7 Segment information
Prior to the acquisition of the remaining shares of the joint ventures in the Middle East, the Group had three operating segments, which were also the reportable segments: Europe, Middle East and Africa (“EMEA”), Asia Pacific (“APAC”) and Americas. The acquisition has resulted in a split of EMEA into two operating (and reportable) segments: segment Europe and segment Middle East and Africa (“MEA”). Since the acquisition, the Group’s chief operating decision maker (“CODM”) receives separate financial information on a regular basis for Europe and for MEA for the purposes of resource allocation and assessment of the performance of the segments.
All four segments provide the same aseptic carton packaging solutions.
Overview of the segments and Group Functions
Until the end of February 2021, when the remaining shares of the joint ventures in the Middle East were acquired, the former segment EMEA included production of sleeves and closures for the Group’s customers in Europe. EMEA also supplied the other segments with sleeves and, to a lesser extent, closures from its plants in Europe. EMEA further included the result from the sale of supply from the Group’s European production entities to the Middle Eastern markets. The Group’s central procurement activities, including commodity hedging, were part of EMEA. The Group’s former joint ventures in the Middle East contributed to the performance of EMEA through dividend payments and royalty payments related to the use of SIG technical solutions and sleeves sales in the Middle East and Africa.
From March 2021 onwards, segment Europe includes production of sleeves and closures for the Group’s customers in Europe. Europe also supplies the other segments with sleeves and, to a lesser extent, closures. The Group’s central procurement activities, including commodity hedging, are part of Europe, with the European production entities being the main internal customers.
From March 2021 onwards, segment MEA covers the Group’s customers in the Middle East and Africa. The operations of the former joint ventures in the Middle East, including a sleeves production plant, are part of this segment.
APAC includes production of sleeves for the Group’s customers in China, South East Asia and Oceania. APAC also supplies the other segments with sleeves. In addition, the China-based filling machine assembly plant is included in APAC. Until the beginning of June 2021, when the Group sold its paper mill in New Zealand, APAC included production of liquid paper board and folding box board (see note 26). The liquid paper board was mainly used by the sleeves production plants in Asia and the former joint ventures in the Middle East.
Americas covers the Group’s customers in North and South America. North America is primarily supplied by sleeves from the European and Asian plants. South America has its own sleeves production plant.
The Group Functions include activities that are supportive to the Group’s business, such as the global filling machine assembly, global technology (including R&D), information technology, marketing, finance, legal, human resources and other support functions. Global filling machine assembly sells filling machines and spare parts, and provides assembly-related services, to all of the segments. The Group Functions are not involved in any significant transactions with third parties. Their sales of filling lines to the former joint ventures in the Middle East were reported as third party sales until the Group obtained control over the joint ventures as of the end of February 2021.
Inter-company transactions between the segments, and between the segments and the Group Functions, are eliminated in consolidation. They mainly relate to the sale of filling machines, sleeves and closures. Pricing is determined on a cost-plus basis.
Information about the Group’s segments is reported to the CODM on a regular basis for the purposes of resource allocation and assessment of performance of the segments. The performance of the segments is assessed by the CODM primarily on the basis of adjusted EBITDA (as defined in the section below).
Segment financial information
The following tables present financial information about the Group’s segments and Group Functions. The same measurement basis is used when presenting the segment information as is used in the Group’s consolidated financial statements.
The increase from three to four segments in the year ended 31 December 2021 has not resulted in any material changes that would require restatement of segment information presented in the comparative period. The Group’s reporting structure changed as a consequence of the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021. The Group did not have control over these entities before the acquisition. The Group accounted for the joint ventures using the equity method as it only had joint control. The results of the former joint ventures in the Middle East are now fully consolidated and reported in the new segment MEA. Sales by various Group companies to the former joint ventures were, prior to the acquisition, reported as external sales. After the acquisition, sales to the former joint ventures are reported as inter-segment transactions.
