Progroup Kundenmagazin Profil 2020 EN

The Progroup magazine Heritage shapes the future RELIABILITY, REFLECTION, CONSISTENCY P. 6 Strong partners PIONEERING SPIRIT AND HUNGER FOR INNOVATION P. 28 Consistently successful AHEAD OF THE TREND P. 30 Employer with a future A GOOD NEIGHBOUR P. 47

profil Dear readers, dear Progroup partners, F rom the coronavirus and the resulting economic consequences through to climate change – we are currently facing trends that will require smart minds and level-headed action. We will only be able to meet our aspiration to be consistently successful if we act in a reliable, reflective and consistent way. If we have a plan, not just for what to do right now, but also one for the future. We at Progroup believe that family companies have a big advantage in this regard. My son Maximilian emphasises this in an interview in this issue: Families have a set of shared values. And they think across the generations, acting with a long-term and sustainable mindset. And they do this both in an economic sense and in the ecological and social domain. Strong networks, relationships and actions that benefit us and our customers, our employees and the regions in which our sites are located are crucial for this. We also consider business cooperation to be a social relationship between partners. The customer portraits in this “Profil” reinforce this. And an ecological improvement in production always also results in greater economic efficiency, as is clearly explained in the “Ahead of the trend” article. Our success is driven by our innovative strength. As well as featuring the world’s most powerful recovered paper drum, the most modern paper machine of its type that is currently being constructed in Sandersdorf-Brehna has a circulating water treatment plant which makes it possible to have a completely closed water cycle using the very latest technologies. This is a great leap forward when it comes to sustaina- bility because resources are saved and the environment is conserved. You can learn about this and much more in this magazine. We hope you get through these turbulent times safely, and we already look forward to the next occasion when we can all meet again. Until then, enjoy reading the magazine. Yours Jürgen Heindl CEO Progroup AG 1

profil CON TENTS 1 Editorial 4 Progroup at a glance Heritage shapes the future 6 Reliability, reﬂection, consistency Jürgen and Maximilian Heindl in conversation 12 How a plant is created The world’s most advanced paper factory is being built – a quick recap 16 Growth spurt in Great Britain Europe’s most modern corrugated sheet board plant has been manu- facturing for a year 19 Efﬁcient, interconnected and forward-looking Innovation leadership as a strategy for success 2

profil Strong partners 22 Strong partners Shaping the future together: a portrait of four Progroup customers 28 Pioneering spirit and hunger for innovation How Progroup overcomes technical limits Consistently successful Interview on sustainability: 30 Ahead of the trend Maximilian Heindl banks on Green Hightech 32 The kidney of the paper machine How Progroup conserves resources and the environment 36 Packaging is a raw material Sustainability trends in the packaging industry 38 Consistently successful CFO Dr. Volker Metz explains why Progroup will be successful in the long run Employer with a future 40 Cultural change is not a sprint but a marathon A discussion on modern corporate management and development 44 Agile. Open. Digital. The future of work: Interview with trend scout Raphael Gielgen 47 A good neighbour Progroup supports local causes – a visionary commitment 51 Mission: Sustainability Heide Geber has devoted herself to protecting the environment 52 Legal information 33

profil We arranged to hold a video conference with Jürgen and Maximilian Heindl. At the time they were at the major building site in Sandersdorf- Brehna where Progroup’s third paper factory is currently being con- structed. They were sitting in one of the construction cabins, and they could look out of the window to see how the work was progressing. During the conversation, one thing became very clear: The two of them had a clear vision of what they were seeking to achieve and how to do this, in terms of both the construction site and the company as a whole. J ürgen Heindl, we meet at a time that could hardly be any more difﬁcult due to the coro- navirus. However, it is not the ﬁrst crisis that you have endured as the CEO of Progroup. Where do you see the parallels with the ﬁnancial crisis of 2008/2009, and how is the situation different? Jürgen Heindl In very general terms, I think that the negative effects will be more severe and longer-lasting than the crisis more than ten years ago. For the Covid-19 pandemic had a more radical and sudden effect than the financial crisis. Another factor is that for most industries it will take longer for them to recover from their losses. How- ever, if we look at our market, we notice a big divergence between different sectors and countries. For us as a company, there are definitely many parallels with the situation in 2008/2009: Back then we were also in the midst of a period of huge investment and expansion with the construction of our sec- ond paper factory, the power plant and two corrugated sheet board plants. But the major difference is that at the time the company had to shoulder this huge expansion with the company being only half the size it is now and with much lower profitability. Is the experience gained from 2008/2009 a help? J.H. Yes, it definitely is. After the financial crisis, we reconfigured all our financing structures. Today we make particular use of the measures for boosting synergies and earnings that were developed back then. We have a complex set of tools for managing production and sales very precisely. And we have a company of a very different size and therefore stability. The underlying condi- tions are therefore fundamentally different to what they were back then. The experiences have firstly already been incorporated, we have a “more stable” set-up, and secondly we have a better idea of what needs to be done operationally and can draw on this wealth of experience. Maximilian Heindl, for you a crisis like this is a new experience in your career. What insights will you take with you from this period? Maximilian Heindl For me, the past few weeks have reaffirmed one insight in particu- lar: we basically have to be prepared for any- thing. The basis for this is to have a solid business model and clear objectives. It is also vital to act very fast, just waiting and seeing what happens puts you on the defensive much too quickly. Under my leadership, we immediately formed a Corona Task Force which examined the possible adverse effects on a wide range of different areas, from the supply chain and distribution through to internal and external communication. We all learned a great deal in the process, including that it is not just an empty phrase to say that every crisis also presents opportunities. Fortunately, we have long been advocates of mobile working. The coronavirus has served here as a catalyst in helping us to roll out the principle of working from home across the board in those areas in which it is not essen- tial for employees to be present at the com- pany’s premises. We are also making much greater use of video conferencing than we did previously. It has of course also given fresh impetus to further digitisation of the workplace. Heritage shapes the future 8

Sales of corrugated board are tied to the rate of growth of gross domestic product. You have just said it your- self: current forecasts estimate that this will drop to mid-single ﬁgures in 2020. What does this mean for you as a manufacturer of corrugated board and what does it mean for your customers? J.H. For us and our customers, the upcom- ing worsening of the situation in the market means that we need to think in an even more differentiated way and focus our product ranges on the growth sectors. Corrugated board is now a commodity product. Adapting the product to specific sectors is less relevant for us. It will be much more of a case of work- ing with our customers to increase compet- itiveness. Interestingly, we have noticed that our packaging park customers are having to deal with the consequences of the crisis much less than other customers. This is because they are able to supply products faster, more flexibly, more in line with demand and ultimately also more cost- effectively. This means that establishing packaging parks is a vital tool for delivering products to the corresponding markets effi- ciently and comprehensively. But what it also means for us is that by constantly investing in efficient production facilities we strengthen our leadership on cost, so that we can operate successfully in the market together with our customers. Sustainability plays an important role here: lack of sustainability will become a cost factor. We would therefore be well advised to invest heavily in carbon neutrality and the principle of recycling. Innovative leadership is an impor- tant element of the corporate strat- egy. Plants such as the new paper factory PM3 or the corrugated sheet board plant PW12 are the techno- logical benchmark. What areas are there in which Progroup wishes to be even more innovative – or innovative again – in the future? profil M.H. Our state-of-the-art plants mean that we are effectively ‘Industry 4.0 ready’. ‘Ready’ is good, but at the same time means not yet ‘active’. Business intelligence is based on ‘big data’, so huge amounts of data. We have this database, and it not only relates to the machines themselves, but to the complete value-added chain. The key thing now is to link together and evaluate these data. On the basis of this, we will develop intelligent over- arching control of the individual systems, the respective stages of the value creation chain and the sites. Only then will we make opti- mum use of the advantage that we have thanks to our Greenfield strategy. “By constantly investing in efficient production facilities we strengthen our leadership on cost, so that we can operate successfully in the market together with our customers.” Jürgen Heindl, Chief Executive Ofﬁcer of Progroup Many years ago, Progroup em - bark ed on a new approach with the Next Generation Products, linking together sustainability, production and product. Can you reveal to us which new product innovations you are working on today? M.H. Today we are working less on new products and more on improving the pro- duction processes to boost efficiency and sustainability. Whereas in introducing the Green Hightech strategy we were talking about significantly reducing emissions, today we need to focus on carbon neutrality. Taking a holistic view of the production chain and integration play a major role here. We can implement “zero waste” concepts, so a production chain in which zero waste is Heritage shapes the future 9

