Opportunities and challenges in times of global crisis

Increasing momentum in the glass industry

The glass industry has traditionally been characterised by a leisurely pace of change. This is because glass – as a material that has been in use for thousands of years and is essentially familiar – justifies long investment cycles. There is a value chain typified by well-established processes and long-standing partnerships with customers and suppliers. But for some years now, momentum in the glass industry has been increasing significantly. The drivers of this acceleration are all aspects of Industry 4.0 – including digitalisation in particular. Moreover, rapid changes are currently impacting various dimensions of overall conditions and global challenges.

We have responded promptly by revising and updating our strategy and business model. Back in 2019, we launched a wide-ranging strategic transformation process that pursues two goals: first, we will tap additional growth potential in our existing business; and second, we will endeavour to develop new business models. With this approach, we intend to position our company as a strong market player in the long term, and to play a key part in shaping the future of the glass industry.

Thanks to a forward-looking strategy and a business model geared to creating added value, we view the new dynamism as an opportunity for innovation and a chance to strengthen our market position. However, the reporting year was dominated by the many diverse challenges still facing us. In the reporting year, these four developments were particularly striking:

Ukraine conflict

We have been hit particularly hard by the Ukraine war, in both economic and human terms. We were impacted economically because our production facility near Kyiv was severely damaged, and we will be unable to resume operations there in the medium term. Our sales business in Ukraine has also collapsed; large numbers of our customers there have had to close their operations or scale them down. This has led to job cutbacks which have been very difficult for us, because they have led to conditions of even more hardship for our colleagues in Ukraine and their families. We will continue to provide our support – either by financial means, or by offering positions in neighbouring countries.

Energy and production costs

The problems generated by volatile and rising energy and production costs became even more acute during the year under review. Due to the high energy requirement for glass production, rising energy costs triggered noticeable price adjustments throughout the market. By implementing a transparent temporary energy surcharge, we were largely able to compensate for the additional costs without losing any customers. This solution also makes sense in view of the major uncertainties regarding energy supplies; it still remains difficult to predict future developments.

Demand for packaging glass

Demand for packaging glass increased during the reporting year. There is one key reason for this: glass is the answer to the question of how to deal with the problem of waste. Thanks to the expansion of capacity we began preparing years ago, we will be in a position to satisfy this growing demand. We have created conditions that will enable us to meet our customers' wishes for individual glass packaging. This requires increased flexibility in production – which is available, because our Technology and Production area is now more focused on stepping up our capacity for innovation.

Circular economy

In terms of suitability for the circular economy, glass packaging has clear advantages as compared to other packaging materials; even so, there is still great potential for improvement, for example as regards the percentage of used glass in the volume of raw material that is processed. We focused intensively on the issue of the circular economy in the reporting year. Regulatory provisions are in place that require higher recycling quotas. There are also a number of voluntary industry initiatives that promote and encourage increased recycling. We intend to play an active part on both fronts. Once again, we increased the share of cullet in our production during the year under review. A larger supply of high-quality cullet material is the only way to increase the percentage of used glass in production – enabling us to contribute to sustainability. As part of our 2030 strategy, we aim to achieve a cullet share of at least 70 percent throughout the Group by 2030.