SHV Energy is a leading global distributor of off-grid energy including LPG and small-scale LNG, as well as being active in sustainable fuels and renewable energy solutions. Its products and services provide decentralised, low-carbon, and clean energy solutions to 30 million business and residential customers predominantly for heating, cooking, and transportation. The company operates in over 25 countries and across four continents through brands such as Calor, Ipragaz, Liquigas, Pinnacle, Primagaz, Xiwei, Supergas, Supergasbras, PetroMax, EM3, and SunSource.
In 2016, SHV Energy launched ‘Advancing Energy Together’, a strategy aimed at driving growth, efficiency, and sustainability across the different brands. By capturing the full potential of the Group and collaborating on a global scale, the strategy is designed to make the energy solutions of the future a reality by providing customers with cleaner and affordable options. This will be achieved through a combination of organic growth, acquisitions, and investments in sustainable fuels and renewable solutions to support the energy transition for generations to come.
In the first half of 2022, volumes started to recover from the impact of COVID-19. However, as a result of global tensions following the Russia Ukraine conflict, the cost of gas increased significantly in the first part of the year. This resulted in volatile commodity markets and an increased awareness among consumers about their gas consumption. Together with a relatively mild winter and warm autumn, these challenging conditions had a negative impact on demand. Even so, solid pricing management and effective hedging strategies led to higher margins, more than offsetting the lower volumes and increased costs caused by inflationary pressure.
In the third quarter, SHV Energy acquired Petromax in Bangladesh. This acquisition will provide access to an attractive new market, as well as opening new opportunities to support the transition to LPG as a cleaner energy alternative. A detailed roadmap is being implemented in close collaboration with relevant global functions to ensure a smooth integration. A transaction with Vulcangas in Italy was also completed to increase the density of activities in the region.
During the year, SHV Energy continued to roll out digital solutions to improve efficiency and enhance the customer experience, including a revamped digital strategy across all business units. A global Security Operations Centre (SOC), set up in 2020, continued to closely monitor IT systems and mitigate ICT and cybersecurity risks. And in January 2022, two new global projects designed to further improve processes and information security were also introduced across the Group.
Over the course of the year, the organisation continued to develop sustainable fuels and renewable solutions to remain at the heart of the energy transition. SunSource Energy became a fully owned subsidiary and successfully commissioned its first open access project. This represents a positive first step towards growth as a provider of mid-to-large-scale solar projects for commercial and industrial customers in the Indian market.
EM3 grew revenues and continues to provide energy efficient solutions to industrial customers in the food & beverage and pharmaceutical sectors. A joint venture with UGI (Dimeta) will accelerate the development of rDME, a sustainable alternative to help de-fossilise the LPG industry. And another joint venture with KEW Technology (Circular Fuels Limited) continues to develop a first-of-its-kind demo site, with production of rDME expected to start in 2023 and full-scale production by 2025.
SHV Energy continues to invest in an extensive R&D portfolio that pursues innovation in the energy sector, including research on rLPG and eLPG. It also collaborates with external sources by means of an Open Innovation program, which last year selected two winners focused on efficient bioLPG production. The program has now been expanded to address environmental challenges by including solutions that reduce Scope 1 & 2 CO2 emissions. And a number of partnerships with start-ups are seeking to develop disruptive solutions such as using LPG or solar energy to power diesel trucks.
Innovation also contributes to the continuous improvement of operational performance. In Brazil, for example, visual technologies that automatically count and weigh cylinders have improved efficiency in filling plants.
Other examples include advanced analytics models that support better forecasting and the optimization of asset distribution across plants, increasing the availability of existing cylinders and decreasing the need to purchase new ones.
Following a strong 2021, operational performance continued to improve in 2022, favoured by stronger margins, despite lower volumes due to a warmer year and the impact of inflation. Income remained at healthy historical levels, favoured by the increase in earnings, however, closed below 2021 levels impacted by higher financing expenses and other exceptional items.