Mercer International Inc. MERC reported that its Peace River mill operations will be suspended for repairs of the digester for a mechanical failure.

Impacts of Peace River’s Halt on Mercer

The company forecasts that hardwood pulp (NBHK) production at the mill will be decreased by around 45,000 tons until operations resume. The company has property and business interruption insurance for the Peace River mill and anticipates that the repairs and business interruption will be covered by such insurance. 

MERC currently estimates the repairs and assessments to be finished by mid-October 2024.

Details on MERC’s Peace River Mill

Located around 500 km north of Edmonton, Peace River’s pulp mill operations began in 1990. It produces both softwood (NBSK) and NBHK pulp. The Peace River mill delivers its surplus electricity to the Alberta market at market rates.

Peace River holds long-term forest management agreements in Alberta, allowing it to harvest approximately 2.9 million cubic meters of hardwood and 375,000 cubic meters of softwood annually. Currently, it utilizes about 44% of its hardwood allowance and trades or sells its softwood to nearby sawmills for wood chips. These agreements are secured until 2029.

Mercer’s Q2 Top-Line Dips Y/Y

MERC reported an adjusted loss of 50 cents in the second quarter of 2024 compared with an adjusted loss of $1.48 in the prior-year quarter. Total revenues declined 6% year over year to $499 million in the second quarter. 

The downside was due to lower pulp and lumber sales volumes, which was partially offset by higher pulp sales realizations and manufactured products revenues.

MERC Share Price Lags Industry

Shares of Mercer have plunged 22.3% over the past year, against the industry's 29.9% growth.

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Mercer’s Zacks Rank & Stocks to Consider

Mercer currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, IAMGOLD Corporation IAG and Eldorado Gold Corporation EGO, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.09 per share. The consensus estimate for 2025 earnings has moved 7% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 127.1% in a year.

The Zacks Consensus Estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for 2024 earnings has moved 36% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG shares have gained 152.6% in a year.

The Zacks Consensus Estimate for Eldorado Gold’s 2024 earnings is pegged at $1.32 per share. The consensus estimate for 2024 earnings has moved 16% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO shares have gained 82.9% in a year.

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