Mercer International Shareholders Back Board as CEO Flags Tough Markets, Cost-Cut Push

Key Points

• Mercer International shareholders approved all proposals at the 2026 annual meeting, including the full slate of nine directors, executive pay, and the reappointment of PwC as auditor. Alan Wallace retired and did not seek re-election.
• CEO Juan Carlos Bueno said 2025 was extremely challenging due to tariffs, weak pulp and lumber markets, higher costs, and reduced construction activity. Mercer reported $1.9 billion in revenue, a $22 million operating EBITDA loss, and a $498 million net loss, heavily impacted by about $270 million in impairments.
• The company says its $100 million cost-cutting program is on track, with about $41 million in savings achieved so far, while it works to protect liquidity and improve the balance sheet. Mercer ended the first quarter of 2026 with $229 million in liquidity and expects better momentum in mass timber, even as weak markets may persist through 2026.

Mercer International NASDAQ: MERC shareholders approved all proposals at the company’s 2026 annual meeting, while management outlined a difficult 2025 marked by weak pulp and lumber markets, higher costs and trade-related uncertainty.

Chairperson William McCartney said shareholders elected all nine director nominees, approved a non-binding advisory vote on executive compensation and ratified PricewaterhouseCoopers as the company’s independent registered public accounting firm for fiscal 2026. McCartney also noted that Alan Wallace retired and did not stand for re-election, thanking him for his service to the company.

The elected directors are Juan Carlos Bueno, William McCartney, James Shepherd, Linda Welty, Rainer Rettig, Alice Laberge, Janine North, Thomas Kevin Corrick and Mark von Pentz.

Management Reviews Challenging 2025

President and CEO Juan Carlos Bueno said 2025 was “one of the most challenging years” the industry has faced in some time. He said market conditions shifted significantly after tariff announcements in April 2025, creating uncertainty across Mercer’s markets.

Bueno said the resulting trade-related uncertainty contributed to weaker demand and pricing in pulp and lumber, inflation in input costs, higher long-term interest rates and reduced construction activity. He also said the U.S. dollar weakened against the euro and Canadian dollar, increasing operating costs when translated into Mercer’s reporting currency. Fiber costs in Germany and Canada rose throughout much of the year, adding pressure to results.

For 2025, Mercer reported total revenue of $1.9 billion, an operating EBITDA loss of $22 million and a net loss of $498 million, or $7.44 per share. Bueno said operating EBITDA and the net loss were heavily affected by non-cash long-lived asset and inventory impairments totaling about $270 million. That included a $204 million non-cash impairment related to the Peace River mill, which he said reflected weakness in the hardwood pulp market under U.S. GAAP accounting requirements.

Cost Savings Program Progresses

Bueno said Mercer remains focused on strengthening liquidity and improving operational performance. In April 2025, the company launched its “One Goal One Hundred” program, targeting $100 million of profitability improvement by the end of 2026 through cost reductions and operational efficiencies measured against a 2024 baseline.

Bueno said Mercer realized approximately $30 million in cost savings and reliability improvements in 2025, plus an additional $11 million in the first quarter of 2026, for about $41 million in total to date. He said the company remains on track to meet the $100 million target by the end of 2026.

“While the savings achieved to date did not fully offset the headwinds of 2025, they position us well for improved results as market conditions normalize,” Bueno said.

Pulp, Lumber and Mass Timber Updates

In the pulp segment, Bueno said Mercer produced approximately 1.83 million air-dried metric tons in 2025, broadly in line with the prior year despite a heavier maintenance schedule. He cited ongoing investments, including lime kiln improvements at Stendal, digester and turbine upgrades at Rosenthal and completion of the wood room at Celgar.

At Peace River, Mercer is shifting production further toward softwood and advancing longer-term initiatives, including a bioenergy carbon capture and storage project with Svante Technologies. Bueno said the company believes trade uncertainty and inflationary pressures remain the main overhangs for the pulp business.

In lumber, Bueno said pricing in 2025 was affected by trade uncertainty, tariffs and countervailing duties, while construction activity stayed subdued due to elevated interest rates in North America. He said lumber price indicators were more encouraging early in 2026, with the Random Lengths U.S. benchmark price for Western SPF No. 2 and better averaging $463 per 1,000 board feet in the first quarter, up from $422 in the fourth quarter of 2025.

Bueno said Mercer’s mass timber business entered 2026 with “significant momentum.” The company’s project backlog stood at about $171 million at the end of the first quarter of 2026, up from about $163 million at the end of 2025. Large data center projects sponsored by hyperscalers made up roughly 60% of that backlog, he said. Mercer expects 2026 mass timber revenue of more than $100 million, significantly above 2025 levels.

Liquidity and Balance Sheet Remain Priorities

Bueno said maintaining solid liquidity remains Mercer’s top priority. At the end of the first quarter of 2026, the company had aggregate liquidity of about $229 million, including $85 million of cash and $144 million of undrawn revolvers.

He said Mercer did not meet the leverage ratio covenant under its German revolving credit facility in the first quarter due to high costs and weak markets. The company obtained a waiver from lenders for that quarter and the two subsequent quarters, and management expects to be in compliance with the covenant by the fourth quarter of 2026 based on current forecasts.

Mercer also launched a consent solicitation with bondholders in the first quarter to provide additional flexibility for potential financing transactions. Bueno said more than 80% of bondholders approved the solicitation. He added that Mercer is evaluating strategic alternatives and financing options to enhance liquidity and financial condition, with a special committee of the board overseeing management’s efforts.

Bueno also noted that the board suspended the company’s dividend in 2025 to focus on debt reduction and navigate the period of uncertainty. He said the board remains committed to a competitive dividend as market conditions improve and the balance sheet strengthens.

2026 Outlook

Looking ahead, Bueno said market weakness is expected to persist through 2026, with Mercer focused on liquidity, disciplined capital spending and execution. Planned 2026 capital expenditures are expected to be about $60 million to $80 million, focused on maintenance, environmental and safety projects.

In pulp, Mercer expects modest NBSK price improvements and relatively flat hardwood pricing. In lumber, the company expects a modest seasonal demand increase through the summer building season in North America and Europe, though U.S. lumber pricing is likely to remain volatile in the short term. In mass timber, Mercer expects production and sales to increase significantly as facilities ramp up.

Bueno said Mercer remains committed to longer-term initiatives including lignin, carbon capture, sustainable aviation fuel and broader biorefinery capabilities, while continuing to pursue cost reductions beyond the One Goal One Hundred program.

About Mercer International NASDAQ: MERC

Mercer International Inc is a publicly traded pulp producer headquartered in Vancouver, British Columbia. Listed on the NASDAQ under the symbol MERC, the company specializes in the manufacture of Northern Bleached Softwood Kraft (NBSK) pulp and dissolving pulp for use in tissue, specialty paper and textile applications.

Mercer's core business activities include the operation of integrated pulp mills in North America and Europe. Its production portfolio encompasses NBSK pulp, renowned for its strength and versatility, and dissolving pulp, which serves as a key raw material in the manufacture of viscose, cellulose acetate and other specialty products.

The company's facilities are located in British Columbia and the U.S.

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