Despite challenging market conditions, Sidel maintained sales of EUR 1.4 billion in 2018. After a weak start of the year, our order intake regained normal levels during the second half, particularly in our PET and aseptic business. By keeping costs under control and continuing our strategic initiatives, we ensured that our profitability remained stable – despite the difficult market environment. The strategy we defined three years ago and the steps taken in 2018 have positioned ourselves well to continue our Performance through Understanding journey with our customers. We provide advanced solutions and services for PET, can and glass packaging equipment and lines – and contribute to the improvement our customers’ performance. Sidel also launched several product innovations in 2018 that were very well received within the industry.
In 2018, the beverage, food, home and personal care market segments reported sales of more than 3,000 billion units of consumer-packaged goods – an increase of approximately 2 per cent compared with the previous year. PET continues to grow, clearly representing the packaging material of choice. It accounts for about 20 per cent of total consumer packaged goods, while the development for glass and can is relatively flat. While the total number of packages is growing, customer investment in bottling equipment is much more reserved. The reasons for this are twofold. First, technological advances make new lines more efficient and faster, thereby absorbing the increased production of packages. Second, packaging producers try to fully exploit their current assets.
From a geographical perspective, we had mixed performance. In North America, we captured less business in PET equipment. The same trend applies to can filling equipment in South America. Our sales in Europe continued to be strong for PET in all the categories we serve: beverages, food, home and personal care products. These positive figures do not apply to the brewery business, a very concentrated market that has shown low investment levels in 2018. Sidel enjoyed growth in Asia. China in particular offered interesting opportunities for our ultra-clean and aseptic technologies for sensitive products in PET. In the Chinese market, liquid dairy products (LDP), soy-based drinks, natural juices and nectars are increasingly requested by consumers.
Finally, in Africa, the CSD (carbonated soft drinks) category shows a positive trajectory, and we are perfectly positioned to serve our customers active in this market, particularly via our Actis™ system - the unique plasma coating solution that extends the shelf life of beverages bottled in PET, while enabling package lightweighting.
In 2018, we also strengthened our fillers portfolio with the new EvoFILL Can and EvoFILL Glass, offering high-quality products at an advanced performance level to beverage producers in the can and glass segments. We also introduced the EvoDECO labelling portfolio. This re-design of the labelling process within our Super Combi – launched in 2017 – helped us to combine total flexibility and unmatched performance, for efficient and high-quality label application. Although it is still early in the life cycle of these new solutions, they have been greatly appreciated by our customers.
Packaging remains a key differentiator for our customers. From the beginning, Sidel has had deep expertise in packaging design and industrial solutions development. This has an impact both in the way we deal with new capital equipment sales and the way customers invest in new production capabilities. A key quality of PET is that it allows for changes in packaging design according to market trends and developments. We continued strategically leveraging our strength in packaging with our acquisition of PET Engineering in 2018. We can now channel a wider set of competencies when it comes to design aspects, thereby addressing a broader spectrum of customer needs.
The total number of packages in the global market is growing. Analysts forecast that an additional 237 billion packages will be sold by 2021, representing an annual growth rate of 2 per cent. This development is related to population growth in urban areas and the fact that average spending power is increasing, fuelling growth of fast-moving consumer goods and thus, the total packaging market. However, environmental aspects are becoming more important for legislators as well as consumers, which is why a circular approach to packaging is key and provides Sidel a large opportunity.
PET offers clear advantages, particularly compared to other plastic packaging materials. Its lightweight potential, virtually unlimited design flexibility, and – of course – recyclability make this packaging material a very sound choice. The current discussion regarding single-use plastics and higher recyclability targets will undoubtedly support positive PET development. Conversion to PET is currently a visible trend in Europe, and is gaining momentum in other parts of the world.
The search for a healthier lifestyle also benefits Sidel. Consumers are looking for healthy and nutritional products, sourced from natural ingredients and bottled through processes that help maintain the quality of the ingredients. The growing demand for drinks with higher nutritional content and without preservatives also gives good growth opportunities for Sidel in selected segments, such as LDP and juices, nectars, soft drinks, isotonics and teas (JNSDIT). Customers active in those markets increasingly turn to Sidel, trusting our extensive experience in aseptic PET packaging.
"The search for a healthier lifestyle also benefits Sidel. Consumers are looking for healthy and nutritional products, sourced from natural ingredients and bottled through processes that help maintain the quality of the ingredients."
As part of Sidel’s strategy to improve our customers’ performance, we have made considerable progress in integrating Industry 4.0 to our offering. This digitalisation trend is a true enabler of performance in our customers’ plants. We want to take a very practical approach and use our technology to support daily operations as well as to analyse trends and propose upgrades adapted to our customer’s needs. Using data collected from production lines and combining it with our built-in-machine intelligence, we can offer our customers better visibility and accuracy for improving their performance.
One of several good examples is our market-leading data acquisition and plant intelligence system, EIT® (Efficiency Improvement Tool), which continues to be a success. It is ideal for maintaining and improving performance throughout the life cycle of the packaging line, and is designed to ultimately decrease unplanned downtime. This reduces waste and costs and increases plant output, giving real-time access to relevant and actionable information about production-related issues.
As 2019 started slightly better than last year, I expect further positive development of our business this year. I am also confident that the continued implementation of our strategy, and the fact that our organisational setup is now well aligned with this implementation, will help us perform better. Greater emphasis on our clients’ agendas through larger representation of customer-facing staff within our Global Leadership Team will help us deepen customer understanding and improve our agility when adapting to their requirements. By acting as one team, our customers gain more-direct access to our full portfolio of solutions across categories and products, and have more-aligned points of contact.
Moving forward, we will continue to leverage our leadership in aseptic PET applications to pursue favourable market demands, while gaining further traction in the food, home and personal care (FHPC) segment. Another clear objective is to continue growing our Services offering, by further supporting our existing customers with their installed base and byi increasing the range of service products to enable our customers to adapt to changing market needs. As always, we remain dedicated to the continuous improvement of our cost structure, driving productivity in our industrial base as well as with our suppliers. Therefore, 2019 should be a year of continued improvement for Sidel.
There is one final change I like to mention. After 35 years in the Group, I have now decided to step down as per 1 July 2019. I am very pleased that the Tetra Laval Group Board has appointed Monica Gimre as my successor. I know Monica very well as we have been colleagues for many years. Her extensive experience from Tetra Pak Processing Systems is highly relevant to the Sidel business.
I am looking at my time in Tetra Laval with gratitude and pride. Working in a Group where you can always be proud about what we do and how we do it. Working with highly competent and committed colleagues and having the benefit of interacting with our customers, established companies securing the continuation of their success as well as entrepreneurs building world class companies.
You cannot have a better working life than that. My sincere thanks to my colleagues and to the Board for allowing me this experience.