Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more details on input cost trends, particularly between Europe and Canada? A: Juan Bueno, President and CEO, explained that pulp costs decreased by about 5% in both Canadian and German mills from 2023 to 2024. However, lumber mills saw a 5% increase. For 2025, Canadian pulp mills might see a slight tailwind unless tariffs impact sawmilling and chip availability. In Germany, fiber costs are expected to rise by about 6% for pulp and 10% for lumber due to reduced wood availability.
Q: How is the European wood business performing, and are there any signs of improvement? A: Juan Bueno noted that the Freeze-out mill is competitive and profitable despite market conditions, while Torgau is still dependent on pallets but is increasing lumber production. Fiber costs are expected to rise in Europe, but the UK market is recovering well, providing some relief. The US market recovery is uncertain due to potential tariffs.
Q: What is the long-term outlook for fiber costs in Germany? A: Juan Bueno stated that over the next 10 years, there will be enough fiber to meet demand, with a shift in species availability rather than a reduction in overall fiber. Spruce availability may decrease, but other species will remain resilient.
Q: How is Mercer managing its manufactured products business given the current market conditions? A: Juan Bueno expects mass timber sales to remain around $100 million in 2025, similar to 2024, but with smaller projects replacing large ones. This may impact profitability. The company is strategically sourcing wood to avoid tariff impacts and is positioned to serve both US and Canadian markets effectively.
Q: How do returns on lumber sales in Europe compare to North America? A: Juan Bueno explained that European pricing is improving, particularly in the UK, which has been consistently upward. The US market is more volatile. Currently, 38% of lumber sales are to the US, down from previous levels, as the company optimizes its market mix.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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