Change, challenges and new opportunities in the European forest products market with Peter Oswald
The CEO of Mayr-Melnhof Karton AG shared his views on strategic acquisitions, sustainability and supply chain challenges in our exclusive interview
Mayr-Melnhof Karton AG (MM) CEO, Peter Oswald, was recently selected as Fastmarkets RISI’s European CEO of the Year by a panel of independent industry experts. We caught up with Oswald to discuss his two-year tenure as the head of MM Group and the challenges and opportunities facing the company ahead.
Since joining MM in April 2020, what are some of the highlights of your time as CEO?
Since MM is a family company at its core, we think long term here. So, the concept upon my arrival was to set the strategic course with a view towards 2030, bringing in my long track record of successful acquisitions, capital expenditure and turnarounds. The new strategy has been directed towards growth for a strong improvement of competitiveness through acquisitions and targeted capital expenditure while also carrying out necessary adjustment measures.
In just two years, we have strongly delivered on this strategy with transformational acquisitions of two large competitive board/paper mills, exiting three smaller board mills and launching a comprehensive capital expenditure program at our large legacy mills and selected packaging plants for more efficiency, sustainability and innovation. And, while we were extra busy with all this, unprecedented huge and rapid cost increases of fiber, energy and many other input factors were incurred in 2021, which were a significant threat to our business. Overall, my start as CEO of MM was full of challenges and changes at a level I have never experienced in my 35-year career, but I am positive that we can gradually move into a time of stabilization in the current year.
Some of the biggest news from MM in 2021 involved acquisitions, including of IP’s Kwidzyn mill in Poland and Kotkamills in Finland. Tell us more.
With these acquisitions, MM has strengthened its leading position in cartonboard in Europe and has extended its portfolio into interesting new businesses, such as kraft papers and uncoated fine paper. I am happy to see that the fit is excellent, with more potential than initially planned and no materially negative surprises. Our strategy to grow in FBB and food service board and enter the European champions league has been 100% validated. Both mills provide a number of growth options, but the growth potential of Kwidzyn is more long term and overall, bigger.
Late last year, MM announced it would significantly increase sack kraft paper production. What was the motivation behind this move?
The acquisition of the Kwidzyn mill in Poland has opened up several attractive future options for MM. Now, it is planned to enter the sack kraft paper market in order to serve the growing demand for sustainable flexible fiber-based packaging products, which is particularly driven by the substitution of plastic. In 2021, we more than doubled sales of our IPACK kraft paper and we plan to expand our kraft paper offering with extensible, high-strength and high-porosity sack kraft paper. In addition, we will substantially expand our saturating kraft paper capacity over the next two years.
The pharmaceutical industry has been front and center in the news the last couple of years. Is MM looking to provide solutions for these customers?
At MM, we provide for the specific needs of this industry with our dedicated board products as well as our specialized packaging plants. Recent acquisitions strengthen our possibility for integrated supply of FBB qualities and recent packaging investments have increased our production and overall technological capabilities. To be a most trusted partner for our customers in pharmaceuticals will definitely remain a top priority for MM.
MM has joined the global “Business Ambition for 1.5°C” initiative. What are some of the sustainability opportunities you see arising?
Joining this important initiative is a clear reflection of our understanding that we cannot achieve systemic change alone and that we can only make the value chain more sustainable together with our customers and partners. That is why we are also a member of the United Nations Global Compact and are committed to the Sustainable Development Goals of the United Nations. Our recent move into the preferred supplier category with the Carbon Disclosure Project was a great step and it had certainly been opening new opportunities. However, I still see the largest importance and potential for MM in plastic waste avoidance, since we can offer packaging with the same functionality and convenience, but without plastic. More innovative solutions are key and we are definitely getting more and more innovative at MM.
Supply chain challenges and shipping delays were rampant last year and are continuing in 2022. How is MM addressing such headwinds?
It’s about flexibility, transparency and relationships. The better and faster data exchanges in the supply chain, the better we can solve problems in time with our business partners – that’s our guiding principle. If everybody enhances their contribution to these exchanges, we will definitely be better off in the time ahead.
Cost pressure remains high from raw materials, energy and logistics as we enter 2022. Do you expect prices to continue to rise?
Since last year was a big surprise with all of these costs tripling, quadrupling or more, obviously, the big question we all ask ourselves is if this is going to continue. No one has a crystal ball, so I don’t know whether it will continue or not. There are a few factors worldwide which make it likely that prices will stay at an elevated level and we might see sudden unexpected increases again. I think we should not make the mistake of assuming that we have reached the top and from here it will go down. There could be a price peak again.
There was a shakeup in management at the company in the early part of 2022. What does MM hope to achieve by bringing in new talent?
A 90-degree change of company strategy often triggers changes in the management team. I am proud to say that we managed to appoint three senior managers with excellent track records in the board and paper industry, bringing in many years of top-management experience in similar divisions with comparable size and complexity. On top of that, we hired a number of employees with high potential to manage our future growth. Because of this, I am very confident in our future.
Peter Oswald will be accepting his award at the Fastmarkets RISI European Conference on March 9, 2022 in Lisbon, Portugal. This interview is also published in PPI Europe, the industry’s most trusted pulp and paper news and price reporting service for Europe. Sign up and get the latest market intelligence and insights now.