profil J.H. As a privately run company, particu- larly in such a capital-intensive industry as ours, you constantly have to look at long- term planning and succession and take the necessary steps in good time to ensure suc- cessful generational change. We have done this and set up an orderly handover process over a period of six years in total in order to deliver the most organic possible transition, but this has been accompanied by essential and necessary changes and new directions. M.H. The challenges that we face – further growth, structural change at the same time with the implementation of an expanded Board and operational management team (OM) and the generational change – require a high level of synchronisation between the two of us, but of course also on the Board and OM. We make a very conscious effort to invest this time because we see the benefit. But at the same time we have the principle of ‘disagree and commit’, which states that everyone from this management team goes along with and implements decisions which are taken jointly, even if they do not neces- sarily reflect their own opinion. It is impera- tive to have a set of shared values here, oth- erwise you very quickly run the risk of going in different directions. produced, at the paper sites for example by integrating refuse-derived fuel power plants. This makes it possible to recycle non-paper components in a carbon-neutral way. The generation and use of biogas from process water purification in closed water cycles also forms part of these concepts. My father always says: Innovation and invest- ment are closely related. And he is right: If you do not make constant investments in innovative technologies and processes, including from ecological aspects, you will have to bear the economic consequences. Our success is based less on constant new product innovations, and more on the long- term strategy of our business models, devel- oping sustainable production and consistent innovation. Close cooperation with the cus- tomers has always been a key aspect for which Progroup has been renowned. This cooperation becomes practically visible with the packaging parks. How many of them exist at present and are more being planned? J.H. Today we have eight packaging park solutions at seven sites. We want to double this number by the end of the strategy period, so by 2025. The packaging parks are a win-win scenario for us and for our custom- ers. They allow us through a joint process and flow of goods to deliver products to our cus- tomers with absolute reliability and flexi- bility, reduce costs and at the same time make significant savings on CO2. The plan is to utilise the opportunities of the ‘Power of Cooperation’ at every existing site and every new site. There is a market for this. Another major issue that concerns Progroup is the takeover of the company. This is a matter that con- cerns many medium-sized busi- nesses and is solved with varying degrees of success. How is change managed successfully at Progroup? Heritage shapes the future 10

profil M.H. I am my father’s son, we share many of the same values and a very similar attitude to many issues. For me, this is the basis on which to scale the successes to which my father has led this company over the last few decades. One task here will be to firmly estab- lish the elements of Progroup’s DNA that he quite naturally embraces throughout the organisation. There are four points that we will be focusing on in particular here: We will develop customer relationships faster and in some areas more closely as we continue to promote the packaging parks model. This means that as a whole organisa- tion we must continue to develop the under- standing of the market and the customers for which my father is renowned. As far as the innovations are concerned, in addition to further growth, in the future it will also be all about modernising the tech- nology at the existing sites and, as I have already said, linking together all processes and sites. Another area of focus will be the issue of sustainability – zero waste, zero emissions, closed material loops: these are the clear goals that we set ourselves. And last but not least, I am keen to explore and use new, modern forms of cooperation, with our customers and equally within the company itself. For reliability, transparency and trust are points that are just as relevant externally as they are internally. This will also require specific development of the corporate culture. This is because talented, motivated and dedicated employees are the most important asset in ensuring that we can continue to write the next chapter in Progroup’s success story. “Reliability, transparency and trust are points that are just as rele- vant externally as they are internally.” Maximilian Heindl, Chief Development Ofﬁcer of Progroup Jürgen Heindl, you built up Progroup. From your point of view, what char- acterises the company’s DNA? J.H. Three things: the absolute reliability that we display to all stakeholders – primarily of course to the customers, but also the employees, partners, investors, and local communities in which we are based. The second thing is a high level of reflection. Every step that we make is weighed up very carefully beforehand, every innovation is tested with the partners involved, every change is modelled through processes, every strategy phase is long planned and then clearly defined. Both together, the reliability and reflection, result thirdly in a high level of consistency in what we do and how we develop. ‘Consistently successful’ is the result of these three factors. Maximilian Heindl, as son you do of course share this DNA. But you are bound to have your own ideas and areas of focus as well. In which direction will you lead the company? Heritage shapes the future 11

profil HOW A PLANT IS CREATED The most modern paper machine of its type is currently being constructed in Sandersdorf- Brehna. PM3 from Progroup is pioneering, in its technology and its performance capacity. Its construction also demonstrates that Progroup pays great attention to sustainability issues. For example, among other things PM3 is being equipped with a new type of circu lating water treatment plant (see page 32). A quick recap – from the ground-breaking ceremony to the present day. Symbolic: The construction of PM3 began on 10 August 2018 with the symbolic ground-breaking ceremony. The spade which Jürgen Heindl handed over to Maximilian Heindl was the same one that the company founder had used in 1999 to herald the start of the construction of Progroup’s ﬁrst paper factory. Heritage shapes the future 12

profil The slogan used at the ground-breaking cere- The biggest recovered paper drum of its type in the mony on 22 August 2019 was: “Lots of money and world: Weighing 340 tonnes, 48 metres long, 4.50 metres effort is being invested here, diligent hands have in diameter. It processes the recovered paper gently with achieved a great deal.” 1300 people are working on a very high yield. The drum pulper (in the picture) makes it the 45 hectare site to construct the plant, which capable of being pumped, and the drum screen washes will ultimately extend for almost 2 kilometres in total. out foreign ingredients which Progroup turns into energy. Heritage shapes the future 14

profil I f despite the uncertainty of Brexit you open a new plant on such a scale in Great Britain and invest a huge amount of money in doing so, you need to have a clear strategy and plenty of excite- ment about the future. With the new corrugated sheet board plant PW12 in Ellesmere Port in Great Britain, Progroup has once again managed to demonstrate that the “Power of Fascination” is firmly rooted in the DNA of the Landau-based man- ufacturer of containerboard and corrugated board. “Our customers have waited for a long time for this new plant and the higher capacities,” says Gerd Rinderhagen, Senior Vice President Sales Board. “With PW12 today we can now cater for what the customers will need in the future.” Right from day one, PW12 has displayed astonishing growth: Following start-up, the growth rates have been an increase in volume of around 35 to 40 per cent per year. Progroup has also impressed many British customers with the stan- dardisation of its products and the high level of efficiency in production. In their eyes, Progroup is regarded as a “typically German” company. This has many benefits: “The British customers really appreciate reliability and innovation leadership,” says Rinderhagen. Highly automated production PW12 is a superlative plant: With a high level of automation, the machine is able to manu- facture 235,000 tonnes of corrugated board a year with a working width of 3.35 metres. A series of new developments delivers a very high and constant working speed of 400 metres a minute. Heritage shapes the future 17 Automated control of the whole facility reduces the requirement for machine operators. The em - ployees receive the latest operating information live on wearables that resemble smartwatches – either presented as graphics or via the headset. “Progroup has implemented a large number of individual developments in Ellesmere Port. In many areas, this really does represent a technolog- ical leap,” says Christophe Haessig, who is respon- sible for technology within Progroup board. These developments not only highlight the “Power of Innovation” at Progroup, but also once again show the corrugated board manu facturer to be a pioneer in the industry. Progroup has had a presence in Great Britain for more than a decade. The corrugator machine at the PW08 plant, which was once in operation in Offenbach/Queich as PW01, was reassembled in Ellesmere Port in 2008. The man- agers in charge continuously pushed PW08 to achieve new performance records. This plant was originally only designed to enhance the produc- tion capacities for the British market. But it quickly became apparent that Progroup would only be able to meet the demand from customers in Great Britain in the long term with a new and more effi- cient plant. Despite all the performance advances that were made, the machine with a working width of 2.50 metres simply could not keep pace with the growth of customers. The insufficient production capacity was threatening to cause a bottleneck for the customers. This was also a risk for Progroup: Particularly as it enjoyed a long and trusting rela- tionship with its customers in Great Britain, the corrugated board manufacturer was keen to grow with them. Ultimately, the time came for Progroup to bid farewell to its longest-serving corrugator machine in January 2019. The shutdown of PW08 heralded the dawn of a new chapter in Ellesmere Port: The location of the new PW12 plant near to Liverpool fits perfectly with Progroup’s Greenfield strategy: It is a modern production facility with excellent transport links that allow the products to be transported quickly to customers in Britain’s industrial hubs. Manches- ter, Birmingham, but also Scotland and Northern Ireland – the journey from Ellesmere Port is no great distance. If you invest on this scale, you can expect to remain state-of-the-art for a long time. The planning for PW12 commenced in 2016, and con- struction work started in 2017. “The new plant has three times the capacity of the old facility and delivers a great deal more with a smaller number of employees,” says Jean-Michel Haessig. He was

profil An emotional moment: Together with employees from the early days, Progroup CEO Jürgen Heindl (2nd from left) shuts down the corrugator machine with which it all began. Start of a new era. responsible for preparing the employees and the operational management for the new plant and implementing the new operating processes. To do this, months before the plant was commissioned, he identified future managers among the em - ployees so that they could be trained to run the new plant. A real pioneering spirit is called for Meanwhile the construction work for the company proceeded through to 2019 – as is fre- quently the case with projects of this magnitude, there were delays and challenges that had to be overcome by working together. In particular the fully automated high-bay warehouse and the logis- tics at the plant presented a headache for the experts: Could the ambitious targets that had been set be met? Yet by working together with the suppliers, Progroup’s employees managed to grad- ually get the plant operating with a high level of personal commitment. “This was the toughest assignment we had ever had. We demonstrated a real pioneering spirit,” says Christophe Haessig. “A number of delays and technical prob- lems during the start-up phase really tested the patience of our customers – especially as reliability is one of our key performance promises,” says Gerd Rinderhagen. “This was where we really benefited from our outstanding network and the trust of our customers that has been built up over many years. They show remarkable loyalty and this is of course particularly noticeable at critical times.” The customers were all the more impressed once the “With PW12 today we can now cater for what the customers will need in the future.” Gerd Rinderhagen, Senior Vice President Sales Board plant was up and running: When they visited the site for the first time, they were able to see for themselves the size and performance capacity of the new corrugator machine. “Although our cus- tomers always trusted us to deliver this boost in performance, they did not expect it to be on this scale and have such an impact,” says Rinderhagen. PW12 and the commitment to the site and market in Great Britain have given a fresh boost to the long-standing partnership with many customers. This also includes a closer working relationship with some customers, true “Power of Cooperation”. The expansion to create a packaging park is another important milestone and over the course of this year will link a major customer directly to production. “The performance capa- bility of PW12 will be able to successfully safeguard and drive forward shared growth over the long term,” states Rinderhagen. Heritage shapes the future 18

