In This Article:
Release Date: May 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Mercer International Inc (NASDAQ:MERC) reported an increase in pulp sales volumes by 26,000 tons to 478,000 tons in Q1, attributed to the timing of sales.
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The company experienced higher lumber prices in both the US and European markets, driven by reduced supply and steady demand.
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Mercer International Inc (NASDAQ:MERC) maintained stable fiber costs for its pulp segment compared to Q4.
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The company has launched a company-wide program targeting $100 million in cost savings and operational efficiency improvements by the end of 2026.
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Mercer International Inc (NASDAQ:MERC) is well-positioned in the mass timber market, with 30% of North American cross-laminated timber production capacity, and expects this segment to be a growth engine.
Negative Points
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Mercer International Inc (NASDAQ:MERC) reported a consolidated net loss of $22 million for Q1, compared to a net income of $17 million in Q4.
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The company's EBITDA decreased to $47 million in Q1 from $99 million in Q4, primarily due to planned maintenance downtime.
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Foreign exchange negatively impacted Q1 results compared to Q4.
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The company is experiencing exposure to secondary effects from tariffs, including a weaker US dollar and weaker pulp demand in China.
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Mercer International Inc (NASDAQ:MERC) anticipates modest fiber cost inflation and lower energy sales prices in Q2.
Q & A Highlights
Q: Can you elaborate on the secondary effects of tariffs and the negative impact on pricing in some markets? A: Juan Carlos Bueno, CEO: The secondary effects of tariffs include the weakening of the US dollar, which impacts our cost bases in Europe and Canada. Additionally, there's been a slowdown in demand from China, particularly due to a recent holiday, which has halted buying and put pressure on prices, especially for hardwood. The uncertainty around tariffs is causing caution in inventory building and shipping decisions globally.
Q: Given the typical lag in market pulp prices versus realizations, what should we expect for second-quarter realizations? A: Juan Carlos Bueno, CEO: We anticipate more positive than negative impacts on pulp and lumber prices in Q2 compared to Q1. Despite some recent softness in lumber, the lag in shipments means Q2 should see positive price movements.
Q: Can you provide details on the $100 million cost savings target by the end of 2026? A: Juan Carlos Bueno, CEO: The cost reduction program is company-wide, focusing on assets in weaker cash positions like Torgau and Peace River. We're targeting improvements in manning, logistics, and fiber handling. We expect to achieve $40-$50 million in savings by 2025, with the remainder in 2026.