Mercer International Inc. Reports 2012 First Quarter Results
Posted on May 03, 2012 at 17:05 PM EDT
NEW YORK, May 3, 2012 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq:MERC) (TSX:MRI.U) today reported results for the first quarter ended March 31, 2012. Operating EBITDA* in the first quarter of 2012 was €30.6 million ($40.1 million), compared to €50.8 million ($69.5 million) in the first quarter of 2011 and €17.0 million ($22.9 million) in the fourth quarter of 2011.
For the first quarter of 2012, we had net income of €1.2 million ($1.6 million), or €0.02 ($0.03) per basic share, compared to net income of €29.1 million ($39.8 million), or €0.66 ($0.90) per basic share, in the first quarter of 2011 and a net loss of €1.8 million ($2.4 million), or €0.03 ($0.04) per basic share, for the fourth quarter of 2011.
Mr. Jimmy S.H. Lee, President and Chairman, stated: "We are generally pleased with our first quarter results as, despite a relatively weak NBSK pulp price environment, we still achieved Operating EBITDA of €30.6 million, primarily as a result of strong pulp production and record energy sales at our mills."
Mr. Lee continued: "Pulp prices remained relatively stable in the first quarter of 2012 as economic uncertainty in Europe was mostly offset by increased demand in China. Overall, at the end of the first quarter, list prices in Europe were approximately $850 per ADMT and in North America and China were approximately $870 and $700 per ADMT, respectively. Going forward, we currently anticipate that NBSK pulp prices will continue to gradually increase in the medium term."
Mr. Lee continued: "We continue to improve efficiencies at our mills. In the first quarter, we commenced Project Blue Mill at our Stendal mill that is intended to increase the production of both pulp and highly profitable green energy. We currently anticipate that, once completed, Project Blue Mill will increase our Stendal mill's annual pulp production by 30,000 ADMTs and energy production by 109,000 MWh."
Mr. Lee added: "Decreased demand from the European pellet and board producers has resulted in reduced fiber costs at our German mills. We also currently anticipate that our Celgar mill's fiber costs will begin to decline early in the third quarter."
Mr. Lee concluded: "Despite continued economic uncertainty in Europe, we currently believe that strong Chinese demand, along with increased energy revenues and continued strong performance at our mills, should enable us to continue to enhance value for our stakeholders."
Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011
Total revenues for the three months ended March 31, 2012 decreased slightly to €215.6 million ($282.7 million) from €224.1 million ($306.6 million) in the same period in 2011, due to lower average pulp realizations, partially offset by higher energy revenues. Pulp revenues for the three months ended March 31, 2012 decreased to €199.4 million from €210.5 million in the comparative period of 2011, primarily due to lower pulp prices, partially offset by higher sales volumes and a stronger U.S. dollar relative to the Euro.
Revenues from the sale of excess energy increased by approximately 18% in the first quarter to a record €16.1 million from €13.7 million in the same quarter last year, as a result of strong pulp production at all of our mills.
Pulp production increased to 380,342 ADMTs in the current quarter, from 358,557 ADMTs in the same quarter of 2011, primarily due to increased production at both our Stendal and Celgar mills. We have 21 days (approximately 20,000 ADMTs) of maintenance downtime scheduled for our Rosenthal mill in the second quarter of 2012 in order to perform annual maintenance and to upgrade the mill's recovery process.
Pulp sales volume increased to 384,826 ADMTs in the first quarter from 348,995 ADMTs in the comparative period of 2011, primarily as a result of increased sales to China. Average pulp sales realizations decreased to €512 per ADMT in the first quarter of 2012, compared to €593 per ADMT in the same period last year, due to lower pulp prices, partially offset by a stronger U.S. dollar relative to the Euro.
Costs and expenses in the first quarter of 2012 increased to €199.3 million from €187.5 million in the comparative period of 2011, primarily due to higher sales volumes.
On average, our per unit fiber costs in the current quarter decreased by approximately 3% from the same period in 2011, primarily due to lower fiber costs at our German mills caused by reduced demand from the European pellet and board industries, partially offset by higher fiber costs at our Celgar mill. As we move into the second quarter, we currently expect fiber prices at our German mills to continue to decline, while we currently expect fiber prices at our Celgar mill to remain stable through the second quarter and then begin to decline slightly early in the third quarter.
Selling, general and administrative expenses remained at €10.1 million in the first quarter of 2012, compared to the first quarter of 2011.
For the first quarter of 2012, operating income decreased to €16.2 million from €36.6 million in the comparative quarter of 2011, primarily due to lower pulp revenues resulting from lower pulp prices, partially offset by higher sales volumes and a stronger U.S. dollar relative to the Euro.
Interest expense in the first quarter of 2012 decreased to €14.1 million from €15.9 million in the comparative quarter of 2011, primarily due to the conversion of our remaining convertible notes in 2011 and lower debt levels associated with the Stendal mill.
Our Stendal mill recorded an unrealized gain of €0.9 million on our interest rate derivative in the current quarter, compared to an unrealized gain of €12.2 million in the same quarter of last year. We recorded a foreign exchange gain on our debt of €nil in the first quarter of 2012, compared to a gain of €1.1 million in the same period last year.
In the first quarter of 2012, the noncontrolling shareholder's interest in the Stendal mill's income was €0.7 million, compared to income of €4.5 million in the same quarter last year.
In the first quarter of 2012, Operating EBITDA decreased to €30.6 million from €50.8 million in the first quarter of 2011. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Operating EBITDA has significant limitations as an analytical tool and should not be considered in isolation or as a substitute for our results as reported under GAAP. See page 9 of the financial tables included in the press release for a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA.
We reported net income attributable to common shareholders of €1.2 million, or €0.02 per basic and diluted share, for the first quarter of 2012, which included a non-cash unrealized gain of €0.9 million on the Stendal interest rate derivative, offset by a non-cash charge for stock compensation of €0.9 million. In the first quarter of 2011, we reported net income attributable to common shareholders of €29.1 million, or €0.66 per basic and €0.52 per diluted share, which included a non-cash unrealized gain of €12.2 million on the Stendal interest rate derivative and a €1.1 million non-cash foreign currency translation gain on our debt, partially offset by a non-cash charge for stock compensation of €2.1 million.
Liquidity and Capital Resources
The following table is a summary of selected financial information as at the dates indicated:
As at March 31, 2012, we had approximately €26.4 million and C$31.3 million available under our Rosenthal and Celgar facilities, respectively. As at March 31, 2012, approximately €467.9 million was outstanding under our Stendal mill's loan facility, compared to €486.1 million as at March 31, 2011.
The following table is a summary of selected financial information for the Restricted Group (which, under the indenture for our 2017 9.5% Senior Notes, is comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills) as at the dates indicated:
Earnings Release Call
In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for Friday, May 4, 2012 at 10:00 AM (Eastern Daylight Time). Listeners can access the conference call live and archived through June 4, 2012, over the Internet at http://investor.shareholder.com/media/eventdetail.cfm?eventid=112666&CompanyID=MERC&e=1&mediakey=1AE35D7DABC3ECD95E2779DA87354812 or through a link on the Company's home page at http://www.mercerint.com. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software. A replay of this call will be available approximately two hours after the live call ends until June 4, 2012 at 11:59 PM (Eastern Standard Time) through a link on the Company's Investors/News Releases page at http://www.mercerint.com/s/newsreleases.asp.
Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com.
The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.
CONTACT: APPROVED BY: Jimmy S.H. Lee Chairman & President (604) 684-1099 David M. Gandossi Executive Vice-President & Chief Financial Officer (604) 684-1099
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