Mercer International, Inc. Q1 FY2026 earnings call

The special committee is considering all aspects of the capital structure, not just asset reduction. Fiber supply constraints in Germany persist, with fiber costs in Germany being a major concern. There are expectations of further curtailments in softwood pulp markets. Mass timber business is progressing with 60% quarter-on-quarter growth, and there's a positive cash flow cycle. SCT's strategic review of tissue business is too early to anticipate impacts.

Expect fiber costs in Germany to be a bit lower in Q2 but still an issue. Mass timber is expected to have better margins in the second half of the year. Working capital is expected to reduce in Q2.

Fiber supply constraints in Germany continuing to impact costs. Seasonal harvesting affecting working capital.

Q: Follow-up on outlook for softwood pulp, including Chinese inventory and Europe/North America markets.

A: More curtailments needed, Canada mills running at low profitability.

Q: Differentiation in wood cost dynamics in Germany between pulpwood, saw log.

A: Policy incentivizing wood for energy impacts wood chip prices, impact on pulp and sawmills marginal.

Q: Working capital outlook.

A: Expect reduction in Q2.

Q: Mass timber cash inflows and SCT tissue business.

A: Mass timber has positive cash flow, SCT tissue review too early to comment.

Q: Substitution opportunity for cellulose-based products.

A: Gap between hardwood and softwood fibers shrinking, potential substitution.

Q: Incremental profit from scanning technology at Torgao.

A: Scanning tech allows access to US market for higher volumes.