Segment financial information is reported for the former segment EMEA for the first two months of the year ended 31 December 2021 and for the comparative period. Prior to the acquisition, the former joint ventures in the Middle East contributed to the performance of EMEA through dividend payments and royalty payments. The royalty agreement was terminated and dividend payments ceased upon the Group’s acquisition of the remining shares of the joint ventures. No dividends were paid by the joint ventures to the former joint venture partners in the first two months of 2021. For the two new segments Europe and MEA, segment financial information is reported for the last ten months of the year ended 31 December 2021.
Based on the facts above, the Group does not believe that a meaningful quantitative comparability can be achieved considering the nature of changes in the relationship between the parties pre- and post-acquisition. Therefore, the following tables should be read in conjunction with the above descriptions.
|
|
Year ended 31 December 2021 |
||||||||||||||||||||||||||||||
(In € million) |
|
EMEA5 |
|
Europe6 |
|
MEA6 |
|
APAC |
|
Americas |
|
Total segments |
|
Group Functions |
|
Reconciling items |
|
Total |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue from transactions with external customers |
|
119.3 |
|
615.7 |
|
251.9 |
|
705.6 |
|
365.6 |
|
2,058.1 |
|
3.7 |
|
– |
|
2,061.8 |
||||||||||||||
Revenue from inter-segment transactions |
|
40.8 |
|
260.7 |
|
0.6 |
|
14.5 |
|
– |
|
316.6 |
|
62.3 |
|
(378.9) |
|
– |
||||||||||||||
Segment revenue |
|
160.1 |
|
876.4 |
|
252.5 |
|
720.1 |
|
365.6 |
|
2,374.7 |
|
66.0 |
|
(378.9) |
|
2,061.8 |
||||||||||||||
Core revenue from transactions with external customers1 |
|
119.3 |
|
615.7 |
|
251.9 |
|
690.6 |
|
365.6 |
|
2,043.1 |
|
3.7 |
|
– |
|
2,046.8 |
||||||||||||||
Adjusted EBITDA2 |
|
38.4 |
|
203.7 |
|
78.5 |
|
211.8 |
|
96.7 |
|
629.1 |
|
(58.5) |
|
– |
|
570.6 |
||||||||||||||
Capital expenditure:3 |
|
(15.5) |
|
(84.7) |
|
(12.4) |
|
(89.6) |
|
(34.0) |
|
(236.2) |
|
(9.7) |
|
– |
|
(245.9) |
||||||||||||||
PP&E (excl. filling machines)3, 4 |
|
(3.3) |
|
(29.0) |
|
(3.3) |
|
(33.4) |
|
(16.4) |
|
(85.4) |
|
(7.5) |
|
– |
|
(92.9) |
||||||||||||||
Net filling machines3, 4 |
|
(7.1) |
|
(14.5) |
|
(2.9) |
|
(5.8) |
|
(17.3) |
|
(47.6) |
|
(2.2) |
|
– |
|
(49.8) |
||||||||||||||
Net capital expenditure3 |
|
(10.4) |
|
(43.5) |
|
(6.2) |
|
(39.2) |
|
(33.7) |
|
(133.0) |
|
(9.7) |
|
– |
|
(142.7) |
||||||||||||||
|
|
|
Year ended 31 December 2020 |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In € million) |
|
EMEA |
|
APAC |
|
Americas |
|
Total segments |
|
Group Functions |
|
Reconciling items |
|
Total |
||||||||||
Revenue from transactions with external customers |
|
797.5 |
|
679.5 |
|
320.8 |
|
1,797.8 |
|
18.3 |
|
– |
|
1,816.1 |
||||||||||
Revenue from inter-segment transactions |
|
229.8 |
|
15.9 |
|
0.2 |
|
245.9 |
|
44.5 |
|
(290.4) |
|
– |
||||||||||
Segment revenue |
|
1,027.3 |
|
695.4 |
|
321.0 |
|
2,043.7 |
|
62.8 |
|
(290.4) |
|
1,816.1 |
||||||||||
Core revenue from transactions with external customers1 |
|
797.5 |
|
659.8 |
|
320.8 |
|
1,778.1 |
|
18.3 |
|
– |
|
1,796.4 |
||||||||||
Adjusted EBITDA2 |
|
274.1 |
|
215.0 |
|
72.8 |
|
561.9 |
|
(63.6) |
|
– |
|
498.3 |
||||||||||
Capital expenditure:3 |
|
(58.7) |
|
(100.0) |
|
(47.0) |
|
(205.7) |
|
6.5 |
|
– |
|
(199.2) |
||||||||||
PP&E (excl. filling machines)3, 4 |
|
(17.3) |
|
(52.0) |
