15 March 2026 | 6:51PM BRT Equity Research Pulp & Paper: Key Debates Going Into Shanghai Pulp Week We are en route to Asia to attend meetings around the Shanghai pulp week with industry participants. We brainstorm on the key topics to be discussed. Asia woodchips markets: With recent news around Indonesia forest license revocations and a series of new pulp capacity additions both in China and Indonesia, we will be looking for details around supply sustainability and pricing outlook. The market seems balance ...

Financial Data and Key Metrics Changes - The operating EBITDA for Q4 2025 was negative $20 million, an improvement of $8 million compared to Q3 2025, primarily due to stable production and the One Goal One Hundred program, despite market headwinds [3][4] - The consolidated net loss for Q4 2025 was $309 million, or $4.61 per share, compared to a net loss of $81 million, or $1.21 per share in Q3 2025 [13] - Total non-cash impairment charges for the quarter amounted to $260 million, or $3.22 per share, largely due to the ongoing weakness in the hardwood pulp market [3][4] Business Line Data and Key Metrics Changes - Both the pulp and solid wood segments reported negative quarterly EBITDA of $11 million in Q4 2025 [4] - Pulp sales volumes increased by 20,000 tons to 472,000 tons, while pulp production remained stable at 460,000 tons [7][20] - Lumber production decreased by about 6% to 109 million board feet, with sales volumes dropping to 103 million board feet, a decrease of about 7% from Q3 2025 [10][22] Market Data and Key Metrics Changes - Softwood sales realizations decreased to $702 per ton, down from $728 per ton in Q3 2025, while North American NBSK list prices averaged $1,568 per ton, a reduction of about $132 from Q3 [5][6] - The average net price for eucalyptus hardwood in Q4 was $540 per ton, an increase of $37 from Q3, while hardwood sales realizations remained flat at $528 per ton [6][20] - The average price gap between softwood and hardwood pulp in China narrowed to approximately $130 per ton [6] Company Strategy and Development Direction - The company is focusing on strategic initiatives to return the Peace River mill to profitability, including expanding softwood pulp production and exploring government support for energy generation [4][15] - The One Goal One Hundred program aims to improve profitability by $100 million by the end of 2026, with approximately $30 million in cost savings realized in 2025 [12][14] - The company is transitioning from hardwood to softwood production at the Peace River mill, aiming for a 50/50 split by the end of 2026 [50] Management's Comments on Operating Environment and Future Outlook - Management noted that ongoing market headwinds and trade uncertainties are impacting operational performance, but underlying performance has improved quarter-over-quarter [14][20] - The company expects modest price improvements for NBSK and NBHK in Q1 2026, while trade uncertainty continues to affect supply-demand dynamics [20][22] - Management expressed confidence in the mass timber business as a growth engine, with expected revenues of over $120 million in 2026 [25][27] Other Important Information - The company reported an improvement in aggregate liquidity of over $54 million to $430 million, attributed to working capital management and cost reduction activities [12] - Planned capital expenditures for 2026 are expected to be between $60 million and $80 million, focusing on maintenance and environmental projects [28] Q&A Session Summary Question: Can you say how much headroom that you have under any of your maintenance covenants as of December thirty-first? - Management indicated comfort with being well under the covenants at the end of the quarter, but expects them to tighten as the year progresses due to a weak outlook [32] Question: Any thoughts on asset recycling opportunities to expedite potential deleveraging of the balance sheet? - Management is analyzing asset sales or restructuring as part of their debt reduction plans, but noted that current market conditions are not favorable for claiming reasonable value for assets [43] Question: Is there any thought to potentially closing the Peace River mill? - Management clarified that they are focused on transitioning the mill from hardwood to softwood production, which is expected to enhance profitability [50] Question: Any updates on the extension of your two RCFs? - Management stated that discussions with lenders are ongoing and are expected to conclude before the end of Q2 2026 [75][78] Question: How do you see the outlook for the market, particularly regarding softwood pulp? - Management acknowledged significant supply disruptions and indicated potential upward pressure on prices for both hardwood and softwood due to recent developments in Indonesia [59][60]

Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q4 2025 Earnings Call February 13th, 2026 Juan Carlos Bueno – President & CEO Richard Short – CFO, Executive VP & Secretary Forward-looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements For more information regarding these risks and uncertainties, review Mercer's filings with the United States Securities and Exchange Commission Unless required ...

