Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (March 2008)
24 slides from Mercer International's investor presentation, Mar 10, 2008
Slide 1: Investor Presentation March 2008
Exhibit 99.1 Investor Presentation March 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 softwo
Slide 4: Locations
MERCER Locations
Slide 5: 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 6: Mercer in Brief — Consolidated Financials
Mercer in Brief — Consolidated Financials As at Dec. 31, 2007 In Millions of EUR Restricted Unrestricted Total (unless otherwise stated) Pulp Production 803,081 Admt 601,592 Admt 1,404,673 Admt Net Sales 401.3 303.1 704.4 Operating EBITDA 65.6 60.6 126.2 In Millions of EUR Restricted Unrestricted To
Slide 7: 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 4Q07 750 STRONG 600 Potlatch Weighted Average Weyerhaeuser T
Slide 8: 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 9: 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 10: 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 11: Mercer's impressive financial performance
Mercer’s impressive financial performance Quarterly Revenue Growth (millions of EUR) 200 Revenue Growth 2005 2006 2007 160 Revenue 120 Revenues (EUR) 531,908 623,977 704,391 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: NBSK End Uses (2006)
NBSK End Uses (2006) Specialties Printing & Writing NBSK pulp adds strength to a 19% 17% Papers wide range of paper products Growing demand driven by technological evolution of industry 21% Tissues 26% NBSK demand growth driven Coated Mechanical by demand for lower basis (magazines) 17% weight paper
Slide 13: 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 17% Coated Mechanical Mechanical (Newspaper (Magazines) Uncoated Mechanical Inserts) Sour
Slide 14: Substitution (Western Europe)
Substitution (Western Europe) European price differential v softwood consumption growth 120 BSKP at a BSKP / BHKP price 8% premium differential 60 growth 4% consumption BSKP / BHKP price differential 0 0% (US$/t) (YoY %chg) pulp Softwood -60 -4% BSKP consumption growth* BHKP at a Right scale premium
Slide 15: 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 16: 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 17: Pulp Price History
Pulp Price History Quarterly Average RISI Price Delivered to N. Europe USD CAD EURO 1200 1100 Tonne 1000 Per 900 Price 800 CAD NBSK 700 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 18: Advantageous Financial Structure
Advantageous Financial Structure Mercer’s levered capital structure is highly manageable 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 19: Mercer export of electricity
Mercer export of electricity Electricity generation Electricity exports Mercer Electricity Generation and 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 20: Balance Sheet — Dec. 31, 2007
Balance Sheet — Dec. 31, 2007 Restricted Unrestricted Consolidated Assets Cash 59.4 25.4 84.8 Other current assets 105.2 100.2 205.4 164.6 125.6 290.2 Restricted cash — 33.0 33.0 Property, plant and equipment 385.6 547.7 933.3 Other long term assets 20.2 6.8 27.0 Due from unrestricted 57.5 (57.5) —
Slide 21: Profit and Loss — Year ended Dec. 31, 2007
Profit and Loss — Year ended Dec. 31, 2007 Restricted Unrestricted Consolidated Revenues 401.3 303.1 704.4 Cost of sales 344.5 260.2 604.7 Selling, general and administrative expenses 21.6 13.1 34.7 Sale of emission credits (1.5) (3.1) (4.6) Operating Income 36.7 32.9 69.6 Net interest expense (23.2
Slide 22: Liquidity — As at Dec. 31, 2007
Liquidity — As at Dec. 31, 2007 Consolidated Liquidity Restricted Group Liquidity Cash balance Dec. 31, 2006 Cash balance Dec. 31, 2006 Free cash 69.4 Free cash 39.1 Restricted cash 57.0 Restricted cash — Total cash balance, Dec. 31, 2006 126.4 Total cash balance, Dec. 31, 2006 39.1 2007 Cash Flows
Slide 23: Strong Credit Ratios
Strong Credit Ratios — As at Dec. 31, 2007 Restricted Consolidated Group EBITDA / Interest Expense 2.8x 1.9x (EBITDA — Capex) / Interest Expense (1) 2.3x 1.6x Senior Debt / EBITDA 3.9x 6.5x Net Senior Debt / EBITDA 3.0x 5.6x Total Debt / EBITDA 4.2x 6.6x Net Debt / EBITDA 3.3x 5.7x Debt / Total Capi
Slide 24: 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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