Mercer reports Q2 EPS ($1.48), consensus (85c)

Reports Q2 revenue $529.86M, consensus $453.05M. CEO Juan Carlos Bueno stated: “Our second quarter results were negatively impacted by the overall weakness in the pulp and lumber markets. Lower pulp prices were primarily the result of weak demand for paper caused by weak economic growth and high inventory levels along with slower than anticipated market recovery in post-Covid China. In particular, on average, hardwood pulp prices declined by over $225 per tonne or approximately 32% in the current quarter. As a result of this weakness in the pulp market, we took a non-cash inventory impairment of $51.4M in the current quarter, of which $26.3M related to hardwood fiber inventory and pulp at our Mercer Peace River mill. The mill had materially built up its hardwood fiber inventory in connection with the start-up of its new woodroom which commenced operations in the recent quarter… Although the current pulp and lumber markets have negatively impacted our short-term financial results, our cash and liquidity levels continue to be healthy. We are fully committed to executing our strategic plan and rebalancing our asset portfolio. Growing and diversifying our solid wood and bio-product revenues are key components of our strategy. In the current market cycle we will continue to prudently manage our liquidity, lower working capital usage and reduce our discretionary capital expenditures to lower costs.”