Mercer International Inc. · NASDAQ:MERC
Mercer International — CIBC Whistler Conference February 2009
23 slides from Mercer International's conference presentation, Feb 18, 2009
Slide 1: CIBC Whistler Conference February 2009
CIBC Whistler Conference February 2009
Slide 2: 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 conditions and business dev
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 _________ (1) NBSK = northern bleached softwood kraft (2) ADMT = air dried metric tonnes (3) Stendal is a 71% owned facility Rosenthal (Ger
Slide 4: Our Strategy & Purpose
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 Our Strategy & Purpose Improve efficiency and reduce production cos
Slide 5: Mercer is the largest publicly traded NBSK market pulp producer
By capacity, Mercer is the largest publicly traded NBSK market pulp producer in the world NBSK Market Pulp Capacity By Producer Source: Public filings of individual companies
Slide 6: 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 Note: Bubble sizes represent market and integrated pulp prod
Slide 7: Kraft pulp mills are already the largest producers of Biomass Energy
Kraft pulp mills are already the largest producers of Biomass Energy As more jurisdictions pay premiums for green biofuels and electricity, pulp mills have more incentive to increase green production and unlock unrealized value from existing assets Use of cogeneration is far more efficient than a st
Slide 8: Mercer Export of Electricity
Mercer Export of Electricity Pulp production and electricity generation are positively correlated - the more pulp that is produced, the more electricity that is available for export In 2008, Mercer generated €31.0 million from the exporting of power 1.30 million tonnes Pulp Production 1.43 million t
Slide 9: Celgar Green Energy Project
Celgar Green Energy Project Turning Celgar into one of the largest biomass electricity generating facilities in Canada Lowers the mill's process steam requirements and simultaneously increases the amount of steam generated The new 48 MW turbine generator harnesses incremental steam, changing Celgar
Slide 10: Mercer's Evolution: Steady decreases in non-fiber conversion costs
Mercer's Evolution Steady decreases in non-fiber conversion costs Since 2005, Mercer has managed to reduce non-fiber conversion costs - despite escalating input costs - through strategic capital investment and operational best practices
Slide 11: Mercer's Evolution: German fiber prices shifting
Mercer's Evolution German fiber prices shifting Increased fiber competition from particle board producers and biofuel speculators have increased the cost of fiber in Germany From 2000 - 2005, fiber prices were relatively flat From 2005 to the end of 2007, there was a steady rise in fiber prices from
Slide 12: North American lumber downturn reduces sawmill residuals, raising fiber costs
Unprecedented downturn in the North American lumber industry has dramatically reduced the amount of available sawmill residuals, forcing P&P mills to increase demand for roundwood, causing roundwood prices to rise Eastern Canada prices were already at very high levels and therefore could not go much
Slide 13: Mercer Performance Focus: EBITDA 30+
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 include: P
Slide 14: Mercer's Consolidated Balance Sheet
Mercer's Consolidated Balance Sheet As at December 31, 2008
Slide 15: Unique Financial Structure
Unique Financial Structure 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 that the company did not have to raise Mercer's €531 million St
Slide 16: Mercer's Key Investment Highlights
Mercer's Key Investment Highlights Future long-term 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
Slide 17: Appendix
MERCER Appendix
Slide 18: 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 a 4% improvement in environmental performance and a 24% reduction in the workplace incident rate over 2007 Economies of scale have allowed for lower convers
Slide 19: 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 Achieved world class mill availability of 93.5% in 2008 Efficient mill with strong cost position One of the lowest delivered costs to Europe Continued its drive for excellen
Slide 20: World Class Assets - Celgar
World Class Assets - Celgar Modern and efficient mill Capacity of 480,000 ADMT per year Achieved a 9% improvement in environmental performance over 2007 Mercer's Blue Goose capital project has exceeded expectations, delivering greater savings per tonne of production In 2007, became a net exporter of
Slide 21: Stendal Loan Facility Amendment
The Amendment was made to further insulate Stendal from these challenging market conditions. It will leave the mill well positioned to weather this economic storm and to continuously add value for stakeholders so that Stendal will be able to take advantage of the recovering market's emerging opportu
Slide 22: Mercer in Brief - Consolidated Financials
Mercer in Brief - Consolidated Financials As at Dec. 31st, 2008 and Dec. 31st, 2007 I n M illions of EUR (unless otherwise stated) Restricted (1) 12 month total ended Dec. 31, 2008 Unrestricted (2) 12 month total ended Dec. 31, 2008 Consolidated 12 month total ended Dec. 31, 2008 Consolidated 12 mon
Slide 23: Pulp Price History
Pulp Price History 2004 2000 2002 2001 2003 2005 2006 2007 CAD USD EURO 2008 Market-related temporary NBSK capacity curtailments amount to 787,000 ADMT from Q1-2008 to Q1-2009, while indefinite and permanent NBSK capacity closures total 820,000 ADMT and 1,504,000 ADMT, respectively, for the same per
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