Asia Pulp and Paper recorded a significant decline in sales in FY23 due to intense competition. The company is now focusing on developing high-value-added and sustainable products

Asia Pulp and Paper recorded a significant decline in sales in FY23 due to intense competition. The company is now focusing on developing high-value-added and sustainable products

-Competition in the cultural paper and industrial paper business segments that the APP operates in is becoming increasingly intense, both domestically and internationally
-APP recorded a significant decline in sales, reaching approximately US$1 billion or 10% lower compared to the previous year. This resulted in a total sales drop of US$1.48 billion.
The Pulp and Paper Times

PT APP Purinusa Ekapersada or known as APP Indonesia ("APP") and its group companies manage several pulp and paper manufacturing and forestry operation that deliver quality products to meet the growing global demand for paper, packaging and tissue.

Following the growing industry and market dynamic, APP will continue growing further to be the global player and global brand, to acquire new customers across markets. APP's products are marketed in more than 150 countries across six continents.

Asia Pulp and Paper (APP) is committed to enhancing its economic performance as an integral part of its contribution to have a positive impact on economic growth at the national level. Throughout 2023, the Board of Directors has steered the company with prudence and agility, navigating economic turbulence while simultaneously enhancing the efficiency of business operations to maintain its sustainability meeting market demand. In this effort, APP’s management has implemented a series of strategic initiatives to streamline operations and optimize the utilization of available resources without jeopardizing its sustainability impact commitments. Having a strategy that is focused on the relatively resilient Asian and domestic markets, coupled with penetration into prospective new markets, has bolstered positive horizon ahead.

In addition to focusing on economic performance, APP also has a strong commitment to supporting economic development through job creation. Thus, APP views economic performance not only as a business goal but also to support and strengthen the nation’s economic foundation.

In 2023, APP recorded a significant decline in sales, reaching approximately US$1 billion or 10% lower compared to the previous year. This resulted in a total sales drop of US$1.48 billion. The sales downturn also impacted the company’s net income, which plummeted by 51% compared to 2022. In the reporting year, APP recorded a net income of US$1.4 billion. In terms of production, APP produced 13.9 million tons of paper and pulp, a 2% decrease or 233,000 tons compared to 2022.

From an economic perspective, APP remains one of the largest pulp and paper companies in Indonesia, contributing significantly to the national economy with net sales of USD 8,534 million in 2023. Additionally, APP contributed US$ 289.87 million in taxes revenue. Moreover, the group created employment opportunities for 33,044 people. 

“By 2023, we achieved 98% energy use from renewable sources at OKI plants, significantly reducing greenhouse gas emissions. Additionally, a 9.8 MWp solar PLTS facility was installed at the Tjiwi Kimia mill on the rooftop of warehouses, office, and production facilities, with a planned increase up 45 MWp across APP,” said by Ms. Elim Sritaba, Chief Sustainability Officer in 2023.

SUSTAINABILITY REPORT of APP
Competition in the cultural paper and industrial paper business segments that the APP operates in is becoming increasingly intense, both domestically and internationally. Key factors influencing the domestic and international markets include brand, product quality, distribution, price, and sustainability. To this end, APP is focusing its efforts in various areas to enhance its sustainable practices performance. One of its efforts is to develop high value-added and sustainable products.

Amidst global economic uncertainty and slowdown caused by the post-pandemic period, the Indonesian economy remains robust and stable. Data from the Central Statistics Agency (BPS) suggests that Indonesia’s economic growth for 2023 could reach 5%. However, in 2024, the global economy is projected to continue facing various uncertainties (i.e., economic slowdowns, etc.), which could lead to economic fragmentation (as opposed to economic integration), commodity price volatility, climate change threats, a contraction of the global manufacturing Purchasing Managers’ Index (PMI), etc. These global conditions can undoubtedly have a significant impact on the Indonesian economy if the government, regulators, industry players, and other stakeholders do not prepare anticipatory measures.

In response to the current market situation, the Company’s management will continue to closely monitor market conditions, assess the situation, and actively respond to mitigate any impact on the Company’s operations. The Board of Directors encourages and expects the Company to continue growing while maintaining a cautious approach and strive for excellence in conducting business with a focus on long-term business sustainability

MATERIAL
APP has designed and implemented innovative processes to utilize raw materials in the most efficient way and reduce waste. The primary focus of this initiative is on pulpwood fiber, which is the main material in paper production. By developing specialized systems, APP minimizes fiber loss in its production processes.

