Mercer International (AEZ) Q2 2026 Earnings Report

The call contained a number of operational and commercial positives — notably strong mass timber growth, solid progress on the One Goal One Hundred cost program, regional pulp and lumber price pockets of strength, and proactive strategic work to address liquidity — but these were outweighed by significant near-term headwinds: negative consolidated and segment EBITDA, a $29 million inventory impairment, elevated German fiber and energy costs, production curtailments, covenant/going-concern pressures, and declining liquidity. Management is taking decisive cost, restructuring and financing actions, but material execution and market risks remain before results normalize.

Management guided that near-term headwinds will persist: they expect German pulp fiber costs to remain elevated in Q3 while sawmill costs should moderate and Canadian fiber costs decline (Germany ~+7% QoQ; Canada ~-4% QoQ), and said Q3 cash-flow items should be similar to Q2. They have ~40 days (~42,000 t) of Q3 maintenance/curtailments scheduled (Rosenthal 26 days/22,000 t including 12 days market-related curtailment; Peace River 10 days/~14,000 t; Stendal 4 days/<7,000 t) and plan Celgar down 18 days/~23,000 t in Q4; German mills were strategically reduced ~26,000 t in Q2. Price and volume guidance/benchmarks cited: softwood pulp realizations $682/t (Q1 $696), NBSK China $658/t (-$27 Q), Europe list $1,655/t (+$37 Q), NA list $1,577/t (+$14 Q); hardwood realizations $607/t (from $564) and NA hardwood list $1,495/t (+$157 Q); they expect seasonally weak pulp demand in Q3 but tightening NBSK later in 2026/into 2027. Financially, they noted Q2 operating EBITDA of -$21M (pulp -$13M; solid wood -$8M), consolidated net loss -$76M (-$1.13/sh) including a $29M non‑cash inventory impairment, aggregate liquidity of ~$192M ($79M cash, $113M undrawn revolvers) after a $37M decrease, and that the special committee is pursuing capital‑structure alternatives while One Goal One Hundred remains on track (achieved $30M in 2025 and $24M in H1'26 toward a $100M target by end‑2026).