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How Kyiv CPM Group operates in wartime conditions and introduces innovations

Kyiv Pulp and Paper Mill, which has been operating in Ukraine since 1982, is one of the largest full-cycle cardboard and paper production facilities in Europe. Since 2001, the mill has been part of the Austrian Pulp Mill Holding group, which has invested over €350 million in equipment upgrades. The mill produces cardboard and corrugated cardboard, various types of packaging, egg trays, and sanitary products. The total production capacity is 322,000 tons per year. Dr Heinz Zinner, who has been listed in the state register as the ultimate beneficiary of Kyiv Cardboard and Paper Mill since 2022, shared his thoughts on the current challenges with Forbes BrandVoice.

Information on Heinz Zinner

Heinz Zinner is a doctor of economic sciences, businessman and manager with over 60 years of experience. His career started as a sales representative and promoted to the top management of the largest European paper and board companies. Since 2003, he has been a director of Pulp Mill Holding (Austria), and since October 2022, he has been its ultimate beneficiary. He was awarded the Order of Honour for services to the Republic of Austria and contribution to business development.

Overcoming military challenges

You faced certain changes in the company`s shareholder structure in 2022. A Cypriot citizen, Volodymyr Krupchak, who was the beneficiary of Pulp Mill Holding GmbH, withdrew from the holding and you became the sole owner. Why did this happen?

At the beginning of 2022, we decided to withdraw from certain assets in Ukraine. As a result of the announced tender, four companies submitted proposals to acquire shares in Kyiv CPM. However, for various reasons, these deals were not completed. I was the only person who was still interested in these assets, as I know the company and its people and have visited it hundreds of times. I realized that I wanted to invest in the mill, although I was taking a risk, because for some time the corporate rights and property of the enterprise were seized, and thus there were difficulties in cooperation with banks. In the end, we managed to prove to the Ukrainian authorities that we have not violated the law and have not cooperated with the aggressor state. After all, as of the beginning of the invasion, Krupchak had renounced his Russian citizenship long ago and was not even a citizen of Ukraine at the time. Today, I am the sole ultimate beneficial owner of Kyiv CPM.

What was your biggest challenge over the past three years?

It`s no secret that before the war, the Ukrainian paper industry was connected with the Russian market, where pulp was supplied. Due to the war, we had to rebuild supply chains, reorganize business processes and look for new markets for cardboard. Today, our products are sold mainly on the domestic market, so we had to reduce production volumes to some extent. However, it is worth mentioning that Kyiv Cardboard and Paper Mill, located in Obukhiv, has not stopped working for a single day since the beginning of the war. The most difficult challenge was to reorganize the supply chain, both for raw materials and spare parts. Previously, Austrian, Swedish or Finnish companies could deliver what we needed within two days without any prepayments. Now, we have to make an advanced payment, and it has become impossible to engage foreign specialists for supervision. As most Ukrainian employers, we are also faced with the problem of staff shortages.

Do you have the opportunity to invest in the development of Kyiv CPM during the war? Who supports you?

The situation with raising external funds is currently difficult. However, we cannot wait – we urgently need the Yankee cylinder, which is involved in the paper drying process. If we don`t replace this equipment today, Ukraine may face a significant shortage of common goods tomorrow. Therefore, we have to invest only our own funds. The total amount of planned investments by the end of this year is about €10 million.

The owner of Kyiv CPM Heinz Zinner, Austrian Ambassador to Ukraine Arad Benkö and Chairman of the Supervisory Board Timur Sokolov

Ukraine needs foreign investment now. In your opinion, how can domestic producers attract investors?

Any country becomes attractive to investors when it has stable political conditions, a favorable environment for industrial development, educated population and transparent free trade rules. Unfortunately, Ukraine is currently facing some difficulties in adherence to these criteria. Another cause for concern is a certain chaotic approach to the implementation of sanctions policy, which has a negative impact on the general investment climate. Despite all the challenges, investors need to make a profit, as it is critical for the development of the business as a whole. The entrepreneur reinvests part of the profit in modernization and reconstruction, and significant funds are allocated to implement social responsibility programs.

Kyiv CPM, e-commerce packaging

Innovative solutions of Kyiv CPM

Despite the difficulties of wartime, the company is developing and introducing innovations. In particular, the mill launched a line for the production of packaging for online trading. What is the peculiarity of such packaging?

E-commerce packaging is a global trend that COVID-19 and the war in Ukraine have only accelerated. Kyiv CPM produces convenient packaging for books, bottles, household chemicals, cosmetics, perfumes, clothing, small electronics, car parts, and children`s toys – for everything that can be ordered online. Our solution is unique in Ukraine, both in terms of convenience and reliability, as well as environmental friendliness. By the way, we are the only company in the country prodicung eco-craft cardboard based on waste paper with a cellulose top layer. I am convinced that the future of the packaging industry lies in effective solutions for e-commerce.

How do you comply with environmental standards at Kyiv CPM?

In recent years, the company has introduced many innovations to minimize waste generated in the production process. We have made progress in this area. This year, changes to technological processes and the commissioning of special equipment for shredding residues made it possible for us to completely abandon the shipment of waste to the landfill. We sell the shredded film for fuel, while building companies buy osprey for use in brick making. Our global goal is to maximize energy efficiency and saving resources. Environmental friendliness has been at the center of our company strategy since its foundation, as our production is based on recycling: every day the mill processes a thousand tons of waste paper.

What are the current production volumes of Kyiv Cardboard and Paper Mill?

The maximum (estimated) capacity of the mill is 322.000 tons, but in recent years we have had slightly lower production volumes. For example, before the start of the full-scale war, our company had two cardboard machines that produced almost 234.000 tons of cardboard annually and two paper machines with a capacity of 88,000 tons. Now, the equipment utilization is only 67% for the cardboard machine and 53% for the paper machine. Even sales of the well-known Obukhiv-65 toilet paper, which is 100% made from recycled materials, have been reduced. In addition to sales in the domestic market, we also export, as our products meet European standards. However, it is currently small: only 4.2% of total sales, while in 2021 this share was 23.5%.

People are the main value of the mill

About 60% of employees have been working at Kyiv CPM for more than ten years. In your opinion, what retains people in the company?

According to my experience, people in Ukraine today really appreciate the stability that the mill can provide, as 2500 people have permanent places of employment with competitive salaries in the industry.

The enterprise has a number of social programs. People are provided with high-quality medical insurance at the expense of the employer, and all guarantees are fulfilled in accordance with the updated Collective Agreement. We provide comprehensive support to our mobilized employees and the families of those who deceased. Unfortunately, we lost 18 of our colleagues during the war. We maintain a sports complex and our own medical outpatient clinic. We pay special attention to the safety of our employees in wartime.

What are the priorities of the Kyiv CPM for 2025?

The priority task of our top managers is to keep the equipment in good technical condition. Solving problems with the supply of raw materials and building an effective HR policy are also difficult challenges. This is vital for future development. I am not a beginner in this business and I know the pulp and paper industry perfectly. So, in my turn, I can assure you that I will fully support people. We will do our best in these circumstances and will not leave the Ukrainian paper business to fend for itself.

Based on the material of Forbes.ua

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