“Progroup and its employees are used to constantly pushing bound- aries,” says Christophe Haessig, head of factory planning and technology at Progroup. During ongoing operation, the employees continuously ensure that Progroup’s processes and perfor- mance capacity are optimised every single day. There is a good reason to take such delight in innovation: This techno- logical progress safeguards the cost leadership and sustainability in produc- tion. It cushions the impacts of a short- age of skilled workers and has ensured that in the last four years Progroup has been able to commission five new corrugated sheet board plants which are among the most modern and most efficient plants in the industry. Close links between the plants in Europe A key element for efficient pro- duction within the corporate group is for information to flow smoothly between the plants and the head office in Landau. “Since the company was founded almost 30 years ago, digital networking has been part of our con- cept,” says Alexander Göttel, Senior Vice President Prosystems (processes & IT). When a new plant is being planned, pro- cess managers and IT experts help to design the layout by simulating com- plete plants and their material flows. Progroup receives the necessary oper- ating data from the machine manufac- turers. “This exchange of data is a sign of mutual trust and our close collabora- tive partnership,” says Göttel. The partnership with the ma chine manufacturers also enables us to exploit the opportunities of digitisa- tion: Artificial Intelligence (AI) or the Internet of Things (IoT) will drive for- ward manufacturing in the future. AI applications are based on a vast quan- tity of data, the quality of the applica- tion improves the more data is added to the pool. These data must be brought together in systems so that they can be evaluated centrally. One of the IT pro- jects is therefore to develop a dedicated IoT platform. This is intended to achieve profil even closer links between the corruga- tor machine and the rest of the systems at the Board sites, as well as with data from Progroup Paper. In corrugated board production, with the iCorr system from BHS Corru- gated, the manufacturer of the corruga- tor machine, an IoT-based platform is used and this makes it possible to ana- lyse productivity and process parame- ters. In addition, the platform enables monitoring of the machine status in real time. As soon as values occur out- side of the defined tolerances, the responsible employees are notified by e-mail immediately. They can then essentially fix faults in real time before they can cause any problems. In future, these data should also be used to iden- tify process bottlenecks and achieve further potential improvements. When it comes to paper produc- tion, further new IoT services will go live with the launch of PM3 in Sanders- dorf-Brehna. Voith has developed them under the name OnEfficiency.Strength. Virtual sensors then help to reduce the consumption of resources with the same level of quality. Part of Progroup’s role as a leading innovator is to strengthen the network through to the service provider and supplier by adopting joint stand- ards. The corrugated board manufac- turer focuses on one thing in particular: the safety and security of machines, applications and data. Progroup uses black-box tests to test its own systems: External IT professionals check through the systems and look for routes that hackers could exploit to access them. “Security is extremely important to us because traditional security concepts have been superseded due to increasing networking,” says Göttel. “However, we cannot just solve this with a technolog- ical fix. Rather, all employees must be aware of how important it is to protect our data and systems.” Overcome technical constraints in production Corrugated board is manufac- tured in very complex systems which computers are much better at con- Heritage shapes the future 20 trolling than human beings. Progroup’s experts are already pushing the bound- aries of what is technically feasible in production today. For example, techni- cal innovations such as the Steady Speeder Program ensure that PW12 in Ellesmere Port consistently manufac- tures at a high and consistent operating speed of 400 metres per minute. Inno- vative control units minimise quality defects in the production of corrugated board. And the automated supply of paper will ensure that in future only three machine operators will control the whole of production. “Our processes are already highly automated – but we are of course already working with our partners today to consider what our worlds of production will look like ten years from now,” says Haessig. The factories of the future will probably be configured very differently. Ideally, an operator will get things going at the start of production and then shut down production again at the end of the cycle. “In between times, experts will monitor all machines from a central tower and quickly provide data and system parameters to the employees on the ground via smart wearables,” explains Christophe Haessig. “This will probably be reality for us in a few years.” Such wearables – data goggles or smart watches – will help to enable corrective action to be taken on the ground, based on the latest system information. There are three reasons why Progroup can also successfully imple- ment such ground-breaking visions. The employees and the company as a whole have the right mindset to break new ground and embrace innovations when it comes to its existing processes. This is the “Power of Fascination”. The network of proficient partners forms the basis for trying out new production methods and approaches quickly. This is the “Power of Cooperation”. And with a view to the future, Progroup has the necessary resources and structures to actually implement innovations. This is the “Power of Innovation”.

profil AGE IS NO BARRIER TO PROGRESS Progroup’s partner Heuchemer shows how a traditional company can get ﬁt for the future through innovation 1 Name Heuchemer Verpackung GmbH & Co. KG Head ofﬁce Miehlen/Taunus, Germany Founded Product 1920 in Bad Ems Packaging made of corrugated board, plastic and wood Number of employees 360 Production volume 320 million pieces of corrugated board packaging per year Notable fact The company is run jointly by three great-grandchildren of the founder Progroup customer number 21 This year Heuchemer celebrates its 100th anniversary as a company. The company special- ises in high-quality printed, intricately die-cut and elaborately glued packaging made of corrugated board and plastic for the food and beverage indus- tries as well as packaging made of corrugated board and wood for heavy cargo. “We ensure that the goods get safely from the manufacturer to the supermarket and also look attractive on the shelf in the store to encourage sales,” explains Laura Heuchemer, who is a fourth-generation member of the family company’s management team. For her, the working relationship with Progroup is a “cooperation just as it should be”. She considers the company to be an excellent partner – from the prices it charges and the delivery reliability and quality through to the level of personal attention. And so the two companies have enjoyed a mutually appreciative and inspir- ing relationship from the outset. Laura Heuchemer emphasises: “We are exciting for Progroup because we not only require attractive volumes, but also require very fine grades, and this is exactly where Progroup is very strong – for example with the Next Generation Products.” This has allowed the companies to grow together. “It is just the right fit.” Both companies are renowned for their innovative strength: In 2019, in the company’s 99th year of trading, Heuchemer entered the market with a new, innovative division featuring a state-of-the-art Highcon laser cutting machine and a digital printer. “We saw the opportunity to form an entire new business unit with two machines to produce intricate, individualised packaging. And we took it,” says Laura Heuchemer. With the combination of digital printing and laser cutting, stamping, and engraving, the possibilities for creating sophisticated packaging that will boost sales are limitless. In addition, it is now also possible to cater for customers requiring smaller quantities quickly and individually. “We are a mechanical industry, but Heuchemer Digital gives us the opportunity to play our part in shaping digitisation,” explains Laura Heuchemer. And so really eye-catching sights are produced in Miehlen/Taunus. With its very delicately die-cut products, some of which are truly spectacular, Heuchemer was able to win awards in the very first year. Progroup also gained from this because the two companies can continue to inspire each other. Strong partners 24

profil COMMUNICATION IS THE BASIS FOR SUCCESS An interview with Witold Waligóra, Chief Operating Ofﬁcer of Poprava, and Magdalena Pakuła, sales manager for Progroup in West Poland POPRAVA Name POPRAVA Sp. z o.o. Head ofﬁce Kobyla Góra, Poland 2 Start of packaging production Number of employees 1990 180 Production volume 65 mill. m² of cardboard packaging per year Notable fact Founder Zdzisław Poprawa converted his family company into a limited company in 2019 and today is its president Progroup customer number 1322 Mr Waligóra, how long have you been working with Progroup? Witold Waligóra: We received the first deliveries from Progroup in 2005 from the plants in Rokycany and Burg – this made us less depend- ent on other suppliers that also manufacture pack- aging and are thus competitors at the same time. Our many years of work and experience have allowed us to secure a significant market share in the XXL packaging segment. Our base profile is industrial packaging, usually in large sizes. We manufacture both long and short series. Our most recent investments have enabled us to offer solu- tions for the e-commerce sector as well. What do you particularly value about Progroup? W.W.: The implementation of a modern growth strategy has made Progroup a real trend- setter in the European corrugated board industry, and this also has an impact on our opportunities for development. And the good level of communi- cation between us means that we can always deliver the optimum solution. Ms Pakuła, what makes the working relationship with Poprava so special? Magdalena Pakuła: The good understand- ing of what we can achieve together and what each party needs to do to make this happen. With each problem, each request, we do not need to ask each other the most important question: Whether we know and understand each other’s internal processes. They are so familiar to both parties that we can effectively get started with our eyes closed and work together to find a solution. To what extent has Poprava beneﬁted from the collaboration, Mr Waligóra? W.W.: First of all, thanks to Progroup we have secured a continuously reliable supply of products with short lead times. This enables us to compete with integrated manufacturers. Another important factor is the consistent quality of our products, which can be attributed primarily to the use of Progroup’s papers. How important are the personal contacts here? W.W.: They are the basis for success. I rely on pursuing long-term strategies. This would not be possible without the trusting working relation- ship with the employees and the relationships with customers and suppliers based on partner- ship. M.P.: We are delighted if our partner is doing well. We also support each other through crises. I think this is very important. Both parties have been able to develop in our working relation- ship over many years – not just as companies, but also as partners and people. Strong partners 25

