Financial performance

SHV significantly improved operational performance in 2023, with income from operations before exceptional items and amortisation of operational Groups reaching € 882 million (2022: € 745 million). This increase was, however, more than offset by the performance of non-operational Groups. The results from private equity investments which reflect NPM’s results, amounted to € 187 million and made a substantial contribution, yet were lower than 2022 (€ 247 million). Income from investments in affiliates, closely matching the contribution from ONE-Dyas, was significantly lower, amounting to € 89 million (2022: € 260 million), mainly due to lower oil & gas prices and related impairments.

Beyond these effects, Net income in 2023 was supported by exceptional income and expenses, which rose to € 73 million (2022: € 56 million). Amortisation costs continued to increase, totalling € 275 million (2022: € 249 million), due to the goodwill from recent acquisitions by Kiwa and SHV Energy. Interest expenses also rose due to the increased cost of borrowing. Other financial results for the year include a book gain resulting from the divestment of SHV Energy China (€ 22 million), which was offset by smaller effects. This reflects a positive contrast to 2022, which included substantial book losses from the sale of Nutreco Russia (-€ 53 million) and the write-off of the Lightyear investment (-€ 30 million). Tax costs remained high, albeit slightly lower than 2022, resulting in an effective tax rate of 42%. Net income landed at € 380 million, which remains in line with results of last year. 

The continued focus on cash supported better cash generation, which resulted in a positive free cash flow of € 175 million. To date, the SHV balance sheet remains strong with a conservative leverage, supporting SHV’s continued resilience. 

P&L developments

Mammoet yielded the largest improvement following a difficult 2022, during which its operational results were strongly affected by Russia. Further improvements in 2023 were mainly the result of strong volumes within both its international projects business as well as its rental markets. 

SHV Energy successfully offset lower volumes due to relatively warm weather with improved margins. The Brazilian and Supply & Risk Management business units in particular delivered a strong performance, while Europe and US activities experienced soft volumes. This resulted in a year-on-year improvement in performance, extending SHV Energy’s successful track record. 

Conditions in South America remained challenging, nevertheless Makro improved performance supported by strong operational results in Colombia and Argentina, Makro’s two remaining operational countries. In addition, a new income stream is being generated from the rental of stores in Venezuela, positively contributing to overall results. At the same time, Makro will continue to be impacted by the run-rate costs of the remaining part of the organisation in Brazil over the coming years, which is managing the winding down of all tax positions and claims. 

After multiple acquisitions, Kiwa delivered expected performance, mainly supported by the full year impact of the Vinçotte acquisition, as well as robust margin management. Importantly, its core activities also showed a step up in performance compared to 2022.

Nutreco successfully offset lower than expected volumes with increased margins and continued cost controls. An improvement in performance across all business units was, however, almost fully offset by the performance in Ecuador, which suffered from highly challenging market circumstances as well as the discovery of accounting irregularities.

Finally, ERIKS also delivered a clear increase in performance as a result of strong margin management in combination with strict cost controls. 

Amortisation amounted to -€ 275 million in 2023, an increase compared to 2022 (-€ 249 million), as a consequence of the full year impact of the amortisation of goodwill associated with the acquisition of Vinçotte by Kiwa, as well as Vulcan and Petromax by SHV Energy in 2022.

While overall (net) debt levels are in line with 2022, interest expenses in 2023 (-€ 160 million) increased compared to 2022 (-€ 124 million). This is mainly due to a global increase in interest rates, leading to increased interest expenses on the Groups floating rate facilities and refinancing of fixed rate debt previously obtained at more favourable interest rates.

Other financial results are less negative compared to 2022, due to the positive impact of the sale of SHV Energy China (€ 22million), while there were no material book losses or write-offs. 

The effective tax rate decreased slightly to 42.0% in 2023 (2022: 44.9%), and is considerably higher than the weighted average tax rate of 26.6%, mainly due to high taxes on income from investments in affiliates. This mostly concerned ONE-Dyas, which is subject to additional tax levies in the oil & gas industry. Furthermore, non-recognition of deferred tax assets related to jurisdictions in which SHV has suffered a tax loss in the current or a preceding period, for which no or insufficient taxable profit is expected in the foreseeable future.

All in all, 2023 Net income amounted to € 380 million in 2023, which remains in line with 2022 restated Net income (€ 377 million).

As per 31 December 2022, accounting irregularities identified by management resulted in an overstatement of income and shareholders’ equity amounting to € 17 million, which resulted from SHV’s share in an understatement of cost of raw material and consumables (€ 28 million) with offsetting entries in inventories (€ 16 million), trade and other receivables (€ 2 million) and current liabilities (€ 10 million). As a consequence of the abovementioned overstatement of income, loans of € 52 million had to be reclassified from non-current liabilities to current liabilities as per 31 December 2022. The measurement of the put/call liability related to Nutreco Ecuador was incorrect, which had an impact on Net income for the year 2022 of € 7 million negative.

As a result the comparable Net income of 2022 has been restated from € 400 million to € 377 million.

Operational cash flow in 2023 amounted to € 985 million (2022: € 1,032 million) reflecting lower cash contributions from NPM and ONE-Dyas partly offset by improved working capital and lower margin call requirements at SHV Energy.

Investment cash flow

Investment cash flow was significantly lower than 2022 at -€ 810 million (2022: -€ 1,179 million). This reflected a fall in investment levels due to lower replacement capital expenditure and fewer acquisitions. 

In 2023, a total of € 678 million (2022: € 759 million) was invested in tangible fixed assets mainly related to cylinders and tanks at SHV Energy, lifting and transport equipment at Mammoet, and the expansion of production capacity at Nutreco. As a result, replacement investments remain above current depreciation levels, which totalled€ 502 million in 2023.

Although more limited in 2023, NPM made the largest acquisitions, acquiring amongst other HQ Pack and Probo as new participations.

Cash inflows from disposals were mainly generated by the sale of SHV Energy’s activities in China as well as the sale of stores by Makro in Brazil. 

Free cash flow

SHV has increased its free cash flow, which amounted to € 175 million (2022: -€ 147 million), as a result of a slightly lower operational cash flow more than offset by a strongly reduced investment cash flow.