic by expanding remote support services to our customers and actively deploying digital technology to provide virtual solutions, including for activities such as product trials and equipment installations.

I am proud that we acted decisively on all the measures we took, to proactively support our customers who consider us to be a reliable supplier.

Business results 2020

Total net sales amounted to €10.8 billion, which is an overall decline of 1.9 per cent compared with 2019. At the same time, we managed to increase our market share and improve our cashflow compared with last year, driven by a strong operating profit and a significant reduction in receivables. We achieved great results on productivity, delivering a reduction in resource costs for the first time in many years. The Packaging Solutions business experienced a 1.4 per cent drop, with number of packages declining by 3.7 per cent, ending the year with 184 billion packages delivered.

This was largely driven by changes in consumption patterns during the pandemic, with an overall decrease in demand across our core categories, even as we saw a reduction in ‘on-the-go’ consumption offset by an increased demand for ‘in-home’ packaging.

Processing Solutions net sales declined 4.5 per cent due to customers postponing investment decisions as well as delayed installations caused by lockdowns.

The Services business recorded net sales growth of 1.6 per cent, which was a great achievement by the team, considering the effect of lockdowns and restrictions on the movement of people. Our services played an important role in ensuring customers could maintain their operations during the pandemic.

From a geographical perspective, the Americas was the only cluster that saw a growth in sales – increasing by 1.3 per cent. Asia Pacific, Europe & Central Asia, and Greater Middle East and Africa declined by 3.7 per cent, 0.5 per cent and 3.3 per cent respectively.

Key developments

To strengthen our long-term competitiveness, strategic acquisitions included the eBeam technology development and manufacturing operations from a globally leading firm will further improve our ability to deliver sustainable and higher efficiency filling lines. Another acquisition was the asset management company Gaussian, which will enable us to boost efficiency and productivity for food and beverage producers through an informed ‘data-­driven’ approach.

In 2020, we continued to drive more ‘Industry firsts’, including the Tetra Pak® Tubular Heat Exchanger equipment that became the first tubular heat exchanger to receive the EHEDG certification, meeting the leading food safety standards in Europe. We also launched a new, first-of-its-kind low-energy processing line for juice, nectar and still drinks that reduces energy consumption by up to 67 per cent and water by up to 50 per cent. Additionally, it was an honour to receive the top awards for manufacturing excellence for our Lahore and Hohhot factories at the prestigious TPM awards.

Driving Sustainability

Sustainability has always been at the heart of our business strategy and our operations. During 2020, we continued to lead the sustainability transformation within the industry, achieving many new milestones. We sold more than one billion Tetra Rex® Plant-based packages globally – the world’s first carton package made entirely from renewable materials. We have produced over 12 billion bio-based caps made from plant-based polymers, ever since their first industry launch in 2011, and have since then saved more than 300,000 tonnes of CO2 emissions with the introduction of plant-based polymers. We ensured that all our packaging material factories are supplied with paperboard from 100 percent Forest Stewardship Council® certified and other controlled sources. This further strengthens our voluntary certification standards, which includes Bonsucro – the industry’s first certification of fully traceable plant-based polymers.

We continued our focus on mitigating climate change – not only with our low-carbon packaging solutions – but also through our commitment to achieve net zero greenhouse gas emissions in our own operations by 2030. Last year, Tetra Pak became the only company in the carton packaging sector to be included in the Carbon Disclosure Project (CDP) leadership band five years in a row and to score an outstanding double ‘A’ for climate and forests.

During the year, we launched a comprehensive sustainability campaign – ‘Go nature. Go carton.’ – signifying our ambition to create the world’s most sustainable food package. The campaign aims to showcasing the value that our packaging can bring to society. Additionally, for the first time ever, we established an external sustainability advisory panel with six key opinion leaders from around the world, who will help shape our sustainability agenda.

Future growth and opportunities

We expect to grow all our three businesses in 2021 despite economic volatility, realising some key quality investments, which will translate into clear customer benefits and greater productivity. Our digitalisation journey will continue to be an enabler for our business – driving productivity and improving how we do business. We will continue to make significant investments in R&D, particularly focused on sustainable packaging that is fully renewable, fully recyclable and carbon neutral. As the pandemic continues, protecting our people will remain a key priority, with increased focus on mental well-being, besides safeguarding their physical health.

Looking forward, one of the main challenges that the industry will need to adapt to is the long-term changes to consumer behaviour, including more people working from home, and greater interest in local and healthy products. This will affect the demand for our products and services, although I am confident that our business has the depth to thrive even in these changing market conditions. In addition, I see significant growth opportunities in India and China; in growing categories such as plant-based, culinary, cheese and specialised nutrition products; in advanced Services solutions; and in food packaging with Tetra Recart®.

2020 highlighted the essential role food packaging plays in feeding the world – by helping to keep food safe, nutritious and available for people everywhere – in a responsible, sustainable way. Together with our customers, employees and partners, I look forward to continuing to help meet the needs of people and the planet in 2021.

Adolfo Orive​