profil “ THE NEW PACKAGING PARK MAKES US EVEN MORE EFFICIENT” An interview with LEWELL managing director Bernhard Lemmink 3 LEWELL Kartonagen GmbH Lichtenfels-Seubelsdorf and Eisfeld, Germany 1985 160 Name Head ofﬁce Founded Number of employees Production volume 200,000 m² of cardboard packaging per day Notable fact Lewell develops roughly 75% of its packaging solutions individually with the customer Progroup customer number 16 Lewell and Progroup are long-standing partners. What do you value about the working relationship? Bernhard Lemmink: When Progroup was founded, it was the only independent supplier that was capable of supplying formats of corrugated board in flexible quantities and different qualities. For processors like us, this is groundbreaking. Unlike previously, we are now able to satisfy our customers’ demands quickly, flexibly and just in time and expand our range. Thanks to our coopera- tion with Progroup, we are the ideal supplier for all mass producers because we can cater for them optimally in their particular quantity segment. What does Lewell represent in the market? B.L.: It has always been important to us not just to manufacture packaging, but to be the partner that adds value for the customer in the corrugated board packaging segment. This is our philosophy. It includes more extensive services, from developing packaging and offering just-in- time storage capacity to making deliveries right on time to the customer’s production line. Who are your customers? B.L.: Our customers come primarily from the metal and wood processing industries, the electrical and electronics industries, and then there are also suppliers of plastics to the automo- tive industry. And not least mail-order companies that often require deliveries at very short notice. We are able to deliver to some of these customers within three hours. How do you envisage a shared future with Progroup? B.L.: The Eisfeld site is located very centrally within Germany. This is why in 2021, alongside Progroup’s PW13 corrugated sheet board plant, we will start operating a new building pro- viding 10,000 square metres of production space and 20,000 storage spaces in an automatic ware- house, and thus optimise the working relationship in a lasting way. The direct link in the packaging park saves costs and scrap materials, and makes us even more efficient. In the medium term, we want to expand to process 100 million square metres of cardboard packaging each year in Eisfeld. Strong partners 26

profil “ PERHAPS THE MOST EXCITING PROJECT THAT WE HAVE EVER HAD” Krystals becomes the ﬁrst packaging park customer integrated at the same site in Great Britain 4 Name Krystals Head ofﬁce Lincoln, Great Britain Takeover by the Shingdia brothers Number of employees Production volume Notable fact 2008 55 Planned capacity of more than 10 mill. m² of packaging per month in Ellesmere Port following start-up Krystals has two business areas, blow moulding for the pharmaceutical industry and corrugated board packaging Progroup customer number 945 Arron Shingdia was 18 and his brother Rowin 23 years old when they took over the pack- aging company Krystals from Lincoln in central England. He recounts that at the time they saw the opportunities in the middle of the recession and decided to invest and turn the company around. “We were like sponges that soaked everything up. We travelled around the globe to learn what the best equipment and the best practice was. Our aim was to understand these processes and then implement them.” The brothers managed to do this with impressive results: Today Krystals is a highly specialist manufacturer – among other things of corrugated board packaging for the e-commerce and mail order sector. The packaging is printed on both the outside and inside to bring the experi- ence of opening it to life for the customer. Another feature is the two strips, which are used on the one hand to make it easy to seal the product on the packaging line and on the other hand can be resealed with adhesive tape for possible returns. They quickly realised, says Shingdia, “that the Pro- liner kraft grades from Progroup were the perfect fit for this because they have all the important environmental references and the right quality”. Krystals was persuaded that it should always invest in the best technology so that it can offer products which satisfy the requirements of the market. Horst Ringe, who is responsible for the packaging park customers at Progroup, sums it up in a nutshell: “We are the weaving mill that produces the fabric. And our customer is the tailor that transforms it into a suit.” In 2020 in Ellesmere Port, Krystals will become Progroup’s first packaging park customer integrated at the same site in Great Britain. “Perhaps the most exciting and most ambitious project that we have ever had,” enthuses Shingdia. The design of the new plant is the result of many years of planning and experience and is intended to ensure maximum efficiency while retaining a high level of flexibility. “The task was not an easy one because normally it is not possible to achieve both things together. But we are confident that we will succeed.” Shingdia’s optimism also derives from the fact that the company sees Progroup as a strong partner: “If we did not believe in Progroup’s philo- sophy and in our partnership, we would not have taken the strategic step to align ourselves more closely with Progroup. This is a win-win scenario. We look forward to the future of a close working relationship of a kind that is not often found.” Strong partners 27

profil PIONEERING SPIRIT AND HUNGER FOR INNOVATION How Progroup overcomes technical limits Progroup sustainably produces high-qual- ity containerboard. At PM1 in Burg, the previous paper finishing recently presented technical limits for the engineers: The existing machine was no longer capable of increasing production and improving the quality of the paper still further. The fitting of the “HardNip” sizing unit promised to deliver a significant improvement, but was risky because such a unit had never been fitted in a paper machine before. The original situation To make containerboard at Progroup, the raw material which is used – recovered paper – is pulped through the addition of water, cleaned and broken down into individual fibres. The basic strengths are set in the front section of the paper machine. Starch has become established as an additive for defining the specific strengths. It is applied to two rolls by means of a film press (Opti- Sizer) and then finally transferred to the paper web. “With this principle, we reached our limits with PM1. The quantity and strength contents in the starch mixture could not be increased any further, and the transfer of the starch to the paper web was uneven. This meant that the strengths were too low and not uniform. Our focus in the desire to make improvements was therefore not just on increasing the strength, but also on stabilising the quality overall,” says site manager Stefan Jürgen on reflection. Better performance while consuming less energy The Progroup engineers consulted with Valmet, the manufacturer of the previous Opti- Sizer. The Finnish company offered a new unit in the form of the HardNip as a solution. This is a finishing component which can also be used to apply additives, but features one crucial innova- tion: The starch is sprayed onto the rolls without any contact. For Stefan Jürgen, the advantages are obvious: “Thanks to this spraying process, the solids contents can be set much higher and there- fore the supply of water can be reduced. This primarily saves energy in the form of steam.” The linear forces acting here are three to four times higher than with the old unit, which also has a positive impact on the strength. Furthermore, the HardNip is noted for the fact that the rolls require less frequent maintenance and the covers need to be replaced less often. This offers cost benefits, saves resources and fits in with Progroup’s sustain- ability strategy. The courage to innovate is rewarded “There are always teething problems with a pilot plant. Lots of trials could only be run for a few minutes. This meant that in particular the tendency for dirt to accumulate in the nozzles was difficult to assess,” says Eike Pitschmann, head of technology at PM1. This was why the project team planned the start-up of the plant with great care and provided specific training to the em - ployees. The aim was to have little downtime and few tears during commissioning. The pioneering spirit and hunger for innovation are rewarded. The shutdown following installation was ended after just ten days and therefore before the scheduled date. There was an immediate improvement in quality. The paper strengths were increased by five to ten per cent while using the same amount of starch. The inten- tion was also to continue to work with Valmet to optimise the plant. Stefan Jürgen sums up: “The courage not just to choose the default option but to look to the future has paid off. Above all else, this is a great team triumph. This innovation would not have been possible without the people behind it.” Strong partners 28

profil Starch ﬁlm Application chamber Paper web Roll QUALITY AND SPEED ENERGY-SAVING RISKY PILOT Additives such as starch or glue have a positive impact on the characteristics of the paper, such as its strength. The faster paper is produced and the thinner the web, the more difﬁcult it is to apply additives precisely and evenly. The HardNip ensures that the starch is applied to the rolls without any contact. This means that the solids contents can be set much higher and therefore the supply of water can be reduced. This primarily saves energy in the form of steam. The technology has never been tested on this scale before. Progroup is entering uncharted territory. But the result is very persuasive: Better paper grades and a higher production speed. Strong partners 29

