Mr. Aloke Lohia
  • Group Chief Executive Officer
Our aim to be a more purposeful organization is not just a slogan on our stationery. Vision 2030 is a bold but realistic ambition that will, once again, require all our focus and our full arsenal of inherent IVL strengths. It is entirely achievable.
Dear Stakeholders,

As I reviewed my last two annual addresses – which together represent the peak of the pandemic era – it struck me how far we have come during a historic period in which we faced unprecedented disruption. That our model’s inherent resilience and our innate agility passed every test during this time – the toughest in our history – invariably must be a key theme of this year’s letter.

We should celebrate our success, review what worked well, and congratulate our employees and their loved ones who valiantly bore the weight of the pandemic and ensured that we were more than equal to the challenge. I thank them all for a truly monumental effort. We should also pay tribute to those among us who paid the ultimate price of the pandemic, and my thoughts and prayers go out to their families and our colleagues who worked closely with them.

Our record 2021 performance heralds a new (dare I say ‘post-pandemic’) era of equally profound change. Our world will not be the same, whether it be how we work, how we relate to our stakeholders, or the kinds of products we make. For us at IVL, change has always been another word for opportunity, and so another theme of my letter this year is how we are taking advantage of the disruption.

We have already begun to reset our business for the new era, at levels of demand which are already approaching or exceeding pre-pandemic peaks. At our annual business planning event in Phuket in January 2022, I outlined our Vision 2030 to build our industry leadership in sustainability, guided by our new purpose statement: Reimagining chemistry together to create a better world.

Our aim to be a more purposeful organization is not just a slogan on our stationery. Vision 2030 is a bold but realistic ambition that will, once again, require all our focus and our full arsenal of inherent IVL strengths. It is entirely achievable. In fact, I have never been more confident in our global leadership position, our integrated model, and the ongoing transformation of our people, platforms, and processes. Our teams’ performance during the pandemic showed that we must never underestimate our ability to overcome difficult challenges, and we should go forward with growing confidence.

Two words have come to mind frequently over the past year – resilience and agility. At IVL, they go hand-in-glove as powerful drivers of our ambition for over 30 years. We must ensure that we continue to prize these vital IVL attributes as we build our future in a more sustainable world.

2021 In Review and Outlook

The year ended with a record Core EBITDA of US$1,743 million, up 55% year-on-year. Much of this was due to resurgent consumer confidence as lockdowns eased and vaccinations were rolled out in many of our key markets. The rise in global demand sparked a wave of supply disruptions and inflationary pressures, including a steep rise in crude oil prices.

The disruptions played to our strengths as our teams responded with IVL’s traditional agility to ensure a steady supply of products as our customers’ preferred provider across our regional footprint. We also benefited from local market import parity pricing and currency hedging strategies, as well as the return of our shale gas advantage which boosted margins in our key western markets. At the same time, the Group-wide transformation programs that we started three years ago are generating higher-than-expected efficiencies while also modernizing our processes and future-proofing our business.

All three of our segments performed admirably as they took further steps towards becoming self-sufficient businesses under our integrated model. I wrote earlier about the need to retain our agility as a core IVL attribute. A key part of this is empowering our segment leaders to shape their businesses according to their distinct growth profiles. During the year, we added the segment Executive Presidents to the Indorama Management Council (IMC), our highest operational decision-making body.Developing our segments as self-sustaining, independent, and differentiated businesses is an important focus under Vision 2030.

As our segments reset their business plans for the next three years, there are early indicators of even better margins, incremental volume increases, and further efficiencies going into 2022. Still, even as we have learned to manage the pandemic, new challenges are certain to arise, such as the emerging situation in Ukraine as I write.

Our growing confidence is an attribute. We remain committed to our goal of doubling our EBITDA every five years, investing in customer-led innovation, being a strategic partner to our customers, and providing opportunities for our people.

Employee Health and Safety

As a responsible organization, I was extremely proud of how we responded to the plight of our employees and their families as we faced the pandemic together. The measures that we implemented when the virus first took hold in 2020, continued into 2021. Sadly, our fatalities grew from 7 employees in 2020 to 16 in the past year (and a further 2 fatalities as I write in 2022). They will always be a part of our IVL family.

In 2021, we expanded the supporting text of our “We are responsible” core value statement to include “Health and safety are non-negotiable.” I am deeply humbled that IVL, as a strong family-based organization, was able to offer a range of support services to our employees, including promoting vaccination programs wherever we could. We were able to do this because we invested in new Enabling Functions such as our Business Continuity Management (BCM) and Environmental, Health and Safety (EHS) teams who prepared us with global best-practice processes that allow us to manage risk.

How can we forget the many kind words, the messages of consolation – the stream of online meetings – as we supported each other through this historic period. Even as we adapted to the new ways of working, the longevity of the pandemic inevitably took a toll on our employees’ physical and psychological health. Our HR teams learned much about the benefits and challenges of work-from-home settings and are implementing new hybrid workplace policies that will allow us to look after our employees’ wellbeing as well as attract, train, and retain talent.

