SHV Energy in 2019
SHV Energy is a leading global distributor of off-grid energy including LPG, small-scale LNG and biofuels. As a leading player in the energy transition, SHV Energy provides decentralised, low-carbon and clean energy solutions for business and residential customers in over 25 countries across four continents under brands such as Calor Gas, Ipragaz, Liquigas, Primagaz and Supergasbras.
The strategy of SHV Energy, “Advancing Energy Together”, is a mix of organic growth, add-on acquisitions, geographic expansion, productivity improvement and advocacy for and the promotion of biofuels. Internally, the strategy involves encouraging SHV Energy’s 18 business units to work together to identify and solve common challenges and leverage mutual opportunities.
In 2019, supply and demand were largely in balance worldwide and prices for LPG remained broadly steady over the year. Specifically, LPG demand for bulk supply was stable in Europe, despite the mild winter weather. The Brazilian market recovered in the second half of the year, and LPG demand continued to be healthy in China. The position of Pinnacle in the US was strengthened and volumes were added. As a next step, a restructuring process was started to grow Pinnacle into a sizable and profitable LPG company.
Digital opportunities focused on enhancing systems and processes to increase efficiency, reduce costs and create business value are an important part of securing profitable organic growth. Progress was made through the implementation of a global website infrastructure while a data-driven, digital approach to growing value from new customer creations was designed. Furthermore, a global procurement function was implemented, aiming to create savings through global category management and to increase the level of procurement compliance.
The net customer creation continued to be positive. This is not only an important indicator of organic growth, it is also instrumental in reducing the overall carbon impact by attracting new industrial and domestic customers that switch from heating oil to LPG or LNG. This was especially the case with LPG in Europe and China. LNG saw the first signs of an emerging new market: the conversion of diesel trucks to LNG.
Chama, the digital concept for LPG cylinder distribution, now operating in several Brazilian cities, took next steps in optimising the business model. The ability to pay through an app was introduced, the pricing strategy was refined and the delivery to customers further improved.
Growth was also bolstered by acquisitions. These included a terminal and large bulk customers from E.ON in Sweden, the customers and assets of Galp bulk LPG in Spain and LPG and LNG acquisitions in China. Six bulk supply companies that were acquired in the US, contribute to the density of the existing network.
During the year, the global innovation programme was expanded from four to seven business units. Initiatives to further develop innovation capabilities, such as trainings, methodologies and tools were combined with a portfolio of projects aimed at solving some of the main business challenges. In addition, a network of employees involved with innovation was created. This includes top management, project leads and innovation ambassadors. More than 60 initiatives are currently active around the world in areas such as customer experience, new business models and smart operations.