The year 2020 was undoubtedly the most unexpected and turbulent one in recent history. At the beginning of January we were all optimistic and looking forward to what seemed to be a good year for SHV. The oil & gas markets were showing a slow recovery and despite the trade wars and Brexit uncertainties, global economies were starting to get in shape. A virus that was infecting people was far away and nobody could imagine how this would affect the world in the way it turned out. Then the virus started spreading and we all entered a complete new reality.

In these difficult times, it is even more important to have a common purpose that unites us. SHV has always placed an emphasis on strong values - values that guide us in every aspect of the business. Although we are all aware of these values, we saw the time has come to make them more explicit. This resulted in the ‘Purpose Journey’ that took place in 2020. The aim was to define a clear proposition that gives direction to SHV and the Groups, unites our organisation, and reinforces our proposition to all stakeholders. This journey encompassed numerous colleagues across all Groups over the course of the year. We conducted extensive surveys to define our starting position. A series of webinars then provided the opportunity for colleagues to share their personal stories and insights, ask questions and state opinions. These sessions were followed by conversations within the Top 100 and, as our purpose began to take shape, with a representative group of SHV-wide employees.

As the end of the journey, the new purpose was revealed at the annual management Top 100 meeting:

Courage to care for generations to come

The courage to care means a promise to shape the future, not simply adapt to it. For everyone at SHV, every day provides the inspiration to create a better tomorrow for generations to come. This promise goes beyond a theoretical set of values, the purpose is underpinned by the courage to act - even if that means making tough decisions and facing tough choices.

From the start of the pandemic, the health and safety of all colleagues has been the number one priority. In line with government restrictions, at SHV Holdings and the Groups extensive safety measures in stores, factories, filling plants, distribution centres and offices were implemented immediately to ensure a safe working environment. However, despite all measures and precautions that were taken, to our utmost regret throughout SHV, 10 colleagues passed away owing to COVD-19 and we feel for their loved ones.

COVID-19 affected all Groups, albeit differently, depending on the business and the geographies they are active in. SHV Energy reported good results following good margin management and strong domestic demand for LPG. Makro faced different degrees of restrictions in the various countries, most of them negatively impacted performance. The operations of Mammoet were impacted by the decline in economic activity as well as the sharp drop in oil & gas prices, resulting in lower investments and postponement of major projects. COVID-19 related declining industrial productivity in general and in the oil & gas sector specifically in the US, negatively affected the performance of ERIKS. Nutreco performed well as demand for animal proteins was fairly resilient, particularly in the first half of the year. Due to a slow market NPM Capital did not conclude any divestments contributing to results. ONE-Dyas was negatively impacted by low oil & gas prices.

Following the strategic review, the sale of the majority of the Makro stores outside the State of São Paulo has been concluded. Subsequently, SHV was approached for the sale of Makro Peru, by InRetail, the country’s largest retailer. After careful deliberation it was decided to accept the offer as it is the firm belief that Makro Peru and its employees would become part of an organisation that enables them to grow and prosper in the future. This, combined with extensive reorganisations at both Mammoet and ERIKS as they adjusted to new market conditions, meant that over 8,800 employees left SHV. Treating people with care and respect was an important element of the termination of the employment agreements.

The events of 2020 impacted SHV on a number of fronts. COVID-19 and the ensuing global lockdowns, factory and restaurant closures, and travel restrictions led to a wide range of operational and organisational challenges. This was compounded by a steep drop in oil and gas prices. Stringent measures were needed to rightsize parts of the business, safeguard results, and prepare the company for the new normal. Even so, operational income rose to €602 million, an increase of €297 million (2019: €305 million). In both years, income from operations was significantly affected by a number of exceptional items (2020: €214 million, 2019: €-236 million).

At SHV Holdings, all quickly adapted to working from home supported by high quality IT systems that enabled a smooth transition. The Executive Board of Directors was in frequent contact with Group management, discussing health and safety, the various operational challenges and ways to address these. All Groups conducted a thorough COVID-19 impact analysis, including upward and downward scenarios that were discussed extensively. Learnings from the different Groups in different geographies and stages of the pandemic were collected, reviewed, shared and discussed. Other topics that were discussed frequently related to working capital levels, cash positions and investments.

