The combination of lower lumber, pulp and energy prices and an average increase of 16% in costs (from US-$1.89 billion to US-$2.28 billion) are mainly responsible for the negative annual result. This is also reflected in operating EBIDTA, which decreased from US-$537 million in 2022 to just under US-$18 million in 2023.
In the full year, though, Mercer reports that it finished the year with sufficient aggregate liquidity (US-$610 million) and that the group is optimistic for the current financial year since market conditions are slowly improving.
Mercer’s financial report also shows a significant negative development in fourth quarter results. Sales remained constant at US-$470 million in the third and fourth quarters. However, net losses increased from US-$26 million to over US-$87 million in the same period. Operating EBITDA, too, fell from just under US-$38 million in the third quarter to US-$21 million in the fourth quarter of 2023.
US market better than Europe
The overall weakness in the lumber market is another reason for the relatively weak results, according to Mercer. Rising prices in North America were not enough to compensate for the low price level in Europe. As for the beginning of 2024, Mercer’s management does not expect lumber prices to rise substantially in Europe. European demand remains relatively weak compared to the US (low stock levels and a growing construction sector). However, glued timber prices are likely to remain constant in 2024, as the company projects in its report.
When it comes to costs, Mercer reported constant log prices (and an increase in Europe) and lower sawlog prices in the fourth quarter. The company gives the high availability of damaged wood, especially in Germany, as the reason for this.
Solid wood segment with an upswing
Last year, Mercer began to gradually ramp up its glued timber production, following substantial investments in recent years (acquisition of Katerra in Spokane/US and of Structurlam with production sites in Canada and Arkansas).
The results from the solid wood business have recently exceeded Mercer’s expectations. 2024 even began with orders with a cumulated value of nearly US-$100 million.
Lumber production, on the other hand, decreased by 5% year on year (2022: 117.3 MMfb or 277,000 m³) and totaled 111.6 MMfbm (260,000 m³) in the fourth quarter. Meanwhile, revenues grew by 6% to just under US-$48 million – which is mainly the result of higher sales volumes. Average lumber sales realizations were impacted by the currently weak price and demand situation in Europe and decreased by around 6% as a result, from US-$454/1,000 bfm (€272/m³ actual size) in the fourth quarter of 2022 to US-$427/1,000 bfm (€256/m³ actual size) in the same period of 2023.