PROGROUP HAS RELIED ON INNOVATIONS FOR MORE SUSTAINABILITY FROM DAY ONE profil AHEAD OF THE TREND REDUCING EMISSIONS Lower carbon footprint thanks to light and stable Next Generation Products CIRCULAR ECONOMY 100 percent of Progroup paper is made from recovered paper CONSERVING RESOURCES 80 percent less fresh water consumed by PM3 thanks to modern technology GREEN HIGHTECH Strategic sustainability conserves the environment and pays off economically Sustainability is not just a trendy topic for Progroup. As the son of the company’s founder and father to a daughter, having a long-term mindset is second nature to Maximilian Heindl. This is also why the Chief Development Ofﬁcer of Progroup takes his role and the company’s ecological responsibility that is associated with it very seriously. He resolutely advocates decisions which are gradually reducing the company’s ecological footprint. In an interview, he explains how as an engineer he relies primarily on technological innovations and bold invest- ments in future technologies to solve this challenge. Consistently successful 30

profil environmentally friendly way. Is this worth it for Progroup? M.H. As I have said: The economy and ecology are intertwined, I am convinced of this. With the circulating water treatment plant, we treat process water in a kind of biological kidney and thus save 80 per cent or 3,750,000 cubic metres of fresh water per year. At the same time, the plant generates biogas which we use to operate the factory. This means that the paper machine consumes ten per cent less fossil fuels. But at the same time by reducing their consumption we manufacture more environmentally friendly products. So it is doubly worth it. The latest state-of-the-art corru gator machines are synonymous with particularly sustainable production today. What plans are in place to make sure that the plants continue to manufacture efﬁ- ciently in a way that conserves resources in the future as well? M.H. With our Green Hightech strat- egy, which we have been championing for years, we are one step ahead of the current trend. We always invest in the latest technology because this pays dividends over the lifespan of a plant. Continuous technological advance- ment plays a major role here. Progroup maintains close partnerships with the Mr Heindl, sustainability has long been a topic for Progroup. What is the motivation behind this? Maximilian Heindl As a family com- pany, having a sustainable mindset is in our DNA. Progroup should be set up to be “secure for the grandchildren”, as my father always says. And this is both economically and ecologically – the two are inextricably linked. For we only have one planet Earth, which we need and want to nurture for the benefit of generations to come. And because we are aware of this responsibility, we are taking action. We are helped by the fact that our products, containerboard and corrugated board, make it possible to create a successful recycling economy. But their production also requires resources and energy. How do you ensure that containerboard and corrugated board are manu- factured in a sustainable and eco-friendly way? M.H. Our contribution as a company is that we handle resources carefully and continue to reduce greenhouse gas emissions. It starts with the product itself: We produce containerboard entirely from recycled material in which the stored CO2 remains bound even after being reused several times. The recycled corrugated board product and all packaging made from it there- fore helps to store CO2 in a sustainable way. We also make huge savings on energy and emissions in the produc- tion process. One example of this is the combined heat and power installa- tions at some of our corrugated board plants which, in addition to electricity, also generate energy for heating and cooling from the waste heat. At PM3 in Sandersdorf-Brehna, which is under construction, you are investing around 100 million euros in technologies to manufacture in a more Consistently successful 31 machine manufacturers so that the machines can be optimised further following commissioning. For you need to bear in mind: A corrugator machine operates for around 25 years, a paper machine for at least 50. But we continuously develop not only the machines, but also the processes: For example, our packaging park models reduce the transport path to the rele- vant customer to virtually nothing. And if we operate a highly automated high-bay warehouse, we thus optimise the logistics for ourselves and the customer. What role do the Next Generation Products play? M.H. We started to manufacture containerboard with a lower gram- mage, so using fewer resources, at an early stage. This is how our Next Generation Products came about. With them we shape the market by enabling customers to reduce their carbon footprint. The level of acceptance from consumers, who get a truly sustainable product, means that we set trends with our products: The debate about more eco-friendly packaging is well under- way. Progroup is synonymous with growth like no other company in your sector. Is it actually possible to manage growth sustainably? M.H. I am convinced that techno- logical innovation is the driving force for delivering more sustainability. It is thanks to our growth that we are actually able to focus on and invest in innovative solutions. But you also need to have the right mindset: As well as consistently striving for success, you need to remain inquisitive and not only be open to new approaches, but actively seek and champion them. I believe that nothing has characterised Progroup since it was formed through to the present day more than this.

profil “Progroup is entering uncharted technical territory with the circulating water treatment plant. PM1 already sets a high standard, and now PM3 will also set the benchmark in the industry globally.” Phillipos Vrizas, deputy project manager, Taurus PM3 Progroup Paper E nvironmentally friendly container- board and corrugated boards demand technology that is state-of-the-art and sustainable. Progroup has equipped the paper machines PM1 in Burg and the future PM3 in Sandersdorf-Brehna with closed water circuits. The company is thus reducing the use of water as a precious resource and making a clear statement in an era of climate change. The facili- ties within the plant treat the used water and return it to the closed circulation system of paper production. Valuable recovered paper Progroup is planning to produce 750,000 tonnes of containerboard per year in Sanders- dorf-Brehna. With high quality, in medium gram- mages and with enormous fibre efficiency. PM3 will therefore require 860,000 tonnes of recovered paper each year. The paper is purified in the stock preparation section and pulped to create fibres from which new paper is produced. As recovered paper has a high rate of recycling, only the targeted use of a drum pulper will ensure a long fibre lifespan. The technical facilities for stock prepara- tion are becoming increasingly more sophisticated and reducing the amount of recovered paper that is used. Focus on water as a resource Right from day one, water as a resource played a key role in the planning of the new paper machine PM3. In order to consume as little fresh water as possible in the production of paper, Progroup purifies the process water in a specific facility: This ensures that the state-of-the-art paper factory in Sandersdorf-Brehna uses 1.2 to 1.3 cubic metres of fresh water per tonne of paper; the plant in Burg dating from 2000 requires 1.4 to 1.5 cubic metres. This is a marked difference from the indus- try average of around 6.2 cubic metres per tonne. Biological kidney For the purpose of purifying the process water on PM3, Progroup teamed up with its part- ner Meri Environmental Solutions to develop a special closed water circuit. The circulating water treatment plant which recycles the water works like a biological kidney. This ensures that recovered paper impurities in the process water are biologi- cally degraded and converted into biogas. As a result, up to 10 per cent of the natural gas that is used is replaced with the biogas. In addition, the inorganic contents, such as lime and other salts, are further processed and utilised in the form of sludge. Cleaning in stages The mechanical pretreatment takes place in the stock preparation section. In the down- stream circulating water treatment, the water is conditioned in the pre-acidification stage for anaerobic (anaerobic – without oxygen) digestion. In the anaerobic stage of the plant, micro organisms convert organic impurities into biogas in the absence of air. The water that has been treated in this way then flows into the stripping reactors and is intensively aerated there. This increases the pH of the water and the dissolved lime is precipitated. The subsequent flotation system skims off the floating lime components. This water is then returned back to the overall process. All of the water used in production is processed roughly twice a day. As is the case with PM1, this means that with PM3 absolutely no process water ends up in municipal or industrial wastewater treatment plants. Further processing The lime which is separated off can be added for example in a brickyard in cement production or in road-building as a filler. The organic contamination in the process water is largely converted into biogas (methane). The biogas is used in the plant’s own boiler house and can replace the appropriate quantity of natural gas. PM3 therefore saves up to 62,000 megawatt hours of natural gas and prevents the emission of more than 12,000 tonnes of carbon dioxide each year. Innovative production techniques reduce CO2 emissions by a total of 170,000 tonnes in com parison to similar plants. Consistently successful 33

profil 4 FLOTATION In the flotation tanks, floating lime is collected and skimmed off. Stripping tanks Air CO2 Plant building OPTIMUM PROCESSES The closed water circuit works like a biological kidney that care- fully purifies the process water. R o ll s t o r a g e f a cilit y P u riﬁ e d p r o c e s s w P r o c e s s w P r e e m - a e r g ci d e n ific a t e r fr o c a y t ti o a n n a k s n d a t e r t o t h e p m t h e p a p a p e r f a c t o r y e r f a c t o r y P a p e r m a c hin e B o ile r h o u s e C ir c tr e ula a t m tio e n t n w a t e r P i p e b ri d g e Consistently successful 34 S t o p r e c k p a r a tio n R e c o v e r e d p a p e r h all

profil 3 STRIPPING Compressed air and stirring cause the lime dissolved in the water to precipitate. 2 ANAEROBIC REACTORS Microorganisms break down organic contaminants in the water under anaerobic conditions. Standpipe Biogas Exhaust air puriﬁcation Biomass A Bio m ass storage tank C O D reduction of up to: 140 tonnes a day n a r e a e r o c t o r s b ic 1 PRE-ACIDIFICATION The pre-cleaned process water from stock preparation is prepared for biological purification. Biogas The biogas w hich is produced 62,000 W h of natural gas saves up to: M Biogas storage tank D esulphurisation Fresh w ater saving up to: 90 % Consistently successful 35

