News Financial Reports & Markets
Mercer International reports results for Q4 of 2023

Mercer International reported that operating EBITDA in the fourth quarter of 2023 was $21.1 million compared to $96.1 million in the same quarter of 2022 and $37.5 million in the third quarter of 2023.

In the fourth quarter of 2023, net loss was $87.2 million or $1.31 per share, which included a non-cash impairment of $33.7 million or $0.51 per share relating to the classification of our sandalwood business as held for sale, compared to net income of $20 million or $0.30 per share in the fourth quarter of 2022 and net loss of $26 million or $0.39 per share in the third quarter of 2023.

In 2023, operating EBITDA was $17.5 million compared to $536.5 million in 2022. Net loss was $242.1 million or $3.65 per share in 2023 compared to net income of $247.0 million or $3.74 per basic share and $3.71 per diluted share in 2022.

CEO Juan Carlos Bueno stated, “In the fourth quarter, our operating results were positively impacted by an improved pulp pricing environment. However, our results decreased relative to the preceding quarter because of greater planned maintenance downtime in the fourth quarter and because in the third quarter there were positive impacts from the recognition of non-cash items and sales of previously impaired inventory.

In the fourth quarter, we saw improved pulp pricing for both NBSK and NBHK across all our markets as customers restocked inventories. We currently believe this pricing momentum will continue into 2024 with modest price increases expected in the first quarter. We continued to be negatively impacted by the overall weakness in the lumber market as slightly higher prices in the U.S. were offset by lower prices in Europe.

We recognized a non-cash impairment of $33.7 million against our sandalwood business in the fourth quarter of 2023 as we made the strategic decision to pursue a sale of this business to focus on our core strategy, resulting in these assets and associated liabilities being valued at fair market value and classified as held for sale as at the end of 2023.

In the fourth quarter of 2023, all our mills ran very efficiently and we had 23 days of scheduled maintenance downtime (approximately 31,600 ADMTs) at our pulp mills. In the first quarter of 2024, we have no scheduled maintenance downtime at our pulp mills.

Overall per unit fibre costs for our pulp segment were stable in the fourth quarter compared to the third quarter. Per unit fibre costs for our solid wood segment decreased due to the availability of lower cost beetle damaged wood in Germany.

In 2023, we saw strong growth in our mass timber business as we secured major customer contracts and continued to build out our order book. We began 2024 with a mass timber order book of almost $100 million. We are pleased that this business has exceeded our expectations to date, including by contributing positively to our Operating EBITDA in the fourth quarter.”

Bueno concluded, “We have seen pulp pricing and fiber supply conditions improve and currently expect this to continue in 2024. While market conditions have improved, our team remains disciplined on controlling costs, including by limiting discretionary spending and managing working capital to ensure our cash and liquidity levels remain healthy. We finished 2023 with approximately $610 million in aggregate liquidity and believe we are well positioned to ensure the integrity of our balance sheet through the business cycle.”

In the fourth quarter of 2023, pulp segment operating income was $1.2 million compared to $69 million in the same quarter of 2022 primarily as a result of lower pulp and energy sales realizations partially offset by lower per unit fibre, energy, chemical and freight costs.

Mercer’s pulp segment revenues decreased by approximately 21 percent to $364.2 million in the fourth quarter of 2023 from $463.2 million in the same quarter of 2022 primarily due to the relatively weaker pulp market and lower energy revenues.

Pulp revenues in the fourth quarter of 2023 decreased by approximately 20 percent to $340.7 million from $425.4 million in the same quarter of 2022 due to lower sales realizations partially offset by higher sales volumes.

In the fourth quarter of 2023, third party industry quoted average list prices for NBSK pulp were materially lower in all of Mercer’s markets compared to the same quarter of 2022. The company’s average NBSK pulp sales realizations decreased by approximately 22 percent to $709 per ADMT in the fourth quarter of 2023 from $913 per ADMT in the same quarter of 2022. In the fourth quarter of 2023, the average NBHK pulp sales realizations decreased by approximately 34 percent to $593 per ADMT from $896 per ADMT in the same quarter of 2022.

Total pulp sales volumes increased by approximately six percent to 491,156 ADMTs in the fourth quarter of 2023 from 465,318 ADMTs in the same quarter of 2022 primarily because of higher production.

Energy and chemical revenues decreased by approximately 38 percent to $23.5 million in the fourth quarter of 2023 from $37.8 million in the same quarter of 2022 as a result of lower sales realizations partially offset by higher sales volumes.

Costs and expenses in the fourth quarter of 2023 decreased by approximately eight percent to $363.2 million from $394.3 million in the same quarter of 2022 primarily due to lower per unit fibre, energy, chemical and freight costs partially offset by higher pulp sales volumes.

In the fourth quarter of 2023, per unit fibre costs decreased by approximately seven percent from the same quarter of 2022 driven by stable supply and the benefits from Mercer’s Peace River woodroom.