Financial Reports & Markets
Mercer International reports decrease in net income, but pulp income is up
By P&PC Staff
By P&PC Staff
August 2, 2019 – Mercer International Inc. has reported a decrease in net income and operating EBITDA in its second-quarter 2019 results over the first quarter, but cites better performance in its pulp segment over the year-ago period.
Mercer International’s second quarter 2019 operating EBITDA increased to $70.0 million from $60.5 million in the second quarter of 2018 and decreased from $123.8 million in the first quarter of 2019.
For the second quarter of 2019, net income decreased to $10.3 million, or $0.16 per share, from $16.8 million, or $0.26 per share, in the second quarter of 2018 and $51.6 million, or $0.79 per basic share and $0.78 per diluted share, in the first quarter of 2019.
In the first half of 2019, operating EBITDA increased by 21 per cent to $193.8 million from $159.9 million in the same period of 2018. In the first half of 2019, net income increased to $61.9 million from $42.4 million in the same period of 2018.
“Our second-quarter results reflect an overall weakening of pulp markets resulting from weak demand for certain paper grades in China and high producer inventories,” says David M. Gandossi, chief executive officer of Mercer International, in a release. “As a result of the decline in pulp prices in China during the current quarter of 2019, we recorded a non-cash write down of inventories at our Canadian mills of $6.9 million. Overall, I am pleased with our mills’ strong production this quarter and the acquisition of MPR continues to materially increase our production, revenues and scope of operations.”
In the second quarter of 2019 pulp segment operating income increased by approximately 14 per cent to $42.3 million from $37 million in the same quarter of 2018. Maintenance costs were significantly lower in the current quarter as Mercer’s 50 per cent joint venture Cariboo mill had 15 days of scheduled maintenance downtime (approximately 7,500 ADMTs) compared to Mercer mills having 37 days (approximately 55,400 ADMTs) in the same period of the prior year.
Excluding the impact of the shuts, production increased in the current quarter due to the inclusion of MPR and overall strong operating performance from all of the company’s mills. The higher production contributed to a higher sales volume in the current quarter. The NBSK pulp realized sales price decreased by approximately 15 per cent to $699 per ADMT in the second quarter of 2019 from $821 per ADMT in the same quarter of the prior year due to high producer inventory levels.
Read the full Q2 2019 Mercer International financial report.