to protect products. In these cases, you should therefore use materials which can easily be separated and where possible single materials to ensure they can be recycled,” explains Kosloh. For if the individual components can easily be separated, it is possible for many plastics to be recycled. Soon organically produced plastics may even replace petroleum-based materials. But sustainable packaging is often a question of money. “Ulti- mately, these questions must be answered by users,” concludes Kosloh. “If the legislation ensures that there is a sensible balance between ecology and the economy, this will undoubt- edly create an incentive for consumers to opt for the more eco-friendly solu- tion.” Progroup has invested in the most modern technologies and designed its supply chain to be highly efficient and create the least possible environmental pollution. “We operate in a structurally sustainable market and within this market we raise the processes to an excellent level,” says Philipp Kosloh. “We as a company and our employees can be proud of the positive contribution we make to the environment.” The sustainability of a packaging material is shown by a life-cycle assessment which considers not only the economic efficiency, but also the way in which the packaging is produced. profil A study by the market research institute Ipsos from 2019 shows that more than three in four consumers in Germany want to buy products which involve the use of as little packaging material as possible. Progroup responded to this trend for more sustainability very early on. Recycling loops that work well “With our Next Generation Products, we are not only pursuing our strategy of ‘minimal use of materials for maximum performance’, but we are also able to meet our customers’ requirements for recyclable pack- aging,” says Kosloh. Paper-based packaging has a huge, fundamental advantage: It rep- resents recycling loops that work well. In Germany, two-thirds of all goods are packaged and transported in transport packaging made from corrugated board. Paper recycling has long since become an integral part of our modern industrial society. This recyclability is the key to resolving a paradox in many industrialised countries For despite a desire for more sustainable packaging, the volume of all kinds of packaging waste has been rising continuously for many years: According to the latest figures from the Federal Environment Agency, 18.7 million tonnes were amassed in Germany in 2017 – 500,000 tonnes more than in the previous year. Reconciling ecology and economy New ideas are needed to solve this problem. Which product has which specific requirements, which packaging is suitable – this is what matters. Plastics also still have a major role to play. They are easy to pro- duce and have properties which are advantageous for example for the pharmaceutical and food industries. “There are lots of proclamations from industry to minimise the use of plas- tics and at least to employ recyclable packaging. It is certainly not always possible to refrain from using plastics Consistently successful 37 Philipp Kosloh, Chief Operations Ofﬁcer of Progroup F or many years now, Progroup has been taking responsibility for the envi- ronment with its products. “The papers and corrugated board for- mats which we produce and distribute are fully recyclable and form part of a very efficient and sustainable circular economy,” says Philipp Kosloh, Chief Operations Officer of Progroup. This is because nowadays pack- aging has to perform many different tasks: It protects goods, ensures a longer shelf life and facilitates han- dling. “Trends such as digitisation, industrialisation and demographic change are transforming the packag- ing market: Combining smaller batch sizes and new functional or smart packaging with more sustainability – these are just some of the challenges for the industry. Our aspiration is not just to meet these trends, but also to work with our customers to identify them at an early stage and then cater for them,” adds Kosloh.

profil TENTLY CONSIS SUCCESS FUL Dr. Volker Metz, Chief Financial Ofﬁcer of Progroup, on longterm planning and market capacities with this. For the company has grown constantly and solidly in the last few years.” The market for corrugated board is very stable overall, and this is demonstrated by the continuous growth in the sector. The same is true of another area of Progroup’s business, namely the generation of electricity and steam, which is done in a power plant at the Eisenhüttenstadt site and in the medium term will also take place in Sandersdorf- Brehna. The production of paper, which will take place in three factories in the future, is more vola- tile due to the fluctuating margin that is influenced primarily by the very different price of recovered paper as the raw material and the regularities of a transit industry; but here too Metz is confident: “We have a very modern infrastructure and extre- mely advanced facilities. This means we can secure our cost leadership so that we are also well placed to withstand difficult periods in our business operations. The current situation does of course present us with great challenges, but we are start- ing from a positive place.” P rogroup is a strong company with a solid foundation. In the past few years, it has operated with a for- ward-looking attitude. This has led to a positive starting position. This is why with the outbreak of the coronavirus crisis the Chief Finan- cial Officer Dr. Volker Metz is also confident in his assessment of the situation. He explains: “The packaging market gene- rally directly follows gross domestic product. Even though in a situation like this production will decline in line with the trend in GDP, we can cope Consistently successful 38

profil As well as the modern facilities, there are other factors that leave Metz in no doubt that Progroup will continue to be successful in the market: efficient, lean processes, a large quantity of high-quality products, the resulting high pro- ductivity of the machines and the utilisation of the plants overall. And from the company’s point of view, the business model is superior to the integ- rated suppliers. Right from day one, Progroup has committed itself to a Greenfield strategy with investments at the highest technological level and specialised in producing containerboard and corru gated board formats. Medium-sized packa- ging manufacturers, which are generally family- run businesses, then perform the further proces- sing required to make packaging. This is a set-up that both parties benefit from: Progroup now has a very broad customer base throughout Central Europe which in turn is supplied quickly and flexibly with high-quality corrugated board formats at marketable prices. He is therefore very confident: “Together with our customers, we will be more successful in the long term than an integ- rated company.” It is not just the short-term performance, but long-term success that counts Progroup, like most of its customers, is a family company. The CFO sees this as a clear advantage: Companies that have a stable group of shareholders or owners do not have to think from quarter to quarter, but can instead focus on longer- term business development. Large companies mainly grow inorganically, which means they make acquisitions. They hardly build any plants themselves or make major investments which are designed to reinforce a long-term commitment. Progroup adopts a fundamentally different approach: The consistently implemented Green- field strategy is based on the construction of new plants. This has the major advantage that over the years they are very much state-of-the-art – and remain up-to-date – and so drive the growth trajectory from within the company. However, this does demand a high level of capital. Metz explains: “We adopt a very long-term approach when it comes to capital procurement. Firstly, the investments that we make are huge. You cannot pay back investments of this magnitude in the space of just a few months or years, so they require long-term financing. And you have to take pre-emptive action.” The most recent project, the PM3 paper machine, is the best example of this: At the beginning of 2017, borrowing terms were nego- tiated which envisaged that a paper machine would be financed at some point in the future. Right from the outset, care was taken to ensure that borrowing terms and other possible financing tools were com- patible. And that they also took account of a Green- field project. This means that initially there is a negative cash flow for a few years before the finan- cial return begins. Thanks to this foundation which was put in place at an early stage, in 2018 when the actual decision was taken to construct PM3 by 2020 it was possible to secure the overall funding that was required relatively easily. A good name in the ﬁnancial sector Investors appreciate it if you present a sta- ble business model and deliver what you promise. They like it when companies are stable and gener- ate positive profits. The high level of reliability, coupled with transparent communication at an early stage, ensures consistently positive feedback from banks and investors. Progroup has thus acquired a very good name for itself over the years and is a valued asset for longer-term investments and partnerships. The company also pursues the same long- term approach as it does with its capital procure- ment when it comes to taking on debt. The main aim after completing PM3 will be to reduce the debt to get into the defined target range for net gearing. “Although we will need to make further investments, and secure funding for them as well, the level of indebtedness must be reduced again first. And I have no concerns that we will not be able to achieve this,” says Metz with confidence in looking to the future. Additional investment for sustainability An additional 100 million euros have been invested in sustainability for the PM3 project. This is money that would not necessarily have been required for successful production. The question of whether he as the CFO went along with this decision from the start amazes him, because these are firstly very innovative themes. Secondly, he is convinced that the investment will pay off both ecologically and economically in the long term. “Do you know, a paper factory is around for at least 50 years, so it makes a great deal of sense to use the best technology possible, with the best level of energy efficiency, because in the long run this will pay dividends in both respects. This is why opin- ions were not split on whether this investment made sense.” Consistently successful 39

profil Prof. Schumacher, everyone is talking about corporate culture and cultural change. Why are these topics so important today? Thomas Schumacher Because the world of work is undergoing such profound change. There are several dimensions to this. The ﬁrst is relatively clear and pragmatic: Digitisation means that organisational structures and process ﬂows need to be reviewed and adapted where necessary. This is extremely important for Progroup in particular: Smooth interaction between papermaking, corrugated board production, logistics and distribution, an optimum production process within the plants, and close cooperation with customers - all of these things need to be guaranteed. There is a good reason why the Power of Cooperation is part of the company’s DNA. This cooperation requires a common basis, otherwise it will not work. An equally big challenge is changing the sense of work. To put it bluntly: If the work no longer needs us, why do we then need the work? Having a joint understanding of the values, identifying with the company is extremely important for staying the course with the change and getting all employees involved and bringing them with you. In our discussions, Maximilian Heindl also identiﬁed these factors as key elements for the corporate culture at Progroup. Thomas Schumacher Maximilian Heindl For me, modern-day management means on the one hand accepting responsibility, but at the same time also working in a team and thus delegating responsibility. This requires trust, clarity and decisiveness, but this clarity must be the result of a joint discussion. This is very much related to the fact that the attitude to work has intrinsically changed, this is the sense question that Thomas alluded to. Work should not only provide a secure livelihood, it should also make sense, contribute to the development of society. And employees want to determine the way they work, they want to get involved, be heard and appreciated. Maximilian Heindl Since Progroup was formed, the company has grown quickly and constantly. At a time when there is a shortage of skilled workers, it cannot have been an easy task to recruit new employees. Did this also play a role in the thinking behind embarking on such a comprehensive cultural process? Maximilian Heindl Yes, certainly. We are convinced that having a good corporate culture is a real competitive advantage. But it is of course just as important to establish integration and identiﬁcation with colleagues. We actively integrate the many new employees and create a shared view of ourselves. Whether you are working in Italy, England or Germany, in an ofﬁce, production or as a truck driver. Employer with a future 41

