Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (September 2008)
21 slides from Mercer International's investor presentation, Sep 12, 2008
Slide 1: Investor Presentation September 2008
Investor Presentation September 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 softwoo
Slide 4: Mercer in Brief — Consolidated Financials
Mercer in Brief — Consolidated Financials As at Dec. 31, 2007 and June 30 th , 2008 In Millions of EUR Restricted (1) Unrestricted (2) Consolidated Consolidated 12 month total ended 12 month total ended 12 month total ended 6 month total ended (unless otherwise stated) Dec. 31, 2007 Dec. 31, 2007 De
Slide 5: Our Strategy & Purpose
Our Strategy & Purpose Mercer’s core purpose is providing fibers, renewable energy and chemicals from sustainable sources, for essential human needs Focus on NBSK market pulp Premium grade kraft pulp that generally obtains the highest price Operate modern, world-class NBSK pulp production facilities
Slide 6: Mercer's impressive financial performance
Mercer’s impressive financial performance Revenue Growth 2005 2006 2007 Revenues (EUR) 452,437 623,977 704,391 Revenues (USD) 1 563,103 783,715 965,720 Revenue (Millions of EUR) Q1’04 0 25 50 75 100 125 150 175 200 Q3’04 Q1’05 Q3’05 Q1’06 Q3’06 Q1’07 Quarterly Revenue Growth Q3’07 Q1’08 Mercer has e
Slide 7: 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 8: World Class Assets
World Class Assets Mercer versus other top 20 NBSK producers as of Q4 2007 (includes integrated capacity) • Large, modern facilities —low capital requirements, high runability • State-of-the-art environmental compliance • Energy — net producers Weighted average PM capacity, 1 000 4Q07 750 mt/a STRON
Slide 9: 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 mill
Slide 10: 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 EURO 500 400 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 Q1 Q2 2000 2001 2002 2003 2004 2005 2006 2007 2
Slide 11: Softwood Kraft Market Pulp
Softwood Kraft Market Pulp • There are three categories of softwood kraft market pulp, as defined by end-use requirements Pulp Category End Uses Premium Lightweight publication papers, premium tissue Heavier weight publication papers, value Standard tissues, lighter uncoated woodfree papers Coarse U
Slide 12: NBSK End Uses (2003 versus 2006)
NBSK End Uses (2003 versus 2006) 2003 2006 Specialties Printing and Specialties Printing & Writing Writing Paper 19% 17% Papers 17% 27% 18% Tissues 21% 26% Tissues 15% 23% Coated Mechanical (magazines) Uncoated Coated 17% Mechanical Mechanical (Newspaper (Magazines) Inserts) Uncoated Mechanical Sour
Slide 13: Mercer's Fiber Advantages German Fiber Profile
Mercer’s Fiber Advantages German FiberProfile • High quality, well-managed fiber supply • Sustainable forest supply exceeds German harvest rates • Large number of world class sawmills • Diversified supply over a large geographic region • Large installed whole log chipping capacity utilized opportuni
Slide 14: Mercer's Fiber Advantages British Columbia Fiber Profile
Mercer’s Fiber Advantages British Columbia Fiber Profile • There are over 40 sawmills in the Celgar fiber basket • 25% of supply is sourced from Washington / Idaho • Celgar proximal fiber-basket unimpacted by the Mountain Pine Beetle • This will be a competitive advantage in the medium term • Periph
Slide 15: 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% reducti
Slide 16: 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.
Slide 17: 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 o
Slide 18: Mercer Performance Focus
Mercer Performance Focus Continuous Improvement Initiatives EBITDA 30+ • 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 incl
Slide 19: Mercer's Consolidated Balance Sheet
Mercer’s Consolidated Balance Sheet As at June 30, 2008 ASSETS Current assets Cash and cash equivalents € 83,295 Receivables 98,181 Note receivable, current portion 557 Inventories 106,360 Prepaid expenses and other 6,485 Total current assets 294,878 Long-term assets Cash, restricted 33,000 Property
Slide 20: Unique financial structure
Unique financial structure Mercer’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
Slide 21: 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 • Significant upside revenue potential due to excess electricity generating capacity and changing global mar
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