SHV Energy is a leading global distributor of off-grid energy including LPG, small-scale LNG, and biofuels. As a major player in the energy transition, the company provides decentralised, low-carbon, and clean energy solutions for business and residential customers in 25 countries across four continents under the Calor Gas, Ipragaz, Liquigas, Primagaz, and Supergasbras brands among others.
The long-term strategy of “Advancing Energy Together” incorporates organic and inorganic growth of the core business, productivity improvement, and the development of sustainable fuels and selected renewable energy services. Internally, the strategy unites the organisation’s business units to identify and solve common challenges and leverage mutual opportunities.
From the start of the COVID-19 crisis, business has focused on protecting the health and well-being of employees and customers, providing uninterrupted services to customers as far as possible, and safeguarding the financial health of the company. Maintaining an uninterrupted supply was achieved thanks to the speed with which all business units adapted to the rapid changes in ways of working.
To supplement local health authority measures, a global SHV Energy COVID-19 protocol was put in place to ensure operating methods adhered to the correct standards. Colleagues showed resilience and flexibility by quickly adapting to the new ways of working whether from home, at the plant, or on-site with customers.
The impact of COVID-19 restrictions on volumes varied according to customer segment and region. Demand from the industrial and commercial segments declined significantly in the first half of the year, particularly in India and the UK. At the same time, the domestic segment remained strong as people stayed and ate at home – with demand even surging in countries with high levels of cylinder-based domestic cooking, such as Brazil. Low LPG prices offered scope for margin management, leading to higher margins.
The pandemic also created significant volatility in the commodity markets for crude oil and LPG, yet thanks to the continuous efforts of the Supply & Risk Management team the effects were successfully mitigated.
The drive to optimise the business was underpinned by a number of “Advancing Energy Together” projects. 2020 saw the roll out of large scale tank telemetry devices, and an in-house data platform, as the basis for smarter logistical planning and better customer service. An internal digital marketing agency was also set up to improve lead-generation and customer acquisition across business units.
Eight acquisitions were finalised over the year to strengthen the core LPG position in existing markets including the USA, Italy, and Spain. Activities in the Netherlands, meanwhile, will be divested on approval from the Dutch competition authorities. The restructuring of US activities progressed smoothly with the sale of the cylinder business and a shift of focus onto the more promising commercial segment in the Texas area.
The innovation programme expanded with more business units joining the journey. Alongside established themes such as customer experience, new business models, and smart operations, safety also became a main priority.
One specific innovation goal was a reduction in the need to handle cylinders by hand – and in the number of incidents associated with this activity. The results were encouraging and led to a number of simple but intelligent ideas that have made a positive impact.
Digital innovation represents another priority. A dedicated programme was set up to accelerate the implementation of learnings from the crisis, particularly those relating to digitalisation and the use of data insights. An incubator supported the business units in speeding up their work in this area and over 125 ideas were generated, many of which continue to be worked on. For example, Tank Finder uses Google Maps to locate tanks quickly, helping sales representatives double their number of customer visits. Tank Finder was implemented by Pinnacle USA. Elsewhere, digitisation of the installation process is being piloted by Primagas Spain.
The sustainability agenda also made good progress over the course of 2020. As part of the drive to develop sustainable fuels, a first patent for a potential new way to produce LPG was filed - one which shows great promise for the future. Signing new contracts with European biorefineries increased bioLPG capacity in order to meet growing demand.
As a first step into the energy efficiency service segment, and in line with the long-term strategy, SHV Energy acquired a majority stake in EM3, an energy efficiency specialist based in Ireland. EM3 advises industrial companies on the best ways to optimise their energy usage to reduce emissions and improve cost efficiencies. A good start has already been made in identifying cross-sell opportunities between EM3 and LPG business units.
Further steps were taken to expand and deepen sustainability reporting, while an Assurance Readiness Assessment of CO2 emissions provided valuable insights into ways to increase the reliability and efficiency of the reporting process.
A broader approach to the crucial issue of the health and safety included the development of the CARE programme. The programme aims to both embed ‘the safety habit’ within the organisation and transform safety culture as a whole. SHV Energy also participated in the first global Health and Safety Week, as part of an SHV-wide initiative involving hundreds of activities across all business units.
As SHV Energy is active in a variety of businesses in a large number of countries, it has to deal with a wide range of laws and regulations. To enhance awareness and minimise and manage Ethics & Compliance risks, a revised Code of Conduct and a Supplier Code was implemented in 2020. The Code and the Ethics & Compliance policies and procedures cover topics such as – but not limited to – anti-bribery & corruption, competition law, trade sanctions & trade controls and privacy. To create awareness, mandatory training on such topics is provided.
As well as dealing with the day-to-day realities of the pandemic, management teams also continued to push diversity & inclusion. Increasing the number of women in management positions and promoting national diversity in management teams both represent key priorities, with the ambition for every management team to include at least one different nationality almost achieved.
Operational performance remained strong in 2020. Total volumes decreased compared to 2019 due to the impact of COVID-19 restrictions. The closure of restaurants, restricted movements, and other governmental measures all took their toll on the industrial and commercial segments. The impact was largely offset, however, by strong domestic volumes, mainly in Brazil. Higher margins and active cost management also contributed to strong results.
Increased bioLPG capacity