 It is important to note that APP emphasizes the use of recycled materials as a strategic step in achieving sustainability goals. In reaching the Sustainable Roadmap Vision (SRV) 2030 target, where at least 30% of raw materials should come from recycling, APP has achieved remarkable results with 48% utilization of recycled fiber, or 3,083,887 tons out of a total of 6,477,970 tons in 2023. This success surpasses the expectations set in the SRV 2030. In addition to optimizing efficiency in the use of wood fibres, APP also utilizes reclaimed materials in its packaging, amounting to 19%. These products are sourced from local or imported postconsumer waste. 

The decision to transition to recycled materials aligns with the growing demand for recycled products from customers. Increased public awareness of environmental issues and sustainability has created significant opportunities for APP. By integrating recycled fibers into the production process, APP not only reduces pressure on forests and ecosystems but also strengthens its commitment to sustainability.

APP’s business depends on natural resources, particularly forests. Recognizing this, maintaining forest sustainability is not only an ethical obligation but also a strategic necessity for the continuity and sustainability of the business, considering that forests serve as the primary source of raw materials that support the company’s operations. Therefore, APP is deeply committed to preserving forest sustainability through sustainable management practices and biodiversity protection. 

Preserving forest sustainability not only serves to ensure a supply of raw materials for APP but also fosters APP’s business reputation among increasingly sustainability-conscious consumers and investors. In addition, APP strives to protect forests as they are a source of livelihood for local communities. By working together to protect forests, APP is building prosperous lives for communities in the vicinity of its operational areas

FOREST PROTECTION AND CONSERVATION
APP is committed to protecting natural forests and improving the livelihoods of communities. To achieve this goal, APP has developed a sophisticated Forest Alert System to monitor changes in forest cover across its suppliers’ concession areas. 

In this digital age, technology plays a crucial role in various aspects of life, including nature conservation efforts. One example is the Forest Alert System, which utilizes RADARSAT-2 satellite technology to monitor and protect Indonesia’s forests. RADARSAT-2 is a satellite launched by the Canadian Space Agency in 2007. It is equipped with Synthetic Aperture Radar (SAR) technology that can penetrate clouds and smoke, enabling forest monitoring in all weather conditions. Its remarkable capabilities even allow RADARSAT-2 to detect a single felled tree in the forest. 

Forest Alert System utilizes RADARSAT-2 satellite data to detect real-time changes in forest cover. This enables authorities to take immediate action in the event of illegal deforestation.

The success of the Forest Alert System demonstrates that advanced technology is a powerful tool in protecting forests. By continuing to develop and utilize the latest technologies, we can ensure the sustainability of our forests.

FOREST CERTIFICATION
93% of APP’s pulpwood suppliers have obtained sustainable forest management certification under the Program for Endorsement of Forest Certification (PEFC). In 2023, our SERA compliant suppliers in West Kalimantan, PT Wanakerta Ekalestari (WEL), obtained the IFCC-PEFC Certification. Meanwhile, another supplier in the same province, PT Buana Megatama (BMJ), is still in the process of obtaining its certification. We are targeting BMJ to obtain this certification by 2024.

All (100%) of APP’s pulpwood suppliers have obtained the mandatory Indonesian government Sustainable Forest Management (SFM) scheme. SFM refers to the scheme implemented by the Indonesian government to ensure that timber harvesting activities in production forests are carried out legally and sustainably.

INNOVATIONS TO SUPPORT SUSTAINABILITY
APP continues to innovate to support sustainability across various aspects of its operations. Here are some examples of innovations undertaken by APP: 

• Cutting-edge Technology: APP employs state-of-theart technology to enhance precision, efficiency, and productivity while reducing environmental impact. For instance, APP utilizes computerized control systems to optimize energy and raw material usage. Interlocking systems help prevent machine damage and optimize energy usage for operators handling the machines. 

• New and Advanced Machinery: APP invests in new and advanced machinery that is more energy-efficient and environmentally friendly. For example, APP utilizes advanced pulp paper machines to improve production efficiency and reduce greenhouse gas emissions. 

• Sustainable Products: APP’s Foopak Bio Natura, a flagship product made from environmentally friendly materials that are free from plastics and other harmful compounds. This ensures the safety of the product for customers. Foopak Bio Natura is biodegradable and compostable, making it a suitable choice for an increasingly environmentally conscious world. In the reporting year, Foopak Bio Natura’s export sales reached USD 48 million, and local sales reached USD 25 million.

The Above review has been extracted from 2023 Sustainability Report of Asia Pulp and Paper
 

Web Title: Asia Pulp and Paper recorded a significant decline in sales in FY23 due to intense competition. The company is now focusing on developing high-value-added and sustainable products