Mercer International Inc. · NASDAQ:MERC
Mercer International — 23rd Annual PWC Global Forest & Paper Industry Conference 2010
16 slides from Mercer International's conference presentation, May 11, 2010
Slide 1: Transformation through Innovation
Transformation through Innovation 23rd Annual PWC Global Forest & Paper Industry Conference May 2010
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: Corporate Overview
Mercer conducts operations through three subsidiaries; two in Germany and one in Canada Mercer operates two of the worlds most modern and the only two NBSK pulp mills in Germany - Europe's largest market for NBSK pulp - and one of North America's largest and most modern pulp mills Corporate Overview
Slide 4: World Class Assets
World Class Assets Mercer operates world-class mills which are some of the largest and most modern in the world Relative age and production capacity provide a competitive advantage Note: Bubble sizes represent market and integrated pulp productions Source: Jaakko Poyry Low production costs Low maint
Slide 5: Growing Green Revenue Streams
Growing Green Revenue Streams Harnessing value and increasing production of highly reliable biomass based electricity is a significant part of our strategy CAGR: 27% Mercer has been amongst the first paper and forest products companies to embrace the "carbon economy". In 2005 Mercer earned €17 milli
Slide 6: Mercer Bio-Energy Profile
Mercer Bio-Energy Profile Mercer continues to have significant incremental opportunities for increased green energy output beyond the Celgar Green Energy Project In modern kraft mills, significant amounts of surplus energy is produced Pulp production and energy production are positively correlated;
Slide 7: Primary Product (Then & Now)
Primary Product (Then & Now) Transformation through Innovation Pulp Machine Then (Rosenthal, circa 1909) Then (Rosenthal, circa 1909) Now (Stendal, circa 2005) Control Systems Then (Rosenthal, circa 1909) Then (Rosenthal, circa 1980) Now (Rosenthal, circa 2010) Forest and Pulp companies have continu
Slide 8: Secondary By-Product (Then & Now)
Secondary By-Product (Then & Now) Transformation through Innovation Bio-fuel Usage - Steam Engine Then (Rosenthal, circa 1909) Then (Rosenthal, circa 1945) Now (Rosenthal, circa 2005) Our Industry has innovated in the utilization of By-Products to increase profits Pulp operations first burned second
Slide 9: Paradigm Shift: demand for green carbon neutral products
Global demand for green carbon neutral products is rapidly developing and is being driven by governments and their policies As their demand and value steadily increase, what were once our secondary by- products have now become "Co-Products" whose revenue streams have the potential to smooth out the
Slide 10: Paradigm Shift to a new Business Model
Mill earnings Paradigm Shift to a new Business Model Lower Return on Capital Employed (ROCE) Improved Long-term Return on Capital Employed (ROCE) Old business model New business model Mill earnings Wood Cost Wood Cost Operating Cost Operating Cost Pulp Revenue Pulp Revenue Carbon Taxes and Carbon Co
Slide 11: Mercer's Approach
Mercer's Approach Mercer has several initiatives and systems (drivers) in place that are designed to create an environment that drives transformative change Continuous Improvement Culture World Class Assets Internal Best in Class Performance Benchmarking Full Value Recognition for Green Products Tra
Slide 12: Transformative Drivers in Action
Transformative Drivers in Action: The drivers in Mercer's approach all function independently across the organization while helping to propel transformative changes Top line focus Recent changes to financial reporting now include Energy Revenues as a separate line item of the Income Statement Full V
Slide 13: Convergence of Mercer's Approach: Transformative Project at Celgar
Convergence of Mercer's Approach Transformative Project at Celgar Prior to Mercer's acquisition of Celgar: It had a generating capacity of 52 MW, with its pulp mill having an average load of 36 MW It was not electrically self-sufficient, though on certain hours it had a small surplus of electricity
Slide 14: Transformation at Celgar - Green Energy Project
Convergence of Mercer's Approach Transformation at Celgar - Green Energy Project The first $28 million optimized Celgar's existing "Co-product" assets and set the stage for the C$55 million Celgar Green Energy Project: Installation of a 48 MW condensing turbine bringing Celgar's installed generating
Slide 15: Celgar Bioenergy Profile
Celgar Bioenergy Profile 2007 With Celgar Green Energy Project The Green Energy Project will deliver C$20 to $24 million annually in incremental EBITDA once fully operational in Q3-2010 Future 238,000 MWh/year of renewable power will be supplied to BC Hydro The installed generation capacity has sign
Slide 16: Key Take Aways
The Paradigm shift is already here creating risks and opportunities The Industry needs to reinvest to address the shift Those that do not reinvest will be marginalized Those that are bold moving forward will have a new profitable business model Government engagement and support for this transformati
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