In these rapidly changing times, we do not just need to adjust to current market circumstances but focus on the future as well. During the year, several in depth strategic reviews of the Groups took place in order to define how and where the best possibilities lie for ongoing sustainable growth. The findings of these reviews have been discussed in great detail and actions are defined that will be executed wherever possible.

To further strengthen performance management, a company-wide forecast improvement project was executed. All SHV Groups and SHV Holdings have moved to a 15-month Rolling Forecast performed on a quarterly basis. The Rolling Forecast has a signalling function and provides an ambitious and realistic outlook on future performance, embedding the latest operational insights. In addition, the sensitivity analysis and scenario modelling support anticipating actions and decisions in the face of changing economic conditions and market developments, especially in these rapidly changing times.

Digital insights are becoming more important for optimising businesses. In 2020, ADAPTFY, SHV’s global data and analytics (D&A) organisation was founded. ADAPTFY is a strategic partnership between SHV Holdings and YGroup and aims to create value through optimising business practises and processes through advanced D&A and technology. It provides capacity and capabilities which can be deployed throughout SHV, to help the Groups create value and accelerate their digital and D&A initiatives. A dedicated ADAPTFY academy will provide training to increase personal D&A capabilities across SHV.

Following the choice for the focus based areas on the UN Sustainability Development Goals, progress has been made with an integrated approach to achieve the targets that have been set in line with our purpose. A newly appointed Director Sustainability and Innovation is leading this process.

To further drive innovation and in close collaboration with IT and the Groups, a program called TEXAS was initiated as a next step in expanding the Innovation Movement. The aim is to bring digital solutions into the businesses in an agile way, while continuously learning and collaborating between the Groups and the innovation ecosystem. It is another step in the journey to embed the innovative culture in SHV and aims to solve challenges within multiple Groups through innovative digital solutions, to promote learning of using a digital accelerator and to stimulate collaboration.

People are key to the sustainable future of SHV and providing opportunities to grow within our family of companies is a high priority. A newly designed Emerging Talent Strategy was implemented, with the creation of six career tracks and relevant developmental positions, to accommodate targeted career growth. On executive level, the clear majority of roles were filled by internal candidates, as a result of structured succession planning and leadership development. Due to COVID-19 the leadership development programmes for senior leaders were all successfully redesigned from a physical to a virtual setting. A dedicated cross Group Diversity & Inclusion taskforce is focused on creating increased and structural awareness on all aspects of the subject.

After driving the growth of Dyas for 10 years and leading the seamless integration following the merger with Oranje Nassau Energie, CEO Robert Baurdoux decided to leave ONE-Dyas as of September 1, 2020. We thank him very much for his contribution and wish him all the best with his future endeavours.

Looking forward, the future remains extremely uncertain. Most countries in which SHV operates, are still in the midst of the second or third COVID-19 wave with regulations becoming more strict, impacting the already struggling sectors of the economy even more. A positive element for SHV is that all Groups have adjusted to the new ways of working while creating efficiencies, amongst others through acceleration of the digitisation process. Economic recovery will depend for a large part on the speed with which people can be vaccinated and the effectiveness of the vaccines. Beyond the challenges related to COVID-19, SHV and the Groups will look to implement the actions planned as a result of the strategic reviews wherever possible. Ongoing optimisation of the business and driving growth will also be high on the agenda. Considering the resilience displayed during 2020, we are confident that we will be able to successfully address the challenges as they come by.

Many things have already been said on the subject, but some things just can’t be emphasised enough. Navigating a family of companies like SHV through the kind of challenges we faced in 2020 is quite a task to say the least.

In fact, it simply would not have been possible without the amazing efforts and unwavering dedication of our people. The Executive Board of Directors was hugely impressed and is very grateful for everything that our colleagues, from all over the world, have achieved. Thanks to their efforts, we can look back and conclude that so far we managed the crisis well. Together, we have made sure that SHV remains solid.

So a sincere thank you to every colleague in stores, factories, filling plants, distribution centres, customer service centres, cranes, trucks, offices… and wherever else they may work. All did great!

The challenging times are far from over. Yet we have every confidence that, with their support, we will weather the storm and come through as strong as ever.

On behalf of the Executive Board of Directors,

J.P. Drost

Special thanks