Stacks of cardboard in factory

The Karton King

Since Peter Oswald took over in 2020 as CEO, the price of Mayr-Melnhof Karton has risen to an all-time high. What does he know that we don't and what does he do differently? Time for us to talk with him.

Mr. Oswald, since you took over as CEO the MM shares reached an all-time high. How did you manage this coup?

At our core, we are a family company and I am actually not looking so much at the share price. We think in the long term. As I have a long track record of successful acquisitions, capex, turnarounds and shareholder value creation, several of the MM investors assume that MM will show more growth and some margin expansion to go forward.

Is your growth strategy also part of the secret? MM has just recently completed the acquisition of two new businesses in Poland and Finland.

Shareholders appreciate that the acquisitions of the plants in Kwidzyn and Kotkamills have an excellent fit with our strategy and were executed at reasonable valuations. Both Kotkamills and Kwidzyn, but especially Kwidzyn, will provide MM with a platform for growth for the next decade.

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 and uncoated fine paper. In addition, both acquisitions provide a number of growth options, whereby the growth potential of Kwidzyn is more long-term and bigger overall.

Peter Oswald, the CEO of Mayr-Melnhof Karton
Peter Oswald, the CEO of Mayr-Melnhof Karton

Wood as resource and raw material is growing in popularity – how does this impact your business environment?

Austria has a long tradition in the wood industry. Almost half of the country is covered with forest. And the forests, contrary to what a lot of people think, are increasing year after year even though trees are cut down. This is a good example of sustainable forestry, as is the case throughout Europe. The popularity of wood overall is positive and it makes sense ecologically.

By acquiring Kwidzyn and Kotkamills, MM now has a well balanced portfolio between virgin and recycled fibre. This provides us with more stability: It reduces our dependency on the more volatile prices of the recycled paper market, and it spreads our wood supply geographically.

In the current packaging discussion, you state that MM wants to offer new opportunities for the substitution of plastics through innovative and competitive solutions made of cartonboard and paper. What do these solutions look like?

We are all familiar with the situation that plastic waste is growing to incredible proportions worldwide, knowing that each tonne that is not recycled stays with us for hundreds of years. For this reason, it is very important to do our best to recycle as much plastic as possible.

However, as we all know, this is very difficult. So, the real solution is only to reduce plastic or at least to slow the growth of plastic. And here, paper and cartonboard have an important role to play. In fact, there are many opportunities to replace plastic with more sustainable cartonboard, such as in the product packaging of consumer electronics, for example, or in the packaging of fresh food or bottles and cans. If barrier properties are required, innovative barrier solutions involving cartonboard come into play. MM has been very innovative with barrier coating against mineral oil migration (Foodboard) and grease. The acquisition of Kotkamills has added barrier solutions for cupstock to our portfolio. Jointly, we are working on a reduction of water vapour transmission. It is our ambition to become the leader in barrier solutions.

In this respect, it is unfortunate that the SUPD (Single Use Plastic Directive) has defined plastic too widely: The important question is not whether there is a polymer or not, but whether the product is water soluble or not. This wide definition is very unhelpful in the fight against plastic waste. Also, whilst the European Union has implemented a tax on plastics, many governments still pay it out of their general budget instead of passing it on to polymer producers. As a consequence, it does not have the steering effect it should have.

The seriousness of the sustainability goals that MM set itself is also illustrated by the fact that you are measured by your adherence to them. Was this move a paradigm shift for your company?

On the one hand, it has to be said that MM has always been strongly rooted in sustainability, let's say in a broader sense, especially in terms of environmental and social aspects. On the other hand, since I became CEO, we have gathered an understanding of sustainability that's more strongly based on a scientific and more transparent basis.

At MM, we have moved sustainability to the core of our strategy. MM’s major contribution to a more sustainable planet Earth and to an effective circular economy will be plastic substitution. In addition, we are committed to climate change mitigation by reducing our absolute CO₂ emissions.

Digitalisation is considered the holy grail on the road to greater sustainability and profitability. What role does it play at MM and how do you implement new digital solutions?

With regard to the digitalisation of the supply chain, MM is a digital pioneer in the cartonboard industry.

With MMK Digital, we have developed a platform that makes it possible for the first time to map all business processes online – from production previews, to product selection and booking, to call-offs from stock and delivery tracking including GPS tracking – and to carry them out within seconds. MMK Digital is an industry leading digital interface with best-in-class customer experience, which was awarded with the Digitalisation Award from PPI in 2020. In the next stage of development, the platform will include more and more AI. Another current project in this regard deals with the digitalisation of our sourcing.

As far as the digitalisation of our production and our mill operations is concerned, we are just at the beginning of a long and exciting journey, which will ultimately bring us closer to reaching our financial and sustainability goals.

Containerboard with recycling icon

The Karton King - Highlights Video

Access the original article on AFRY Insights Magazine Autumn 2021 Bioindustry Digital Edition to see the highlights video of the interview of Peter Oswald.