The Group achieved good revenue growth, excellent profitability and an outstanding cash flow, despite the difficult business environment characterised by persistent inflation, lower consumption and geopolitical instability. Performance was positively impacted by price increases and lower material costs.
Revenue increased by 2.8 per cent in 2023 to €15.7 billion, despite the -1.5 per cent impact from the divestment of Tetra Pak Russia. Growth was reported by every industry group with overall revenue growth by 7.4 per cent at comparable rates and scope. Despite declining consumption due to lower consumer purchasing power, we delivered good growth particularly in the US and Canada, Brazil, Mexico and Iberia.
During 2023 our donation of €10 million of humanitarian aid continued to support Ukraine, while we did our utmost to help Ukrainian customers maintain their operations. We continue to condemn the Russian invasion of Ukraine, we stand with those affected by the violence, and we support calls for an immediate ceasefire and for Ukraine to remain a sovereign and democratic state.
On behalf of the Board, I would like to express our gratitude to our dedicated employees for the outstanding performance and their commitment during yet another challenging year.
Tetra Pak – excellent performance
Revenue rose to €12.8 billion at prevailing rates, and an increase of 7 per cent at comparable rates and scope. Packaging Solutions sales rose by 5 per cent, to deliver 179 billion packs globally, while Processing Solutions and Services grew by 10 per cent and 12 per cent respectively.
Automation and digitalisation are key drivers to further optimise our customers’ operations – to help them to take faster and more precise decisions, especially in terms of equipment and performance, facility operation and integration. In China, we delivered equipment, automation and digital solutions to Mengniu’s new state-of-the-art mega dairy plant. Here efficiency is taken to a completely new level, meaning that just 100 employees can produce one million tonnes of dairy products annually. The plant was up and running within two years of the order being placed.
We made good progress on our ambition to create the world’s most sustainable food package, solely made from responsibly sourced renewable or recycled materials, fully recyclable and carbon neutral. An important milestone was the launch of our aseptic beverage carton featuring a paper-based barrier. This innovative solution expands the amount of paper and lowers the carbon footprint, while continuing to preserve the taste, appearance, and quality of the product inside across the supply chain from production to the consumer. This brings Tetra Pak one step closer to its ambition of a beverage carton made solely from responsibly sourced renewable or recycled materials, fully recyclable and carbon neutral.
To optimise customer operations, we launched the Tetra Pak® E3/Speed Hyper, which uses eBeam technology for packaging material sterilisation. The technology uses up to 30 per cent less energy, 45 per cent less water and 99 per cent less chemicals, while enabling a 10 per cent reduction in customer operation costs and providing the fastest filling machine in the aseptic carton industry.
In 2024, we expect Tetra Pak to increase sales but deliver slightly lower operating profit and cash flow following an outstanding 2023.
DeLaval – Fifth year of record sales
Total net sales increased by 2.8 per cent to €1.4 billion. At comparable rates and scope, revenue increased by 8.6 per cent. Most of the growth derived from price increases and the aftermarket.
Growth in capital equipment sales was driven by Automated Milking Systems. DeLaval’s operating margin reached an all-time high thanks to good volume development, price increases and pruning of the product portfolio. For example, DeLaval Cleaning Solutions in the US was divested as there was no customer overlap with DeLaval’s customer base.
New products launched during the year included the next-generation milking system DeLaval Rotary E500 that achieves 30 per cent more throughput and the OptiWagon autonomous feed distribution robot that promotes animal welfare by providing more frequent feeding. We also began offering the DeLaval Plus Behaviour Analysis, which is a digital farm management tool that uses sensors and Artificial Intelligence (AI) to help identify sick cows and cows in heat.
With most emissions from the dairy industry occurring at farm level, we can have a significant positive impact through our products and solutions. During 2023, we conducted a double materiality assessment and made a scope 3 downstream emission calculation with the aim to further optimise our customer offering. DeLaval also teamed up with Deere & Company (John Deere) to create a digital eco-system to help dairy farmers improve the efficiency and sustainability of their operations.
The expansion project at our demonstration farm, Hamra Farm in Sweden, progressed to create a state-of-the-art dairy farm with new barns, new automatic milking robots and more digital solutions with sustainability and animal welfare at its heart.
In 2024, we expect declining sales and operating profit due to lower demand caused by declining milk prices for dairy farmers. However, we expect a gradual recovery during the second half of the year.
Sidel – favoured by several trends
Revenue increased by 9.3 per cent to €1.6 billion, with an increase of 8.1 per cent at comparable rates and scope. Since the pandemic, there has been a huge demand among food and beverage producers to invest in packaging equipment and increase their production capacity, but the global shortage of components has significantly hampered delivery. Service sales increased by 11 per cent at comparable rates, as our customers maintained and improved their existing production lines.
Sidel is favoured by several trends. Firstly, the macrotrend of sustainability works in Sidel’s favour, with collection rates, recyclability and recycled content making PET and the aseptic solution an attractive packaging alternative. Secondly, the technology conversion from hot-fill to aseptic has gained momentum and is likely to continue. Finally, aseptic PET improved its competitiveness versus other packaging alternatives in 2023 thanks to the lower cost of resin and lightweighting. With world-class expertise in the design, blowing, filling and labelling of PET bottles, Sidel is well placed to benefit from these trends.
Indeed, we continue to be a recognised leader in optimised container design where we drive the sustainability performance of our customers’ packaging through our expertise and state-of-the-art laboratory in France for recycled PET. The innovative solutions we have developed include a breakthrough PET blower that produces resource-efficient and uniquely designed bottles with patented laser technology.
In 2023, Sidel acquired Makro Labelling Srl, an innovator and leader in modular labelling machines, based in Italy. Makro has enabled us to offer a complete range of labelling technologies to customers, and broadened our reach within the Food, Home and Personal Care, and Wine and Spirits markets.
During the year, we embarked on the implementation phase of Leading Excellence, our three-year transformation programme. The programme will make us a more agile and high-performance organisation. We also continued to optimise our industrial footprint by moving the manufacturing of two factories in France to existing Sidel factories and divesting the US Novembal cap factories.
In 2024, we expect Sidel to increase its sales, supported by a solid order backlog, and significantly improve its operating margin.
Growth, sustainability and innovation remain in focus for 2024
We forecast good revenue growth, but product volume growth will be more challenging given the decline in global consumer purchasing power. By introducing new innovative products, we will support our customers to give retailers and consumers an outstanding offer – and ultimately drive volume growth.
The theme of this year’s report is ‘Mitigating climate change in the food and beverage industry’. This is a key focus area for our sustainability agenda at Tetra Laval and all three industry groups play an important role in reducing CO2 emissions throughout the value chain. The food and beverage carton is the best package to minimise CO2 emissions. DeLaval enables dairy farmers to enhance their raw milk production and reduce their climate impact. Sidel’s leading position providing equipment for the production of PET bottles from recycled material is another example of our commitment.
During 2024, we forecast revenue growth, slightly lower profitability due to inflation and good cash flow.
Lars Renström