SHV’s financial performance over 2020 resulted in a net income of € 469 million (2019: €428 million), with capital gains from the sale of Makro stores in Brazil and the sale of Makro Peru offsetting the negative impact of COVID-19 across most Groups and the costs of right-sizing the business for the future.
Net sales in 2020 amounted to € 16.7 billion, a decrease of 12.8% compared to last year (2019: € 19.2 billion). The devaluation of, amongst others, the Brazilian real, the Argentina peso and the Turkish lira against the euro caused a negative effect on sales of € 1.3 billion. Adjusted for foreign currency translation effects, sales decreased by 6.5% driven by all Groups except for Nutreco and Mammoet, following the acquisition of ALE. Pending approval for the sale, Makro already closed 44 stores in Brazil at the beginning of the year, negatively impacting sales. SHV Energy reported significantly lower sales following the steep drop in gas prices. Low LPG prices offered scope for margin management, leading to higher margins.
Income from operations of € 602 million, increased with € 297 million compared to 2019 (€ 305 million). In both years, income from operations was significantly impacted by a number of exceptional items (2020: € 214 million, 2019: €-236 million). Adjusted for these exceptional items, income from operations in 2020 totalled € 388 million (2019: € 541 million) in a year that saw an impact from the global pandemic as well as a steep drop in oil & gas prices following uncertainty in the markets, lockdowns, mobility constraints, business closures, and a fall in customer activity.
Adjusted for exceptional items and a negative foreign currency translation effect, operational performance varied across the Groups. SHV Energy improved performance despite lower sales, thanks to the combination of higher margins and strict cost control. Nutreco performed slightly below last year. After a strong start to 2020, the animal feed business in particular felt the impact of COVID-19, mainly due to closure of restaurants. This was partially offset by strong demand for shrimp feed. Makro results also fell, again due to COVID-19 restrictions such as restaurant and store closures and the restricted movement of end-consumers. Mammoet, ERIKS and ONE-Dyas were also significantly affected by COVID-19 and lower oil & gas prices. A significant fall in sales was followed by reorganisations and adjusted capital expenditure. NPM capital was unable to make a positive contribution to net income, with planned exits postponed to 2021 in the face of increased market uncertainty as result of COVID-19.
In 2020, the effective tax rate increased from 18.2% to 22.1%. This was mainly the result of lower non-taxable capital gains and dividends under Dutch participation exemption rules, and non-recoverable withholding tax charges. The effects were partly offset by the recognition of previously unrecognised deferred tax assets linked to tax losses and timing differences. In Switzerland, these relate to the sale of Makro Peru, in Brazil to the sale of Makro stores outside São Paulo and in the Netherlands to increased opportunities for utilisation.
SHV Energy, Nutreco and Mammoet represented the main contributions to the operational cash flow of € 1,063 million. Investment cash flow amounted to € 704 million (2019: € 619 million). In 2020 proceeds received from divestments amounted to € 745 million, driven by the sale of Makro stores outside Sao Paulo and Makro Peru. Working capital reduced by € 345 million across all Groups to preserve cash and adjust to lower sales as a result of COVID-19.
A total of € 591 million was invested in operational fixed assets, mainly in gas cylinders and tanks at SHV Energy, heavy lifting and transport equipment at Mammoet and in production lines and facilities at Nutreco. Mammoet acquired ALE, the third largest player in the global heavy lift market, to strengthen its position in the industry. NPM Capital invested in Agrocare, Europe's largest tomato producer and Futurewhiz, a digital developer of educational applications for children. NPM Capital also increased stakes in Ohpen, a fast growing fin-tech company and Groendus (formerly Rooftop Energy), a specialist in rooftop solar energy, as well as making several smaller investments.
By the end of 2020, SHV's Group equity amounted to € 6.4 billion (2019: € 6.5 billion). The total negative effect of converting shareholders’ equity from local currencies into euros came to € 324 million. Total liquidity amounted to € 1.2 billion, and net debt was € 300 million. The return on shareholders’ equity was 7% (2019: 7%).
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