Financial Reports & Markets
Mercer International reports strong Q1 with record operating EBITDA
By Mercer International
By Mercer International
May 3, 2019 – Mercer International Inc. has reported strong first quarter 2019 results, with operating EBITDA increased to a record $123.8 million.
Operating EBITA was $99.4 million in the first quarter of 2018 and $118.1 million in the fourth quarter of 2018.
For the first quarter of 2019, net income increased to $51.6 million, or $0.79 per basic share and $0.78 per diluted share, from $25.6 million, or $0.39 per share, in the first quarter of 2018 and $45.0 million, or $0.69 per basic share and $0.68 per diluted share, in the fourth quarter of 2018.
David M. Gandossi, chief executive officer of Mercer International, says, “Our record first quarter results reflect overall strong operating performance and cost discipline at our mills, generally steady demand and the inclusion of a full quarter of results of Mercer Peace River Pulp Ltd. (MPR) acquired in December 2018.
“Pulp pricing was generally softer quarter over quarter, however, there [were] some modest price improvements late in the current quarter resulting from better paper producer demand.
“As I have mentioned previously, the acquisition of MPR has materially increased our production, revenues and scope of operations. Our recent acquisitions highlight the benefits of our value creation strategy of delivering sustainable profitable growth by leveraging our core competencies to complement our world class assets. Our integration of MPR is proceeding well and according to plan.”
In the first quarter 2019, Mercer’s operating income increased to $93.6 million, or by approximately three per cent from $91.0 million in the fourth quarter of 2018, and approximately 23 per cent from $76.0 million in the same quarter of the prior year. The increase in the current quarter over the prior quarter is primarily due to the inclusion of a full quarter of results of MPR, lower maintenance and per unit fibre costs and higher pulp and lumber sales volumes partially offset by lower pulp sales realizations. The increase in the current quarter over the same quarter of the prior year is primarily due to inclusion of the results of MPR, the net positive impact of a stronger dollar on the company’s Euro-denominated costs and expenses and higher pulp sales volumes partially offset by lower product sales realizations.
In the first quarter of 2019, pulp segment operating income increased by approximately 26 per cent to $93.5 million from $74.1 million in the same quarter of 2018. The increase was primarily due to the positive impact of a strong dollar relative to the euro on Mercer’s Euro-denominated costs and expenses and the inclusion of the results of MPR in the current quarter. NBSK pulp sales volumes increased by approximately 27 per cent to 466,893 ADMTs in the current quarter from 367,074 ADMTs in the same quarter of 2018.
The NBSK pulp realized sales price decreased by approximately three per cent to $757 per ADMT in the first quarter of 2019 from $783 per ADMT in the same quarter of the prior year due to lower overall demand in China. In China, demand from tissue producers was steady but there was a decline in demand from paper and packaging producers. Per unit fibre costs were generally flat in the current quarter compared to the same quarter of 2018. In Germany, the fibere market was stable due to the availability of storm- and beetle-damaged wood and the market in Celgar’s fibre procurement basket remained tight due to strong demand. MPR’s fiber costs were largely in line with prior quarter costs.
Read the full Q1 2019 Mercer International financial report. The company also announced a 10 per cent dividend increase and $50-million stock repurchase program.