profil “Culture eats strategy for breakfast,” said the economist Peter Drucker, and many managers will nod approvingly. But how exactly do you approach such a cultural process? What did Progroup do? Thomas Schumacher We asked all employees a total of 64 questions. As well as cooperation in a team and at the site, this also focused on questions of leadership, understanding strategy or focusing on the customer. This generated a very comprehensive picture of the situation in the different plants and teams. We then made the results transparent to the whole workforce and presented them as the basis for discussing what the next steps should be. How should we imagine this – how exactly did these discussions proceed? Maximilian Heindl A Board member was present with the divisional manager and plant manager at each site in every single shift and discussed the results with colleagues, answered any questions and presented an outlook of what would happen next. From our point of view, this was an extremely exciting and helpful process, even though it was in fact just the ﬁrst step on our path to creating a shared understanding of our corporate culture and values. Mr Heindl, what were the most important ﬁndings that you gleaned from this process? Maximilian Heindl As a Board, we were very impressed overall to see what a high level of understanding of strategy there is in the company and how big the focus is on the customer. The employees have a huge level of interest in over- arching themes and projects. And there is deﬁnitely an interest in working together to shape the road ahead. We will build on this. But we also know that we need to earn this trust every single day. This is why working on the corporate culture is not just a single action. We have taken speciﬁc steps to change the most important points that were addressed and we are continuing to work on this. Thomas Schumacher The whole discussion takes place in a wider context, namely of developing our own form of leadership and cooperation. Progroup is in the midst of a long-planned transition process as far as the succession of the company management and, linked to this, the leadership structure as a whole is concerned. Culture has a particular role to play here. Employer with a future 42

profil Thomas Schumacher It is all the more important to understand that culture is not a project, but a process. Culture is a living thing, so it is constantly evolving. It is vital in this process to have shared values. They are an expression of the corporate culture, they deﬁne guidelines for work and cooperation. This solid value framework should not only exist, but should also be ﬁrmly established and practised in the minds of all employees. Values only become valuable and rewarding if they are put into practice. Maximilian Heindl That is absolutely right. Certain cornerstones such as performance and reward or innovation and responsibility have existed right from the start. As a family company, we have also always focused very deliberately on the link between our heritage and future. We have now developed the values on precisely this foundation and based on our DNA – the Power of Fascination, the Power of Innovation and the Power of Cooperation – deﬁned a ﬁxed set of values. The values are the foundation. How do you manage to get the employees to engage with this, how are they translated into everyday life? Maximilian Heindl We translate values into principles of action because otherwise they remain abstract and vague. One example: One of our values is trust and reliability. Everyone likes this, nobody will take issue here. But what does this mean in everyday life, how are these values practised? In working groups with interested colleagues, we devised principles of action and rules of conduct for them. In the case of trust and reliability, for example, one principle is: “We communicate at an equal level: openly, directly and respectfully.” Every- one – including me – can apply this in their daily work and also question themselves with a critical eye. What are the next steps in the further development of the corporate culture? Maximilian Heindl We will primarily now also practise what we have analysed and discussed. This includes how we engage with one another, but also includes very practical points such as ﬂexible handling of working hours and the place of work. In a company in which many people work on one machine and therefore in a ﬁxed structure, this is easier said than done. This is why the task ahead of us in the next few years is to develop ﬂexible solutions which satisfy everyone. In addition, we will expand the discussion surrounding values and practical behaviour widely within the company with the aim of ensuring that every single team, in the plants and at the management level, discusses and deﬁnes how we want to work together. I am conﬁdent that by doing this together we will successfully master the challenges of the future. Employer with a future 43

profil Today working in groups accounts for half the time we spend working. Teamwork has long been a matter of course that many of us are not even really conscious of. AGILE. OPEN. INTERVIEW WITH VITRA TREND SCOUT RAPHAEL GIELGEN If you think that we are already work- ing in a digital way today, you will be amazed to see all the things that will become possible with new technolo- gies in the future. The space in which work takes place will change in the future: It will offer development oppor- tunities and be as agile and open as the employees that utilise it. DIGITAL. THE WORLD OF WORK IN THE FUTURE Employer with a future 44

profil Mr Gielgen, you say: “The work of tomorrow is an ecosystem which will cater for a new age. This just needs to be explored.” What essential factors will inﬂuence this ecosystem? new developments and advancements. We need this human feedback. With greater involvement, we also establish a stronger level of identification with the work. Raphael Gielgen I see three essential points here. First: The essence of work is changing. Routine work is greatly decreasing – and that is a good thing. What is increasing? Project work and what I call permanent beta work, work in flex- ible teams which are constantly reformed on a project-related basis. It is all about the willingness to change – of the companies and also of every single employee. What this requires is curiosity and creativity. Second: Digitisation. We all think this is already here. But in actual fact it has barely arrived yet. The new technologies, the interaction between hardware and software, are allowing us to expe- rience transformation on an entirely new level. And third: the workspace, that is to say the “receptacle” in which work takes place. These spaces will look quite different. They need to make work visible, offer development opportu- nities and be as agile and open as the employees that utilise them. “Work must be visible” is one of your theses. Progroup is a manufacturing company, so the work is very visible here. What does the future of work look like here? R.G. Your business is currently booming because there is a crazy level of demand for corrugated board. At the same time, the new technologies will mean that the areas of work will change for you too. The visionaries within the company will spot new opportunities and areas of business. Ideally, this process will be visible to everyone. We need to involve all employees actively in key activities in the future. The knowl- edge and the experience of the employees are valuable assets in advancing the machines and production. For example, they can play a part in For some time now, there has been a dialogue between the company manage- ment and employees at Progroup so that necessary changes can be introduced by working together in partnership. This often focuses on issues such as working hours and remuneration systems, but not enough attention is paid to the future of work. R.G. This is almost always the case initially. It is highly likely that a discussion about new work will be largely about dealing with past issues. And this is also ok. The issues of the past need to be solved first, then you can focus consistently on what happens tomorrow. We need to start afresh from somewhere. There needs to be a willingness to engage in dialogue on both sides – employees and company management. Both have their points of view, which should be listened to, and you should attempt to understand the other party’s position. And what is very important here is that there does not have to be a solution for everything immediately, you also need to be allowed to take some time to reflect. For we have forgotten how to do this. Disruption was one of the most used words of the 2010s. Do we have to make a conscious break with what we are familiar with or can new things evolve organically? R.G. The new economy will be completely dif- ferent to what we have known before. This change is fundamental, it is not just about moving to a different office. It is just like with a garden: We can only successfully grow new plants if we also remove the soil. A changed ecosystem is needed. The nice thing for those who have already been working for a long time is that towards the end of their career they will learn another new way of working, just like a new language. Employer with a future 45

profil How can you encourage people to take delight and pleasure in the change? Change is never painless. Can you alleviate the pain? R.G. Let us assume that one of your friends has a vegan restaurant and invites you for a meal – you will experience something completely new. Most people will say: I would never have thought the food would taste that good! This is an experi- ence you would not have dared to try if it had not been your friend who asked you. Curiosity is like a muscle. But our muscle is not well trained enough to do new things. From a defensive perspective, you say: I must break old habits. But if you are being positive, you are following a new path, exploring and learning new things. We need to highlight the potential that exists here. What is also required is psychological security for the employee: He or she needs to know that it is ok to engage with this, to train the muscle, even if it does not work first time round. R.G. Do you know, you also have to be able to endure a little. We all believe that nothing should be painful anymore. There are some things where you also need to sweat a little, you can occasion- ally lie in bed with a fever. Change is not easy, because the world is not easy. Vitra is a family company like Progroup. Do family companies ﬁnd it easier to embrace change? R.G. Yes, definitely. Because a family business owner has a much greater feel for the company. They have an emotional and cultural affiliation with the company, not just a commercial one. I don’t want to offend the managers that get on the plane with me tomorrow, but with all due respect: Many probably think that culture only takes place at the theatre, and you can buy a ticket to see it. You have compared the Vitra Work Panorama to a weather map that shows which trends and general weather patterns exist. What is your forecast for the next few years? R.G. The contents of the weather map in the future will be dictated quite literally by the weather. The biggest issue will be climate change. This will concern us more than any of us can imagine, and also have massive repercussions for busi- nesses. Here too it is true that we think we’re in the middle of it – but it hasn’t even begun. RAPHAEL GIELGEN Raphael Gielgen is future of work trend scout at the Swiss furniture design company Vitra. His mission is to travel around the world seeking to deﬁne a new era. He documents his ﬁndings and experiences on the Vitra Work Panorama – a map showing the trends and patterns of the future world of work. Employer with a future 46

