Mercer International (MERC) Q2 2026 earnings summary

Executive summary

• Q2 2026 saw negative operating EBITDA of $21.0 million and a net loss of $76.0 million ($1.13/share), including a $29.0 million non-cash inventory impairment, as high German fiber costs and delayed pulp price recovery weighed on results.

• Revenues for Q2 2026 were $460.3 million, nearly flat year-over-year, with higher solid wood sales and pulp volumes offsetting lower pulp realizations.

• Strategic restructuring at the Torgau facility is underway, including a workforce reduction of approximately 350 positions by Q2 2027 and operational adjustments at German mills.

• The One Goal 100 program delivered $54.0 million in cost improvements since April 2025, with $24 million in H1 2026 and $13 million in Q2 2026, on track for $100 million by year-end.

• Management is addressing liquidity challenges due to upcoming debt maturities, engaging advisors and evaluating strategic alternatives to enhance liquidity and strengthen the balance sheet.

Financial highlights

• Q2 2026 revenues: $460.3 million (Q2 2025: $453.5 million); H1 2026: $949.6 million.

• Q2 2026 net loss: $76.0 million ($1.13/share), improved from $86.1 million ($1.29/share) in Q2 2025.

• Q2 2026 operating EBITDA: negative $21.0 million (Q2 2025: negative $20.9 million).

• Inventory impairment charges: $29.0 million in Q2 2026, mainly due to low pulp prices and high fiber costs.

• Aggregate liquidity at June 30, 2026: ~$191.7 million, with $78.8 million in cash and $113 million in undrawn revolvers.

Outlook and guidance

• Fiber costs in Germany expected to remain high in Q3 2026, with modest decreases at sawmills and Canadian pulp mills.

• Pulp production at German mills to remain reduced in Q3 2026 due to high fiber costs and planned maintenance downtime.

• Pulp prices (NBSK and NBHK) expected to decrease slightly in Q3 2026 as supply constraints ease and demand remains weak.

• Lumber prices projected to remain stable in Europe and rise modestly in the U.S.; mass timber production and sales expected to be flat in Q3, with a meaningful increase in Q4.

• Mass timber order book at $151 million, with major contracts expected to contribute from late 2026 into 2027.