Mercer International Inc. · NASDAQ:MERC
Mercer International — Strategies for Pulp & Paper Conference 2008
17 slides from Mercer International's conference presentation, Feb 15, 2008
Slide 1: Strategies for Pulp & Paper Conference, Miami, February 2008
Strategies for Pulp & Paper Conference Miami, Florida February 2008
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 70% owned facility Rosenthal (G
Slide 4: Mercer in Brief - Consolidated Financials
Mercer in Brief - Consolidated Financials I n M illions of EUR (unless otherwise stated) LTM Ended Sept.30, 2007 For Year Ended 2006 For Year Ended 2005 Pulp Production 1,363,443 Admt 1,302,260 Admt 1,184,619 Admt Net Sales 697.7 624.0 452.4 Operating EBITDA 139.3 148.3 69.8 I n M illions of EUR (un
Slide 5: 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 6: EU & US energy strategies and biomass
"EU & US energy strategies are the same in that they both are focused on achieving a secure, affordable and environmentally friendly supply" "Although each have a different approach to implement these strategies, the potential world wide impact on agricultural crops and forest biomass is similarly d
Slide 7: Bio-energy in Europe
Bio-energy in Europe The target for the 10 EU countries who have the biggest gap to close for production of renewable energy equates to 113 million tonnes of oil equivalent or 832 million barrels of oil equivalent (boe) per year
Slide 8: Bio-energy in Europe: EU renewable target and biomass supply
EU member states have agreed to a binding target to increase the amount of renewable energy to 20% of the total EU energy output by 2020 In 2005 renewable sources accounted for 6% of total EU energy output Biomass is expected to account for 40% of target Bio-energy in Europe Source: Dr. Udo Mantau:
Slide 9: Cogeneration efficiency and compensation
Jurisdictions such as Europe have been the first to compensate in recognition of the energy efficiency realized by Cogeneration Cogeneration: Provides the most efficient use of the biomass resource by increasing thermal efficiency from 40% to 85% Reduces GHG emissions by up to 50% Decreases requirem
Slide 10: Black liquor wood chip usage
Black liquor wood chip usage Wood Chip Product: Results of burning black liquor in pulp mill Kraft pulp mills have the ability to extract the highest value from a wood resource, producing pulp and generating high quality green energy Black liquor product: ** For discussion purposes only and is meant
Slide 11: Threat of bio-energy to the Forest Products industry
Biomass electricity projects could be a major benefit to Northern Hemisphere Pulp mills if there is a level playing field with other players for green electricity pricing. Pulp mills are the natural location for expanded biomass electricity production. Environmental footprint already exists with pot
Slide 12: Pulp Transition to Bio-energy Economics
The transition to bio-energy economics is happening with Europe at the forefront, and other first world jurisdictions following suit Historically, wood has been priced in the market based on its value for alternative uses, such that saw logs were more valuable than pulpwood Wood's energy value has n
Slide 13: Are we receiving value?
At $92/ barrel of oil, wood should be valued at approximately 212 EUR / odmt, which means various forest products should reflect these values in addition to the value created in the product itself Softwood kraft, with a wood to pulp yield of 45%, has an energy value of $675 per tonne Hardwood kraft,
Slide 14: Are we receiving value?
Are we receiving value? ** FX rate of 1.45; assumed 0.628 odmt of wood per 1000bf lumber Clearly, if we deduct the costs of non-fiber conversion, transportation and overhead off of the above margin, our industry does not receive any value for transforming wood into something beyond its energy value
Slide 15: World Wood Supply Transition to Bio-energy Economics
World Wood Supply Transition to Bio-energy Economics Wood based products have to start reflecting the energy value in wood The use of historic pulp prices does not reflect future pricing mechanisms for pulp. Prices for wood commodity products such as pulp will have a higher floor price going forward
Slide 16: Impact on dissolving pulp grades
Impact on dissolving pulp grades The value of energy is not just going to impact kraft pulp, but will also impact the dissolving grades through the revaluation of cotton and synthetic oil derived fibers The same type of economic effects that will cause wood to be re-valued will impact cotton Higher
Slide 17: Conclusions: Transition to Bio-energy Economics
Conclusions: Unless there is a change in how customers value forest or wood based products, the industry will not continue in its current state creating capacity decline which will continue to affect supply and demand fundamentals until prices rise high enough to reflect the energy value of wood Ove
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