Mercer International Inc. Reports First Quarter 2025 Results

First quarter Operating EBITDA* of $47.1 million (net loss of $22.3 million) compared to $63.6 million (net loss of $16.7 million) in the same quarter of 2024

Continue to implement cost reduction and operational efficiency initiatives targeting approximately $100 million in savings by the end of 2026

The first quarter of 2025 included annual planned maintenance downtime at the Celgar mill compared to no such downtime in the first quarter of 2024

Mercer International Inc. reported first quarter 2025 Operating EBITDA of $47.1 million, a decrease from $63.6 million in the same quarter of 2024 and $99.2 million in the fourth quarter of 2024.

In the first quarter of 2025, net loss was $22.3 million ($0.33 per share) compared to $16.7 million ($0.25 per share) in the first quarter of 2024 and net income of $16.7 million ($0.25 per share) in the fourth quarter of 2024.

Mr. Juan Carlos Bueno, Chief Executive Officer, stated: “There was continued strength in pulp markets and an improving lumber pricing environment in the first quarter of 2025. However, our operating results in the quarter were negatively impacted by annual planned maintenance downtime at our Celgar mill and the impact of the weaker dollar against the euro.

We continue to monitor ongoing developments relating to U.S. and international trade policies, including tariffs, countermeasures and countervailing duties. To date, our costs and revenues have not been materially impacted by these developments. However, we recognize the potential for indirect impacts of a weaker global economy on both demand and pricing for our products and the fiber supply of our mills. In addition, the scale of any trade conflict may cause foreign exchange rate fluctuations, which would impact our operating results. The market uncertainty resulting from these developments has created some disturbances and volatility in cross border demand volumes. We continue to take steps seeking to mitigate our exposure to such tariffs and countermeasures and to take advantage of related opportunities that may arise as a result of our geographic diversity. However, it remains difficult to predict the potential impacts on our businesses as these developments are ongoing.

In this uncertain environment and to build resiliency through the economic cycle, we continue to implement cost reduction initiatives and operational efficiency measures targeting approximately $100 million in savings by the end of 2026, compared to 2024. In addition, in 2025, we are targeting a reduction of inventories of $20 million and have further reduced our expected capital expenditures for the year by $20 million by focusing on maintenance and accretive projects that are expected to enhance operational reliability and value across our business.

In the first quarter of 2025, third-party softwood pulp list prices increased from the fourth quarter of 2024 due to stable demand and continued global softwood supply constraints. Hardwood pulp prices in China also improved from floor levels as the maintenance season commenced in Latin America. As we move into the second quarter of 2025, we currently expect pulp prices to remain strong in Europe and North America. In China, we currently expect lower pulp prices, particularly for hardwood, as a result of weakened demand due to the current economic environment.

We saw increased lumber sales realizations in both the U.S. and Europe during the first quarter of 2025 as a result of reduced supply and steady demand. In the second quarter of 2025, we currently expect lumber prices to modestly decrease in the U.S. as a result of the impact of the current economic environment on customer demand. In Europe, we currently expect lumber prices to slightly increase in the second quarter due to higher per unit fiber costs.

Overall, per unit fiber costs for our pulp mills were relatively steady in the first quarter of 2025. For our sawmills, per unit fiber costs increased in the first quarter of 2025 due to strong demand. We completed a wood room upgrade at our Celgar mill during the quarter. The project was designed to reduce our dependence on sawmill residuals and lower our per unit fiber costs. In the second quarter of 2025, we currently expect per unit fiber costs for our German operations to be higher due to strong demand and reduced supply and for our Canadian pulp mills to be relatively stable.

Production volumes were impacted by 22 days (29,700 ADMTs) of planned annual maintenance downtime at our Celgar Mill in the first quarter of 2025, with an additional five days in April due to slower than planned start up. We are currently planning for a total of 21 days of planned maintenance downtime at our pulp mills in the second quarter of 2025.

In our solid wood segment, our mass timber business continued to make progress on various projects. Despite the ongoing impacts of the elevated interest rate on sectoral demand, we are starting to see embedded demand translate into a gradual increase in orders with planned start dates towards late 2025 and into 2026.” Mr. Bueno concluded: “The positive market momentum continued into the second quarter of 2025. However, we are beginning to see the uncertain climate affecting customer buying patterns and negatively impacting pricing in some of our markets. We remain steadfast in managing our costs and liquidity prudently and maintain our focus on debt reduction.”

Consolidated Financial Results

Consolidated – Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Total revenues for the first quarter of 2025 decreased by approximately 8% to $507.0 million from $553.4 million in the same quarter of 2024 primarily due to lower pulp sales volumes partially offset by higher pulp and lumber sales realizations.

Costs and expenses in the first quarter of 2025 decreased by approximately 10% to $500.2 million from $553.9 million in the same quarter of 2024 primarily as a result of lower pulp sales volumes and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses partially offset by higher planned maintenance downtime at our Celgar mill and higher per unit fiber costs. In the first quarter of 2024, costs and expenses included a non-cash loss of $23.6 million recognized in connection with the dissolution of the Cariboo Pulp and Paper (“CPP”) joint venture.

In the first quarter of 2025, Operating EBITDA decreased to $47.1 million from $63.6 million in the same quarter of 2024 primarily as a result of higher planned maintenance downtime and higher per unit fiber costs partially offset by higher pulp and lumber sales realizations and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses.

Segment Results

Pulp

In the first quarter of 2025, Segment Operating EBITDA for the pulp segment decreased by approximately 27% to $49.9 million from $68.5 million in the same quarter of 2024 primarily as a result of higher planned maintenance downtime partially offset by higher pulp sales realizations and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses.

Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the first quarter of 2025 decreased by approximately 12% to $381.1 million from $432.4 million in the same quarter of 2024 primarily due to lower pulp revenues.

Pulp revenues in the first quarter of 2025 decreased by approximately 13% to $357.0 million from $408.3 million in the same quarter of 2024 as a result of lower sales volumes partially offset by higher sales realizations.

In the first quarter of 2025, third-party industry quoted average list prices for NBSK pulp in Europe and North America and third-party industry quoted average net prices in China for NBSK pulp increased from the same quarter of 2024 primarily due to stable demand and supply constraints. Our average NBSK pulp sales realizations in the first quarter of 2025 increased by approximately 7% to $783 per ADMT from $732 per ADMT in the same quarter of 2024 due to higher list prices in all of our key markets.

In the first quarter of 2025, third-party industry quoted average list prices for NBHK pulp increased in North America from the same quarter of 2024 due to stronger demand. Third-party industry quoted average net prices for NBHK pulp decreased in China in the first quarter of 2025 from the same quarter of 2024 as the market absorbed increased hardwood capacity. In the first quarter of 2025, average NBHK pulp sales realizations decreased by approximately 10% to $570 per ADMT from $631 per ADMT in the same quarter of 2024 due to lower net prices in China.

Total pulp sales volumes in the first quarter of 2025 decreased by approximately 16% to 477,879 ADMTs from 565,664 ADMTs in the same quarter of 2024 primarily due to lower production and the dissolution of the CPP joint venture in the first quarter of 2024.

Energy and chemical revenues in the first quarter of 2025 and 2024 were flat at $24.1 million.

Costs and expenses in the first quarter of 2025 decreased by approximately 13% to $360.9 million from $416.5 million in the same quarter of 2024 primarily as a result of lower pulp sales volumes and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses partially offset by higher planned maintenance downtime. In the first quarter of 2024, costs and expenses included a non-cash loss of $23.6 million recognized in connection with the dissolution of the CPP joint venture.

Total pulp production in the first quarter of 2025 decreased by approximately 15% to 458,909 ADMTs from 538,907 ADMTs in the same quarter of 2024 primarily as a result of the dissolution of the CPP joint venture in the first quarter of 2024 and the 22 days of planned annual maintenance downtime (approximately 29,700 ADMTs) at our Celgar mill in the first quarter of 2025. In the first quarter of 2024, we had no planned annual maintenance downtime.

Overall average per unit fiber costs in the first quarter of 2025 were relatively steady compared to the same quarter of 2024. For the second quarter of 2025, we currently expect per unit fiber costs for our German pulp mills to be higher due to strong demand and reduced supply and for our Canadian pulp mills to be relatively stable.

Solid Wood

In the first quarter of 2025, Segment Operating EBITDA for the solid wood segment was negative $0.3 million compared to negative $0.9 million in the same quarter of 2024 primarily due to higher lumber sales realizations partially offset by higher per unit fiber costs.

Solid wood segment revenues in the first quarter of 2025 modestly increased to $122.7 million from $119.0 million in the same quarter of 2024 as a result of higher lumber and manufactured products revenues partially offset by lower revenues from our other products.

Lumber revenues in the first quarter of 2025 increased by approximately 17% to $65.4 million from $55.9 million in the same quarter of 2024 primarily due to higher sales realizations and sales volumes. Average lumber sales realizations in the first quarter of 2025 increased by approximately 8% to $499 per Mfbm from $460 per Mfbm in the same quarter of 2024 driven by lower supply and steady demand in both the U.S. and European markets. The U.S. market accounted for approximately 47% of our lumber revenues and approximately 39% of our lumber sales volumes in the first quarter of 2025. The majority of the balance of our lumber sales were to Europe.

Lumber sales volumes in the first quarter of 2025 increased by approximately 8% to 130.9 MMfbm from 121.4 MMfbm in the same quarter of 2024 primarily due to timing of sales.

In the first quarter of 2025, manufactured products revenues increased by approximately 13% to $18.8 million from $16.7 million in the same quarter of 2024 primarily due to timing of mass timber projects in progress. Manufactured products sales realizations decreased by approximately 22% to $2,832 per cubic meter in the first quarter of 2025 from $3,644 per cubic meter in the same quarter of 2024 as the high-interest rate environment negatively impacted demand.

Lumber production in the first quarter of 2025 was relatively flat at 128.0 MMfbm compared to 127.0 MMfbm in the same quarter of 2024.

Fiber costs were approximately 80% of our lumber cash production costs in the first quarter of 2025. In the first quarter of 2025, per unit fiber costs for lumber production increased by approximately 12% compared to the same quarter of 2024 driven by strong demand. For the second quarter of 2025, we currently expect higher per unit fiber costs due to continued strong demand.

Liquidity

As of March 31, 2025, we had cash and cash equivalents of $181.5 million, approximately $289.2 million available under our revolving credit facilities and aggregate liquidity of about $470.7 million.

Quarterly Dividend

A quarterly dividend of $0.075 per share will be paid on July 3, 2025 to all shareholders of record on June 26, 2025. Future dividends will be subject to Board approval and may be adjusted as business and industry conditions warrant.

For the full first quarter results, click here.

*Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”) and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 6 of the financial tables included in this press release for a reconciliation of net loss to Operating EBITDA.

About Mercer International

Mercer International Inc. is a global forest products company with operations in Germany, USA and Canada with consolidated annual production capacity of 2.1 million tonnes of pulp, 960 million board feet of lumber, 210 thousand cubic meters of CLT, 45 thousand cubic meters of glulam, 17 million pallets and 230 thousand tonnes of biofuels. To obtain further information on the company, please visit its website at https://www.mercerint.com.

Contact:

Juan Carlos Bueno – CEO – (604) 684-1099

Source: Mercer International Inc.