profil A GOOD NEIGH BOUR You never just build on a greenﬁeld site. When a company moves into a location, it also becomes part of a community. This at any rate is Progroup’s philosophy: To be a good neighbour to the people at all its sites. The company therefore gets involved in the social life of the respective town or community and also takes respon- sibility itself. “You can use education – social, sporting, ecological – to enact positive change in the long term,” says Herta Heindl, the wife of the company founder, in explaining Progroup’s involvement. This is why the com- pany speciﬁcally supports the environment as well as encouraging children and young people – in the form of donations, sponsorship or other partnerships. “We look at what motivates people in the corre- sponding region,” explains Carolin Bollinger, location mar- keting ofﬁcer. This is how for example the idea came about for the “Every tree counts” project to mark the 2018 State Garden Show in Burg. In addition, she goes on to say, it is important “that with our commitment to a region we make a valuable contribution because it has a lasting impact.” As well as nurturing the natural environment, this also includes strengthening social cohesion. Examples of this include supporting projects for children and young people such as the youth football team in Sanders- dorf-Brehna or the Landau Children’s and Youth Farm. They combine creativity with ecology and social learning. To create caring cohesion, which Progroup wishes to promote, as a good neighbour should. “You can use education – social, sporting, ecological – to enact positive change in the long term.” Herta Heindl, wife of the company founder Employer with a future 47

profil CLIMBING, GARDENING, EXPLORING NATURE Progroup for the Landau Children’s and Youth Farm Landau is very fortunate: “Every town should have a farm for children and young people,” says Dagmar Flörchinger. And Landau has one – thanks to Dagmar Flörchinger. The art therapist and creative educationalist manages the farm for children and young people in Progroup’s home town in Germany’s Palatinate region which she started in 2012. The farm is more than an adventure playground. It is a popular place to visit for kindergartens and school classes, for parents with children, and above all it is also a place for extracurricular learning. Progroup sees the crucial strength of the concept as follows: “It creates an impor- tant space for adolescents in which they can develop and receive support and encourage- ment regardless of their back- ground or social status,” says Maximilian Heindl. “This approach is exemplary and we are very happy to support it.” Children’s and youth farms, as they are organised in the Federation of Youth Farms and Adventure Playgrounds, rely on receiving financial support from sponsors and businesses. “We are impressed,” says Maximilian Heindl, “to see what valuable work is done here. Integration and inclusion are not just theo- retical topics, but are actively championed. The children play together and of course they sit next to each other around the camp fire. We are delighted to be able to make a contribution to this.” Farm manager Flörchinger was therefore also thrilled when Progroup donated the signifi- cant sum of 12,000 euros to support the project in February 2020: “They approached us, visited our site and found it to be just delightful. The very generous donation makes us very happy.” Employer with a future 48 “Every town should have a farm for children and young people.” Dagmar Flörchinger, art therapist and creative educationalist

profil A TOWN, A CLUB, A STRONG LOCAL PARTNER Progroup sponsors the children’s and youth teams of SG Union Sandersdorf What is locally important? Where can we reach the people? According to Carolin Bollinger from Progroup’s location marketing team, these are the first questions which the company looks at to integrate itself in the community in a meaningful way. At the new PM3 site in Sandersdorf-Brehna, it quickly became clear: The town loves its sports club, SG Union Sandersdorf. As Progroup focuses primarily on encouraging children and young people, Bollinger says that the decision was made to support the club’s youth football division. SG Union has roughly 1,000 members, its sports and leisure centre can in fact accommodate 7,000 people – believe it or not half the town’s population. Bollinger recounts that it was quickly clear that the company wanted to cooperate “soon after our PM3 team arrived in Sandersdorf”. A sponsorship agreement was concluded in 2018, initially for three years. The Progroup logo has appeared on the youth team’s shirts ever since. SG Union greatly appreciates the relation- ship with Progroup. The people at Progroup, the club stated in February 2020, “are renowned for innovation and environmental awareness, they represent the high technology of the world’s most modern paper factory, and not least they offer new opportunities in the labour market here in the chemical region.” Two champions have teamed up here. Employer with a future 49

profil TREE SPACE The “Every tree counts” project In 2018, more than 300,000 visitors felt “...embraced by gardens”. This was the motto for the State Garden Show in Burg. Although the town near Magdeburg, which since 1998 has been a strong Progroup site with a corrugated sheet board plant, a paper factory and a logistics company, is known as the town of towers, it is also surrounded by lots of green spaces. The perfect location for a garden show. To reflect this, Progroup devised the “Every tree counts” project. With this initiative, the company wanted to show that it was a good neighbour and help to make Burg and the surrounding area even greener. For this purpose, Progroup employees handed out free hornbeam seedlings at the garden show. Everyone could then upload a photo of their planted seedlings on the project website. But there was even more behind this initiative: Trees also have a very important role to play in the fight against global warming. They store a huge amount of carbon dioxide. Planting trees is the most natural method of binding CO2 from the atmos- phere. Scientists estimate that each native tree that is planted absorbs ten kilograms of CO2 per year. With each picture that is uploaded, a counter on the website which uses this average as a basis adds up the CO2 which is bound thanks to the project. “By taking part in our initiative,” emphasised Progroup CEO Jürgen Heindl, “the visitors to the garden show made an active contribution to improving the climate.” This is very much in keeping with the Green Hightech strategy which the company has embraced to ensure a sustainable approach in handling resources and the environment. Specifically, this involves the Next Generation Products, in whose production average CO2 emissions are lower than with standard products on the market. And the fact that Progroup only ever processes recovered paper shows that here too every tree really does count. “By taking part in our initiative, the visitors to the garden show made an active contribution to improving the climate.” Jürgen Heindl, Progroup CEO Employer with a future 50

profil MISSION: SUSTAINABILITY HEIDE GEBER HAS DEVOTED HERSELF TO PROTECTING THE ENVIRONMENT FOR PROGROUP PM3 then got in touch with her: “There’s a new project here, would this appeal to you? And it did appeal to me. Seeing such a machine develop once more, on a greenfield site, that is definitely very exciting. Right from day one, you can take the right steps when it comes to sus- tainability.” It is certainly a similar experience to watching a child grow up. And she knows what she is talking about: She has not only “raised” three paper machines, she has three children as well. D o all good things come in threes? Heide Geber has to laugh: “Once PM3 is opera- ting, I will first need to recuperate.” The head of environmental and regu- latory management at Progroup has spent months working to ensure that everything was done properly in terms of environmental protection at the PM3 paper factory which is under construction in Sandersdorf- Brehna. For the law, specifically the official regulations, are her area of responsibility. “Before even the first spade can be dug into the ground, you have to obtain the permits.” What is the level of land sealing? How much noise will be produced and what sort of facade will insulate against it? What emissions will be released? Geber, who was born in Magdeburg, has to clarify and obtain approval for this and much more. The trained mechanical engi- neer benefits from her education here. She can understand technical processes, for example in the con- struction of PM3, where great value was placed on sustainability right from the start: “I like to look for every avenue where it may be possi- ble to make ecological improve- ments. What is great is that these things then deliver an economic benefit too.” Consequently, PM3 is already EMAS-certified before it starts operating in summer 2020. The “Eco-Management and Audit Scheme” (EMAS) is a scheme that has been developed by the EU for companies that want to improve their environmental performance. By participating in it, Progroup is pledging to reduce its energy consumption, save resources and minimise the volume of waste mate- rials produced. The PM2 paper factory in Eisenhüttenstadt has also been EMAS-certified for more than ten years. Heide Geber thus coordi- nates a sustainable environmental management system for Progroup across all sites. Heide Geber, who has been at the company since 1999, helped to plan not just PM2, but also PM1 in Burg and saw them start operating, which is now 20 and ten years ago, respectively. At the time, four folders of official “paperwork” were produced for the application for the permit for PM1, and with PM3 the figure is 20. Today she is responsible for dealing with the environmental issues for all three plants – including after commissioning as well. “I nat- urally like to see the bigger picture. For the future is of course important to me.” This is also why she really likes working in a family company that values continuity and sustain- able prospects for the future. “Progroup pursues all sustainability measures extremely consistently. This starts with the fact that we create a high-quality product from recovered paper which to others is just waste.” In 2013, Heide Geber moved to the pulp industry for four years. However, the project manager of Employer with a future 51

profil LEGAL INFORMA TION IDEA AND CONCEPT Progroup AG Strichpunkt GmbH PUBLISHER Progroup AG TEXT Strichpunkt GmbH EDITOR Progroup AG marketing@progroup.ag PICTURE CREDITS Axel Pfaender Hartmut Nägele Heuchemer Jindrich Novotny Krystals Lewell Niko Wilkesmann Pexels Pixabay Poprava Progroup AG SG Union Sandersdorf Thomas Schumacher Tobias Faisst Unsplash Vitra DESIGN AND LAYOUT Strichpunkt GmbH TYPESETTING Strichpunkt GmbH Ultrabold Kommunikationsdesign GmbH LITHOGRAPHY ctrl-s GmbH, Stuttgart PRINTING Blaich Druck GmbH, Straubenhardt TOTAL PUBLISHED 5000 copies CORRECT AS OF June 2020 All rights reserved No part of this work may be reproduced or processed, duplicated or distributed using electronic or mechanical systems in any form without the written permission of Progroup AG. © Progroup AG 52