Transforming Our People, Processes, and Platforms

It is a further testament to our resilience that our transformation programs continued apace throughout the period. I can understand how it would be tempting for companies to “batten down the hatches” and wait for the storm to pass, but that isn’t an option at IVL, which has a clear mandate for growth and a roadmap for continuous improvement.

During the year, we implemented our plan for a single ERP, our most ambitious transformation project, in three North American entities, and our SAP S4/HANA implementation team is gearing up for further rollouts in 2022. We also opened our first Global Business Solutions (GBS) center in India to drive efficiencies by adopting practices and technology under one roof. Talented leads of our six new Enabling Functions are now in place and they are progressing with their development plans.

Our decision to push on with these major projects was a sound one. The initial successes have given our teams more confidence. The transformation of our Processes, Platforms, and People is a springboard for the new chapter in IVL’s storied journey.

Creating an Unparalleled Global Footprint in Surfactants

Our announcement to acquire Brazil-based Oxiteno – a key highlight of the year – heralds new growth potential for our Integrated Oxides and Derivatives (IOD) segment. As a result of this highly complementary transaction, IVL will become a leading player in the high-value integrated surfactants market, particularly in the Americas, with additional potential to expand in Asia and Europe.

With the experience of completing some 50 acquisitions in 20 years, we hold great store in assessing existing management teams as an important part of our M&A strategy. During the process, I was very pleased to appreciate Oxiteno’s highly experienced team, as well as their family-based origins and shared values. Oxiteno brings strong customer relationships in attractive LATAM end-markets, world-class expertise in sustainability innovation, and an environmental governance record including in lowering greenhouse gas emissions.

This transaction sets a new high bar in how we plan our new acquisitions as we execute a 100-day integration plan under a new M&A playbook involving best-in-class specialist expertise and processes.

Vision 2030 and Purpose

Throughout this report I have referred to Vision 2030, guided by our new purpose statement: Reimagining chemistry together to create a better world. Let me now explain it more fully.

As a modest start-up some 30 years ago, our purpose was simply to cater for the enormous demand for plastic goods. After some initial success, we felt confident enough to set a vision to become a leading PET producer, which we achieved by the time we listed in 2010. We then upgraded our Vision to become a global chemical company. Having proved our mettle during this testing time, culminating in a stellar 2021 performance, we are now ready to reset our ambition once again.

In the years since we were founded, there has been a profound shift in attitudes to the health of our environment and our communities and planet that no company can afford to ignore. This is not new; IVL has been responding to this trend for some time, and in 2021 we were pleased to celebrate our tenth year of sustainability reporting. We also added the word “sustainable” to our Vision statement: To be a world-class sustainable chemical company making great products for society.

A clearly started purpose – why we do what we do – is important because we have seen how stakeholders, including consumers and the broader community, care as much about a company’s purpose as they do about its products and services. Our purpose is aligned with our stakeholders’ desire for a better, more sustainable world. The pace of disruption is now so much faster than it has ever been. Having reset our business for the ‘new normal’ era, we are ready to build our industry leadership in sustainability.

This is a big leap in our journey towards ‘net zero’, centered around three familiar pillars: Decarbonization of Operations, Innovative and Sustainable Products, and a Future-Ready Organization. IVL, which is already the world’s largest producer of recycled PET for beverage bottles, will invest in infrastructure to deliver the circular economy and reduce Scope 3 greenhouse gas emissions, and build PET recycling capacity. New technologies will help us capture carbon from our operations, increase our use of renewable energy, and phase out coal to lower Scope 1 and Scope 2 greenhouse gas emissions.

IVL will also introduce more bio-based feedstock across our value chain. More than 80% of our feedstock is polyester related, which is possible to be bio-renewable or circular. By 2030, we aim to source a third of our feedstock mix from sustainable sources, assisted further by the Oxiteno acquisition which brings significant credentials in green energy innovation including in bio-based raw material.

Additional measures to future-proof the company will underpin Vision 2030, including developing leaders with a growth mindset and empowering them with the tools to lead. Our Combined PET segment is focused on strengthening our leading position in recycling; IOD segment will unlock benefits of the Oxiteno acquisition, leverage bio- feedstock, and grow adjacent opportunities, while Fibers segment will expand its diverse portfolio and R&D partnerships to promote more sustainable products.

Our ambition must be people led. Employees, customers and end-consumers, and our shareholders, all have a role.

My Priorities

When we look back over the last year, I hope we agree that we used our time well. Our teams took advantage of the disruption to streamline our business, improve our processes, and build platforms for growth. We never took a step back. In fact, we continued to deliver an exceptionally high standard of service to our customers while carrying on with our program of transformation and continuous improvement. The result of our work is that we now have an unprecedented platform for further growth.

When I outlined Vision 2030 to our leaders early in 2022, I also named my personal priorities. The first one I mentioned is our people. Succession planning is key to sustainability, and we need to recruit, develop, and promote talented leaders with a growth mindset. Second is to introduce more bio-based feedstock to our products. Third is developing our segment strategy to empower our three segments to fulfill their potential. Finally, I will focus on digitalization as a critical part of our transformation.

All these priorities are my personal pledge in fulfilling IVL’s purpose. I hope you are as excited as I am!

Aloke Lohia

Group Chief Executive Officer