Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (November 2008)
19 slides from Mercer International's investor presentation, Nov 7, 2008
Slide 1: Investor Presentation Operational Update November 2008
Investor Presentation Operational Update November 2008
Slide 2: Forward Looking Statements
Forward Looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, such as statements relating to results of operations and financial
Slide 3: BSK Tightening of Supply and Demand
BSK Tightening of Supply and Demand Total Bleached Softwood Kraft demand in 2007 was 22.2 million tonnes, up from 21.9 million the year before NBSK follows the general demand increases for softwood Historic BSK Demand versus Practical Maximum Capacity Capacity (tonnes) Demand (tonnes) Demand Capacit
Slide 4: NBSK Tightening of Supply and Demand
NBSK Tightening of Supply and Demand The gap between supply and demand widened slightly in 2007 We had expected the supply / demand spread to narrow to zero in 2007 with the 1.2 million tonnes in capacity closures, but swing capacity and debottlenecking offset the closures Based upon species mix in
Slide 5: Market-Related NBSK Capacity Downtime
Market-Related NBSK Capacity Downtime As a result of the significant downturns in pulp pricing and demand the pulp market has experienced in recent weeks, there have been announcements of downtime being taken at NBSK mills around the world Market-Related NBSK Pulp Mill Temporary Closures (000’s t) C
Slide 6: Permanent NBSK Capacity Reductions
Permanent NBSK Capacity Reductions The recently announced market-related closures are in addition to regular maintenance downtime and the considerable quantity of recent NBSK capacity closures Approximately 1.3 million tonnes of NBSK market pulp capacity already shut down with another 0.5 million to
Slide 7: Evolution: Steady decreases in non-fiber conversion costs
Mercer’s Evolution Steady decreases in non-fiber conversion costs Mercer L4Q Non-Fiber Conversion Cost % Change from L4Q Q4-2005 30% cost 20% 10% conversion 0% Avg. non-fiber -10% -20% 5 006 007 200200620062006 2 220072007200720082008 Q4 Q1 2 3 4 Q4 Q1 Q2 Q3 Q Q Q Q1 Q2 Since 2005, Mercer has manage
Slide 8: Evolution: Celgar capital projects a success
Mercer’s Evolution Celgar capital projects a success Celgar L4Q Non-Fiber Conversion Cost % Change from L4Q Q4-2005 30% 20% cost 10% conversion 0% Avg. non-fiber Celgar completes -10%CAD $27 million mill debottlenecking project - -20% 07 2005200620062006200620072007 2020072008 413423Q41 QQQ2QQQ1QQQ
Slide 9: Evolution: Rosenthal conversion cost decreases
Mercer’s Evolution Rosenthal conversion cost decreases Rosenthal Rolling L4Q Non-Fiber Conversion Cost % Change from L4Q Q4-2005 30% 20% cost 10% conversion 0% Avg. non-fiber -10% -20% 5667778 0000000 000000 22006 20 22006 2 22007 2 22008 41234123412 QQQQQQQQQQQ Rosenthal, continues to be a star per
Slide 10: Evolution: Stendal sets the standard for low production costs
Mercer’s Evolution Stendal sets the standard for low production costs Stendal L4Q Non-Fiber Conversion Cost % Change from L4Q Q4-2005 30% 20% cost 10% conversion 0% Avg. non-fiber -10% -20% 7 007 07 07 2005 2006 20062006 2006 200 0 202 220082008 Q4Q1Q2Q3Q4123 QQQQ4Q1Q2 Newly built in 2005, Stendal h
Slide 11: European Softwood Price Trend
European Softwood Price Trend Price levels of competing jurisdictions Conifer Price Trend — Europe (US$ / odmt) ConiferQ4 2005 Q1 2007 Q2 2008 % Change Roundwood14020420143.6% Germany Chips10116615654.5% Roundwood11614019164.7% Sweden Chips9312716476.3% Roundwood12614821066.7% Finland Chips— German
Slide 12: Evolution: German fiber prices shifting
Mercer’s Evolution German fiber prices shifting German Mills — Rolling L4Q Fiber Cost % Change from L4Q Q4-2005 RosenthalStendal cost 80% 60%Increased competition conversionfor fiber supply from particle board producers 40% 20% Lower demand from particle board Avg. fiber 0%producers - -20% 56 006 00
Slide 13: North American Softwood Price Trend
North American Softwood Price Trend Reduced sawmill residual supply increases fiber costs Conifer Price Trend — North America (US$ / odmt) ConiferQ4 2005 Q1 2007 Q2 2008 % Change Roundwood6110010673.8% Canada West Chips598210171.2% Roundwood641019650.0% US Northwest Chips7314013787.7% Roundwood14914
Slide 14: Evolution: Western fiber price shift
Mercer’s Evolution Western fiber price shiftCelgar Rolling L4Q Fiber Cost % Change from L4Q Q4-2005 cost 80% conversion 60%2006: Sawmill “stay 40%open” premiums paid20%2007: Increased 0%whole log chippingAvg. fiber -20%6 006 006 200677 00720088 2005 200 2 2 200 200 22007 20023234Q1Q2 Q4Q1 QQQ4Q1 QQQ
Slide 15: Mercer Performance Focus
Mercer Performance Focus Continuous improvement initiatives A program created to focus the workforce on the goal of increasing EBITDA margins The program identifies and implements improvement opportunities that will enable the mills to reach minimum 30% EBITDA margins Key Areas include: Production i
Slide 16: Consolidated Balance Sheet
Mercer’s Consolidated Balance Sheet As at September 30, 2008 LIABILITIES Current liabilities ASSETSAccounts payable and accrued expenses € 87,315 Current assetsPension and other retirement obligations, current portion955 Cash and cash equivalents € 75,779Debt, current portion 36,599 Receivables81,50
Slide 17: Unique Financial Structure
Unique Financial StructureMercer’s capital structure provides high leverage to pulp cycles German Government provided Mercer € 375 million in grants for the construction of the Rosenthal and Stendal mills. This amount is credited against fixed assets and translates into € 375 million in equity or de
Slide 18: Key Investment Highlights
Mercer’s Key Investment Highlights Future supply/demand outlook for NBSK has never looked better World class mills that have low delivered costs and are located in excellent fiber baskets Significant upside revenue potential due to excess electricity generating capacity and changing global markets f
Slide 19: Key Takeaways
Key Takeaways Mercer’s future remains bright We are a low cost producer, our mills perform well during cyclical downturns Some of the mills that compete with us will not be here when the cycle turns upward, further improving our long-term prospects Mercer is well positioned to take advantage of the
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