|
(4.4) |
|
(73.7) |
|
(3.2) |
|
– |
|
(76.9) |
||||||||||
Net filling machines3, 4 |
|
(6.7) |
|
(29.9) |
|
(41.4) |
|
(78.0) |
|
9.7 |
|
– |
|
(68.3) |
||||||||||
Net capital expenditure3 |
|
(24.0) |
|
(81.9) |
|
(45.8) |
|
(151.7) |
|
6.5 |
|
– |
|
(145.2) |
||||||||||
|
Segment revenue per major product/service lines
Information about the Group’s revenue is included in note 6, where total revenue is disaggregated by major product/service lines. The split of revenue between revenue from sale of sleeves and closures, filling line revenue and service revenue is broadly the same at Group level, between the Group’s segments and over recent years (also for the new MEA segment). Other revenue was, until the acquisition of the remaining shares of the joint ventures in the Middle East, mainly divided between EMEA and APAC.
Geographic information
The Group operates eight plants that produce aseptic carton sleeves (two each in Germany and in China, and one each in Austria, Thailand, Saudi Arabia and Brazil). The plant in Saudi Arabia was part of the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021 (see note 27). The second plant in China became operational in December 2020 (see note 13). In connection with this, the Group decided to close its Australian sleeves manufacturing operations (see further note 9).
The Group also operates two assembly plants for filling machines in Germany and China, and a production plant for closures in Switzerland. It operates three R&D centres (one each in Germany, Switzerland and China), three technology centres (one each in Germany, United Arab Emirates and China) and five training centres (one each in Germany, Saudi Arabia, China, Thailand and Brazil). The Group sold its paper mill in New Zealand in the year ended 31 December 2021 (see notes 9 and 26).
The below table includes information about the Group’s non-current assets on a country basis. Non-current assets exclude financial instruments, deferred tax assets and net defined benefit assets.
(In € million) |
|
Year ended |
|
Year ended |
||||
---|---|---|---|---|---|---|---|---|
Germany |
|
1,111.2 |
|
1,076.8 |
||||
China |
|
692.5 |
|
619.9 |
||||
United Arab Emirates |
|
630.8 |
|
– |
||||
Switzerland1 |
|
478.6 |
|
492.5 |
||||
Thailand |
|
460.2 |
|
484.4 |
||||
Other countries |
|
1,015.6 |
|
952.4 |
||||
Total non-current assets |
|
4,388.9 |
|
3,626.0 |
||||
|
The non-current assets are reported based on the geographic location of the business operations. The non-current assets are predominantly located in the countries in which the Group’s production and assembly plants are situated. The Group’s intellectual property is primarily held by a company based in Switzerland.
The below table includes information about the Group’s revenue from external customers on a country basis.
(In € million) |
|
Year ended |
|
Year ended |
---|---|---|---|---|
China |
|
324.7 |
|
296.1 |
Germany |
|
217.9 |
|
211.7 |
Switzerland |
|
12.4 |
|
13.1 |
Other countries |
|
1,506.8 |
|
1,295.2 |
Total revenue from external customers |
|
2,061.8 |
|
1,816.1 |
Revenue is reported based on the geographic location of customers. The customer base of the Group includes international companies, large national and regional companies as well as small local companies.
Information about major customers
The Group does not have revenue from transactions with a single external customer amounting to 10% or more of the Group’s revenue in any of the periods presented.