Home Commodities Mercer 2Q Profit Rises on Higher Pulp, Energy Prices — Commodity Comment

Mercer 2Q Profit Rises on Higher Pulp, Energy Prices — Commodity Comment

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By Jennifer Tershak

Mercer International Inc. said its second-quarter profit rose on higher pulp, lumber and energy pricing.

On earnings

Mercer’s second-quarter net income rose to $71.4 million, or $1.07 a share, from $21.4 million, or 32 cents a share, in the prior-year period. Revenue rose about 42% to $572.3 million from $401.8 million primarily due to higher pulp sales volumes and higher pulp, energy and lumber sales realizations.

On pricing and sales

“Our strong second-quarter operating results were driven by increased pulp and lumber pricing, continued strong energy pricing and our Stendal mill’s reversal of its wastewater fee accrual,” said CEO Juan Carlos Bueno. “However, we see our surplus energy sales as a strong hedge against higher energy prices and we are focused on developing strategies to manage the cost of our key inputs.”

“When comparing our second-quarter pulp results to the first quarter, our second quarter was negatively impacted by higher planned maintenance costs, lower pulp sales volumes and higher per unit fiber costs.”

“Pulp supply demand fundamentals remained strong throughout the second quarter and resulted in price improvements in all of our markets.”

On third-quarter outlook

“As we move into the third quarter, we expect stable pulp prices as a result of low customer inventory levels and supply constraints.”

“We expect lumber prices in the United States to be generally stable and prices in Europe to decline from the second quarter but remain at historically attractive levels in both markets. Further, we expect continued strong energy demand and prices in Germany in the third quarter of 2022.”

“Although U.S. lumber pricing decreased in the later part of the current quarter due to concerns of rising interest rates and inflationary pressures, prices were still at historically attractive levels.”

Write to Jennifer Tershak at jennifer.tershak@wsj.com

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