Mercer International reports Q3 2016 results; projects steady growth in NBSK deliveries
(Canada, Nov. 03, 2016) Mercer International Inc. recently reported results for the third quarter ended September 30, 2016. Operating EBITDA in the third quarter of 2016 declined to $47.9 million from $61.1 million in the third quarter of 2015, primarily due to lower pulp sales realizations and sales volumes, partially offset by lower fiber prices, but increased from $34.7 million in the prior quarter of 2016.
Mr. David M. Gandossi, Chief Executive Officer, stated:
“In the current quarter, our mills generally performed well, with normal levels of pulp and energy production resuming at our Celgar mill after a challenging second quarter and continued solid pulp production at our Stendal and Rosenthal mills;
Energy and chemical revenues in the current quarter of 2016 increased by about 10% from the prior quarter of 2016, as a result of increased energy sales, and by about 2% from the same quarter of 2015, as a result of increased chemical sales;
In the third quarter of 2016, pulp prices in Europe and North America were marginally higher than the prior quarter while prices in China decreased by about 4% compared to the prior quarter of 2016 due to the seasonal summer slowdown. As a result, our average pulp sales realizations were largely unchanged from the prior quarter of 2016. At the end of the current quarter, list prices in Europe, China and North America were approximately $810, $590 and $995 per ADMT, respectively;
Overall, fiber prices decreased by approximately 7% at our mills in the current quarter compared to each of the prior quarter and the same quarter of 2015, primarily as a result of a balanced wood market and strong sawmilling activity in both Germany and the Celgar mill’s fiber basket;
In the current quarter, Operating EBITDA increased to $47.9 million from $34.7 million in the second quarter of 2016 but declined from $61.1 million in the third quarter of 2015; and
In the current quarter, we had net income of $11.9 million, compared to a net loss of $4.2 million in the second quarter of 2016 and net income of $23.8 million in the third quarter of 2015.”
Mr. Gandossi continued: “During the current quarter, we continued to focus on high return projects to improve our operational efficiencies, including projects that improve our operational reliability and de-bottleneck certain processes. We are also moving forward with certain high value fiber logistics projects in Germany which, we hope, will further reduce our fiber costs and exposure to fiber supply risks.”
Mr. Gandossi concluded: “Currently, the NBSK pulp market is generally balanced, with world producer inventories at about 30 days’ supply. Looking forward to the fourth quarter of 2016, we currently expect overall steady pulp demand and stable pricing in Europe and China.”
Market Review [3Q Conference Call]: Speaking at the company 3Q/16 Conference Call Mr. Gandossi said
“Overall the company had good operating results this quarter. Wood costs continued to trend down and NBSK demand remained steady through what is traditional a slow period.
In terms of the pulp markets demand has been good and our order books are full. We expect these balanced conditions to continue for some time. Pulp prices today reflects the increasing [additional] capacity that has come on with the new volumes of southern softwood in the market and the impact of the stronger U.S. dollar. Growth in global NBSK deliveries continues to be steady at 2.6% year-to-date and China in particularly remains solid at 4.3% growth when compared to the same nine months period in 2015. Currently we expect steady demands in both the European and Chinese markets.
September NBSK producer inventories were at 30 days this is up two days from the previous quarter, but inventories at this level are still considered to be well balanced. The quarterly average list price in Europe increased slightly to $810 per ton from $798 in Q2, while the quarterly average list price in China went down to $595 per ton from $617 per ton in Q2. Looking forward the October NBSK list prices in Europe and China are consistent with September, we continue to believe that the global tissue and specialty paper markets growth will remain steady into the forcible future. (Source: press release)