Mercer International Inc. · NASDAQ:MERC
Mercer International — CIBC Whistler Conference February 2008
18 slides from Mercer International's conference presentation, Feb 20, 2008
Slide 1: CIBC Whistler Conference February 2008
CIBC Whistler Conference February 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: Company Overview
Company Overview Mercer is the largest publicly traded NBSK(1) market pulp producer in the world Operates three pulp mills with 1.43 million ADMT(2) of capacity Rosenthal Stendal (3) Celgar (Germany) (Germany) (BC, Canada) 325,000 ADMT 620,000 ADMT 480,000 ADMT (1) NBSK = northern bleached softwood
Slide 4: Our Strategy
Our Strategy Focus on NBSK market pulp Premium grade kraft pulp that generally obtains the highest price Operate modern, world-class NBSK pulp production facilities Target profitability in all market conditions Limit ongoing capital requirements Improve efficiency and reduce production costs Focus o
Slide 5: NBSK Market Pulp Capacity By Producer
NBSK Market Pulp Capacity By Producer By capacity, Mercer is the largest publicly traded NBSK market pulp producer in the world Sodra Cell Mercer Canfor Pulp Trust Pope and Talbot Ilim Pulp Weyerhaeuser (1) Tembec New Domtar (1) Producers by Total Capacity Stora Enso West Fraser Metsa-Botnia SFK Pul
Slide 6: Pulp Price History
Pulp Price History Quarterly Average RISI Price Delivered to N. Europe USD CAD EURO 1200 1100 1000 900 800 CAD 700 NBSK Price Per Tonne USD 600 500 EURO 400 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2000 2001 2002 2003 2004 2005 2006 2007 Source:
Slide 7: Capacity reductions
Capacity reductions Recently announced closures and expected shutdowns will reduce supply Approximately 1.1 million mt of NBSK market pulp capacity already shut down with another 500,000 mt expected to close in the next two years Represents approximately 11% of total global NBSK market pulp capacity
Slide 8: Capacity expansions
Capacity expansions Recently announced expansions have not fully offset capacity reductions World NBSK Pulp Expansions Size Market Pulp Company Location Date (000’s mt) (000’s) NBSK Pulp Mill Expansions Mercer — Stendal Germany Q4 2007 20 20 Metsa-Rauma Finland Q2 2007 45 45 Jilin Chenming China Q2
Slide 9: Tightening of Supply and Demand
Tightening of Supply and Demand The gap between supply and demand flattened in 2006 We had expected in 2006 the supply / demand spread to narrow to zero with the 1 million tonnes in capacity closures, but swing capacity offset the closures. Based upon species mix in forests we believe capacity that
Slide 10: Substitution (Western Europe)
Substitution (Western Europe) European price differential v softwood consumption growth 120 BSKP at a BSKP / BHKP price 8% premium differential 60 4% BSKP / BHKP price differential 0 0% (US$/t) (YoY %chg) -60 -4% Softwood pulp consumption growth BSKP consumption growth* BHKP at a Right scale premium
Slide 11: Mercer's impressive financial performance
Mercer’s impressive financial performance Quarterly Revenue Growth (millions of EUR) 200 Revenue Growth 2005 2006 2007 160 120 Revenues (EUR) 531,908 623,977 704,391 Revenue 80 Revenues (USD) 1 662,013 783,715 965,720 40 0 0 4 0 4 5 0 0 5 6 0 0 6 7 0 0 7 1 ‘ 3 ‘ 1 ‘ 3 ‘ 1 ‘ 3 ‘ 1 ‘ 3 ‘ Q Q Q Q Q Q Q
Slide 12: Advantageous financial structure
Advantageous financial structure Mercer’s levered capital structure is highly beneficial 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 debt
Slide 13: Mercer average daily pulp production
Mercer average daily pulp production Average Daily Production by Mill Rosenthal Celgar Stendal 2,000 1,800 1,600 1,734 1,400 1,534 1,644 1,200 1,349 1,000 1,247 1,254 800 918 901 929 600 Average Daily Production (ADMT) 400 200 — 2005 2006 2007 Mercer has steadily increased the productivity at all of
Slide 14: World class assets — Celgar
World class assets — Celgar Modern and efficient mill Capacity of 480,000 ADMT per year 16.6% reduction in non-fiber conversion costs from 2006 Mercer’s Blue Goose capital project has exceeded expectations, delivering greater savings per tonne of production In 2007, became a net exporter of electric
Slide 15: World class assets — Rosenthal
World class assets — Rosenthal Converted to kraft pulp production in 1999 Capacity has increased from 160,000 to 325,000 ADMTs Sets new standards for world class mill availability at 98.8% Efficient mill with strong cost position One of the lowest delivered costs to Europe Achieved a 10.1% reduction
Slide 16: World class assets — Stendal
World class assets — Stendal One of the newest and largest NBSK mills in the world 71% Mercer owned Capacity of 620,000 ADMTs per year Achieved world class mill availability of 94.0% in 2007 Economies of scale have allowed for lower conversion costs than Rosenthal Achieved a 26.4% reduction in non-f
Slide 17: Mercer export of electricity
Mercer export of electricity Mercer Electricity Generation and Exports Electricity generation Electricity exports 1,600,000 1,400,000 1,200,000 1,401,881 1,000,000 1,297,437 1,274,906 800,000 600,000 Total Electricity per Year (MWh) 400,000 200,000 430,437 414,411 403,171 — 2007 2006 2005 1.4 millio
Slide 18: Mercer's 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 Insulated from risk of rising energy prices due to excess electricity generating capacity Incremental production
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