Mercer International Reports 7% Revenue Growth, Improved Operating Income in Q3 2024

Mercer International Inc. reported a notable increase in revenues for the third quarter of 2024, achieving $502.1 million, up 7% from $470.8 million in the same period of 2023. The company's operating income also improved significantly, reaching $8.8 million compared to an operating loss of $3.4 million in Q3 2023. The pulp segment was a key driver of this growth, with revenues rising to $373.3 million, an increase of approximately 7% from $348.9 million in the prior year. However, the company recorded a net loss of $17.6 million for the quarter, an improvement from a net loss of $26.0 million in Q3 2023.

For the nine months ended September 30, 2024, total revenues increased to $1.6 billion from $1.5 billion in the same period of 2023. The pulp segment revenues for this period rose to $1.2 billion, up from $1.1 billion in the previous year. Despite these gains, the net loss for the nine months was $101.8 million, a reduction from a loss of $154.8 million in 2023. The company’s operating EBITDA for the nine months was $144.5 million, a significant recovery from a negative $3.7 million in the same period last year.

Strategically, Mercer International disposed of its 50% interest in the Cariboo Pulp & Paper Company in Q1 2024, resulting in a non-cash loss of $23.6 million. Additionally, a non-cash goodwill impairment of $34.3 million was recognized related to the Torgau facility due to market weaknesses in Europe. The company also faced challenges with inventory impairments, recording a $4.0 million charge against raw materials inventory at the Peace River mill due to low hardwood pulp prices.

As of September 30, 2024, total assets decreased to $2.5 billion from $2.7 billion at the end of 2023, while total liabilities also declined to $2.0 billion from $2.0 billion. Shareholders' equity fell to $516.8 million from $635.4 million, reflecting the impact of the net losses and impairments. Cash and cash equivalents were reported at $239.0 million, down from $314.0 million at the end of 2023.

The market environment for Mercer International remains challenging, with softwood pulp prices stable despite seasonal demand fluctuations, while hardwood prices have decreased in China. The company anticipates stable pulp sales realizations in the fourth quarter, although demand may be weaker due to supply constraints.