Tuesday, August 5, 2025
A forest product leader, Mercer International Inc., reported a disappointing financial performance for the second quarter of 2025. The company experienced a significant decline in Operating EBITDA, which fell to a negative $20.9 million, a stark contrast to the positive $30.4 million reported during the same period in 2024. This marks a continued decline from the $47.1 million in Operating EBITDA recorded in Q1 2025. The second quarter of 2025 also saw a steep net loss of $86.1 million, compared to a net loss of $67.6 million in Q2 2024 and a smaller loss of $22.3 million in the first quarter of 2025. The unfavorable financial results are attributed to a combination of external market pressures and internal cost-related challenges.
Juan Carlos Bueno, Mercer’s president and CEO, highlighted the primary factors contributing to the company’s disappointing performance. He pointed out that the global trade environment remains uncertain, coupled with the weakening of the U.S. dollar, which has affected the company’s financial outcomes. The company faced reduced demand for pulp in China due to these trade challenges, which in turn negatively impacted pricing.
Bueno emphasized that the depreciation of the dollar against the euro and the Canadian dollar led to an adverse impact of approximately $26 million on the company’s Operating EBITDA for Q2 2025, compared to the first quarter. Additionally, Mercer had to contend with a significant $11 million non-cash impairment related to hardwood inventory at its Peace River mill. The impairment was a result of declining hardwood prices in China, which were driven by weaker demand for hardwood pulp.
Richard Short, the company’s Chief Financial Officer, noted that the uncertainty surrounding tariffs and ongoing global trade disputes played a crucial role in Mercer’s financial struggles. However, he stressed that the company is focusing on internal strategies to improve performance amid these macroeconomic challenges. Short also pointed out that despite these headwinds, Mercer’s mills showed strong operational reliability during the quarter.
Cost-cutting and operational efficiency initiatives
In response to the challenging economic environment, Mercer has implemented several measures aimed at improving operational efficiency and reducing costs. These initiatives are part of Mercer’s broader effort to navigate through the economic cycle and build resiliency.
Short explained that Mercer’s internal program, called “One Goal One Hundred,” is focused on achieving a $100 million improvement in profitability by the end of 2026, using 2024 as the baseline year. To date, Mercer has realized approximately $5 million in cost savings and anticipates reaching $25 million by the end of 2025. These savings are expected to stem from various operational efficiencies and cost-reduction actions across the company’s operations. “We are confident that our focus on improving our bottom line through both permanent and one-time measures will yield results in the long term. The steps we are taking now are setting the foundation for more sustainable growth in the future,” Short added.
Mercer’s pulp business faced mixed conditions in Q2 2025. In Europe, third-party softwood pulp list prices remained stable, but North America saw a slight increase in prices, driven by steady demand and supply constraints. However, in China, third-party pulp net prices declined due to weaker demand, largely stemming from the uncertainty surrounding global trade policies. The company anticipates a decrease in softwood pulp prices across key markets heading into the third quarter of 2025, in line with the expected seasonality. On the other hand, Mercer expects hardwood pulp prices to remain relatively stable in the upcoming quarter, providing some hope for the company’s pulp operations.
Lumber production for Mercer dropped by 6% in Q2 2025, largely due to planned maintenance at its Friesau sawmill in Germany. Despite this, the company expressed satisfaction with its lumber production performance during the quarter. Looking ahead, the company is optimistic about an increase in lumber production at its Torgau, Germany, sawmill, which is expected to provide an additional 65 million board feet of annual capacity.
Mercer also reported an increase in per-unit fiber costs for its pulp and solid wood segments during Q2 2025, driven by strong demand. However, the company anticipates a reduction in fiber costs for its German pulp mills in Q3 2025 due to lower demand. The company expects Canadian pulp mills to maintain relatively stable fiber costs during the same period.
Mercer’s pulp mills also experienced 29 days of downtime during Q2 2025, which included both planned maintenance and slower-than-expected startup periods. While this hurt overall production, the company remains focused on addressing these issues in the second half of 2025. Despite the challenging market conditions, Mercer’s mass timber business has remained resilient, maintaining a healthy order book. This is particularly significant given the ongoing high-interest rate environment in the U.S., which has harmed many sectors.
Mercer’s mass timber business is seeing an uptick in the “win rate” for new project bids, which is expected to positively impact the company’s results in 2026. The company anticipates potential sales volumes exceeding $400 million, with over 100 projects per quarter, which is a strong indicator of future growth in this segment.
In light of the ongoing market and trade-related uncertainties, Mercer has made the strategic decision to suspend its quarterly dividend. Bueno explained that this decision was made as part of a prudent approach to capital allocation, focusing on maintaining liquidity and reducing debt as the company navigates through the current volatile global trade environment. Despite this, Mercer remains committed to reinstating a competitive dividend once the uncertainties surrounding the global economy are resolved. Mercer International’s Q2 2025 financial results reflect the significant challenges facing the global forest products industry. However, the company is actively working to address these challenges by focusing on cost reductions, operational efficiency, and the strategic growth of its mass timber business. The path forward for Mercer is one of resilience, as it adapts to an ever-evolving market and seeks to deliver long-term value to its stakeholders.
Read more news on: sawmill, mass timber, pulp, solid wood, lumber
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Tags: cost reduction, fiber costs, global economy, global trade uncertainty, lumber production, mass timber business, Mercer International, Operating EBITDA, operational efficiency, pulp market, Q2 2025, tariff uncertainty, wood products
