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Mercer International shares first quarter financial results for 2024

May 9, 2024  By P&PC Staff/Mercer International


Mercer International reported first quarter 2024 Operating EBITDA of $63.6 million, an increase from $27.5 million in the same quarter of 2023 and $21.1 million in the fourth quarter of 2023.

In the first quarter of 2024, net loss was $16.7 million (or $0.25 per share), which included a non-cash loss on disposal of $23.6 million (or $0.35 per share) relating to the dissolution of the Cariboo Pulp and Paper (CPP) joint venture, compared to a net loss of $30.6 million (or $0.46 per share) in the first quarter of 2023 and a net loss of $87.2 million (or $1.31 per share) in the fourth quarter of 2023, which included a non-cash impairment charge of $33.7 million (or $0.51 per share) relating to the classification of our sandalwood business as held for sale.

Company CEO Juan Carlos Bueno stated, “In the first quarter, our operating results were positively impacted by an improved pulp and lumber pricing environment, lower fibre and other production costs and no planned maintenance downtime. NBSK pulp prices in Europe and North America continued to improve in the first quarter, driven by stronger demand, lower customer inventory levels and global supply disruptions. In China, third party industry quoted NBSK net prices were flat, with weaker demand around the Chinese New Year offset by stronger demand towards the end of the quarter. We believe this positive pricing momentum will continue and expect modest price increases in the second quarter of 2024. 

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In the first quarter, we continued our focus on our strategic priorities. To this end, in April 2024, we announced the dissolution of the CPP joint venture, which will allow us to direct resources to areas aligned with our long-term focus.

In the first quarter of 2024, all our pulp mills ran very efficiently with no scheduled maintenance downtime. We are currently planning for a total of 35 days of maintenance downtime (approximately 60,800 ADMTs) at our pulp mills in the second quarter of 2024.

Overall per unit fibre costs for our pulp segment decreased in the first quarter of 2024 compared to the fourth quarter of 2023 due to stable supply. Per unit fibre costs for our solid wood segment increased compared to the prior quarter due to strong demand for sawlogs.

We continue to maintain a healthy order book for our growing mass timber business and commenced work on certain large-scale projects in the second quarter.

Overall, conditions continued to improve in the first quarter, including better pricing and lower production costs for our pulp segment. While we expect this momentum to continue in the second quarter of 2024, we remain steadfast in managing our costs and liquidity prudently. As a result of our strong liquidity, we believe we are well positioned to execute our business plan through the business cycle.”

Mercer currently expects pulp pricing to continue to improve in the second quarter of 2024, led by Europe and North America as a result of stronger demand and global supply constraints. In China, the company currently expects stable prices in the second quarter of 2024.

Total revenues for the first quarter of 2024 increased by approximately six percent to $553.4 million from $522.7 million in the same quarter of 2023 primarily due to higher pulp sales volumes partially offset by lower pulp sales realizations. Costs and expenses in the first quarter of 2024 modestly increased to $553.9 million from $542.8 million in the same quarter of 2023 primarily as a result of higher pulp sales volumes and the non-cash loss on disposal of the CPP joint venture investment partially offset by lower per unit fibre, chemical, energy and freight costs. In the first quarter of 2024, Operating EBITDA increased to $63.6 million from $27.5 million in the same quarter of 2023 primarily due to lower per unit fibre and other production costs, lower freight costs and higher pulp sales volumes partially offset by lower pulp sales realizations.

Pulp segment performance

In the first quarter of 2024, Mercer’s pulp segment operating income increased by approximately 36 percent to $17.4 million from $12.8 million in the same quarter of 2023 primarily as a result of lower per unit fibre and other production costs, lower freight costs and higher sales volumes partially offset by lower sales realizations and the non-cash loss on disposal of the CPP joint venture investment.

Pulp segment revenues, which include pulp, energy and chemical revenues, in the first quarter of 2024 increased by approximately eight percent to $432.4 million from $400.4 million in the same quarter of 2023 due to higher sales volumes partially offset by lower sales realizations.

In the first quarter of 2024, third party industry quoted average list prices for NBSK pulp modestly increased in Europe and decreased in North America from the same quarter of 2023. Third party industry quoted average net prices for NBSK pulp in China decreased from the same quarter of 2023. Mercer’s average NBSK pulp sales realizations in the first quarter of 2024 decreased by approximately 14 percent to $732 per ADMT from $849 per ADMT in the same quarter of 2023. In the first quarter of 2024, average NBHK pulp sales realizations decreased by approximately 22 percent to $631 per ADMT from $809 per ADMT in the same quarter of 2023.

Total pulp sales volumes in the first quarter of 2024 increased by approximately 30 percent to 565,664 ADMTs from 435,973 ADMTs in the same quarter of 2023 primarily because of the sales timing and higher production.

Energy and chemical revenues in the first quarter of 2024 decreased by approximately 21 percent to $24.1 million from $30.7 million in the same quarter of 2023 due to lower sales realizations partially offset by higher sales volumes.

Costs and expenses in the first quarter of 2024 increased by approximately seven percent to $416.5 million from $388 million in the first quarter of 2023 primarily due to higher pulp sales volumes and the non-cash loss on disposal of the CPP joint venture investment partially offset by lower per unit fibre, chemical, energy and freight costs.

On average, in the first quarter of 2024, overall per unit fibre costs decreased by approximately 16 percent from the same quarter of 2023 due to lower per unit fibre costs at all of Mercer’s pulp mills as a result of stable supply. The company currently expects per unit fibre costs to decrease in the second quarter of 2024 as a result of continued stable supply.


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