Core Insights - Suzano S.A. (SUZ) reported positive market reactions due to sequential improvements in pricing and increased volume, attributed to the Cerrado region and lower average pulp costs [2] Group 1: Company Performance - The market response to Suzano S.A.'s recent report was favorable, indicating improved pricing and higher volumes [2] - The increase in volume was significantly driven by operations in the Cerrado region [2] - There was a noted decrease in average pulp costs, contributing to the overall positive performance [2] Group 2: Investment Strategy - The Valkyrie Trading Society focuses on high conviction, obscure developed market ideas that are expected to yield non-correlated and outsized returns [2] - The Value Lab, led by the Valkyrie Trading Society, offers a portfolio with real-time updates, 24/7 chat support, and regular market news reports [2]

Core Insights - Mercer International Inc. reported a significant decline in financial performance for Q4 2025, with an Operating EBITDA of negative $20.1 million, compared to positive $99.2 million in Q4 2024 and negative $28.1 million in Q3 2025 [2][3][8] - The company experienced a net loss of $308.7 million ($4.61 per share) in Q4 2025, a stark contrast to a net income of $16.7 million ($0.25 per share) in Q4 2024, largely due to non-cash impairments totaling $238.7 million [3][8][34] - Despite the challenging environment, the company is focused on cost reduction and operational efficiency, aiming for $100 million in savings by the end of 2026 through its "One Goal One Hundred" program [6][8][34] Financial Performance - Total revenues for Q4 2025 decreased by approximately 8% to $449.5 million from $488.4 million in Q4 2024, primarily due to lower pulp sales realizations [14][34] - Costs and expenses in Q4 2025 increased by approximately 66% to $728.0 million from $438.0 million in Q4 2024, driven by negative foreign exchange impacts, maintenance spending, and higher fiber costs [15][34] - For the full year 2025, total revenues decreased by approximately 9% to $1.868 billion from $2.043 billion in 2024, attributed to lower pulp and manufactured products sales [34][37] Segment Performance - In the pulp segment, revenues decreased by approximately 11% to $334.3 million in Q4 2025 from $375.5 million in Q4 2024, with a significant drop in Operating EBITDA to negative $11.3 million from positive $106.1 million [18][22][34] - Lumber revenues in Q4 2025 decreased by approximately 6% to $54.9 million from $58.6 million in Q4 2024, despite a 12% increase in average sales realizations to $533 per Mfbm [28][34] - The solid wood segment's overall revenues remained relatively flat at $110.2 million in Q4 2025 compared to $111.6 million in Q4 2024, with higher revenues from manufactured products offsetting declines in lumber and biofuels [27][34] Market Conditions - Softwood pulp prices in Europe remained stable, while North American and Chinese prices decreased due to weak demand and economic uncertainty [7][19] - The company anticipates a modest increase in pulp prices in early 2026 due to stable demand and global supply constraints [7][9] - The U.S. imposed a 10% global tariff on imported lumber, significantly impacting Canadian producers, which has led to sawmill closures and tighter fiber supply [10][34] Operational Initiatives - The company is shifting its production mix towards softwood pulp and engaging with government stakeholders on energy and carbon capture opportunities to address challenges in the hardwood pulp market [4][8] - The "One Goal One Hundred" program has already realized approximately $30 million in cost savings and operational improvements during 2025, with continued focus on efficiency initiatives [6][8][34] - The mass timber order book has grown, with contracts secured for large-scale data center projects, indicating potential for future revenue growth [12][34]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, even amidst a lower price cycle, indicating resilience and competitiveness in its business model [5][6] - The cash cost reached BRL 778 per ton in Q4 2025, a 3% reduction from Q3 2025, marking the lowest cash cost performance since Q4 2021 [23][24] - The company generated a positive free cash flow of $400 million in Q4 2025, reducing net debt to $12.6 billion and decreasing leverage to 3.2 times [26] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, driven by operational excellence in the supply chain [4] - The paper and packaging business unit saw strong volumes, particularly in the U.S., with a 21% year-over-year increase in packaging prices despite declining paper prices in export markets [8][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results by reallocating production to more competitive mills [12] Market Data and Key Metrics Changes - In Brazil, print and write paper demand increased by 1% in the first two months of Q4 2025, while paperboard demand grew by 2% [9] - The U.S. market experienced stable shipments in Q4 2025, but production increased by 2% due to new capacity, leading to pressure on operating rates [10] - In China, paper and board production increased by 17% in Q4 2025 compared to Q4 2024, contributing to higher demand for hardwood pulp [13] Company Strategy and Development Direction - The company views 2025 as an inflection point for total operational disbursement (TOD), aiming to improve competitiveness and cash generation capabilities [5][29] - A comprehensive multi-year program is being implemented to enhance competitiveness, focusing on reducing total operational disbursement [24] - The company is strategically positioning inventories for Q2 2026, anticipating maintenance downtimes that will reduce output [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [29] - The delay of new market pulp capacity in Indonesia and the revocation of forestry licenses are expected to tighten supply, positively impacting market dynamics [71][73] - The company anticipates a gradual decline in cash costs throughout 2026, despite challenges in the first quarter due to planned maintenance [24][60] Other Important Information - The company renewed its revolving credit facility, increasing the line from $1.3 billion to $1.8 billion while reducing costs [26] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months, following a previous buyback of 15 million shares [28] Q&A Session Summary Question: Insights on pulp market dynamics in China - Management indicated that despite new pulp capacity, the net effect on supply is neutral due to lower operating rates and shutdowns, leading to a positive import trend for hardwood pulp [34][35] Question: Future CAPEX trends - Management acknowledged potential for lower CAPEX in 2026 due to non-recurring items but refrained from providing specific guidance [33][37] Question: Buyback execution strategy - The company remains focused on deleveraging but is opportunistic with buybacks, considering various market factors [41][42] Question: Potential divestments and their impact on deleveraging - Management noted that divestments are not a primary strategy for deleveraging, which will primarily come from operational improvements [43][44] Question: Paper prices in China and their impact on pulp prices - Management confirmed that while paper prices are a factor, pulp prices generally lead the market, and they expect a recovery in paper prices [48][50] Question: U.S. packaging market outlook - The company expressed confidence in its U.S. packaging business, citing stable demand and long-term contracts that insulate it from market volatility [53][55]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, demonstrating resilience despite lower price cycles [5][6] - EBITDA for Q4 2025 reached $4.8 billion, an 8% increase quarter-over-quarter, supported by higher volumes and better prices in US dollar terms [15][21] - Cash costs were reported at BRL 778 per ton, marking a 3% reduction from Q3 2025, driven by lower input costs and operational stability [21][22] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, with a notable price recovery in all markets, particularly in China and Asia [4][12] - The paper and packaging business unit also delivered strong volumes, with a 21% year-over-year increase in the U.S. market, despite declining paper prices in export markets [7][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results [11] Market Data and Key Metrics Changes - In Brazil, print and write demand increased by 1% in the first two months of Q4 compared to the same period last year, while paperboard demand grew by 2% [8][9] - The U.S. market saw stable SBS shipments in Q4, but production increased by 2%, leading to pressure on operating rates [9] - International markets remained weak, with declining demand and oversupply, particularly in Europe [8][10] Company Strategy and Development Direction - The company aims to improve competitiveness through a multi-year program focused on reducing total operational disbursement [22][23] - The management highlighted the importance of maintaining liquidity and reducing net debt, targeting a reduction to $11 billion [40] - The joint venture with KC is progressing as planned, with expectations for closing in mid-2026 [27] Management's Comments on Operating Environment and Future Outlook - Management noted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [27][68] - The delay of new market pulp capacity and revocation of forestry licenses in Indonesia are expected to tighten supply further [68] - The company anticipates a gradual decline in cash costs over the course of 2026, despite challenges in the first half of the year [22][59] Other Important Information - The company generated positive free cash flow of $400 million in Q4 2025, contributing to a reduction in net debt to $12.6 billion [24] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months [26] - The company is maintaining a healthy portfolio of FX hedges, with significant potential cash adjustments expected [25] Q&A Session All Questions and Answers Question: Insights on pulp market dynamics in China - Management provided updates on the pulp market, indicating a strong demand in China and a net zero effect of verticalization in 2025, with expectations for 2.8-3 million tons of new capacity in 2026 [32][34] Question: CAPEX trends and expectations - Management discussed the potential for lower CAPEX in 2026 due to non-recurring items, but did not provide specific guidance [31][35] Question: Buyback execution strategy - The company emphasized an opportunistic approach to buybacks, focusing on leveraging its balance sheet while considering market conditions [39][40] Question: Potential divestments and their impact on deleveraging - Management indicated that divestments would focus on non-core assets, particularly in the forestry business, but emphasized that deleveraging would primarily come from operational improvements [41][42] Question: Paper prices in China and their impact on pulp prices - Management noted that while paper prices are a factor, pulp prices typically drive paper prices, and they expect a recovery in paper prices [45][49] Question: U.S. packaging market outlook - The company highlighted its strong position in the U.S. packaging market, with stable demand and protected pricing under long-term contracts [51][52]

Financial Data and Key Metrics Changes - The company reported strong operational cash flow and free cash flow in Q4 2025, demonstrating resilience despite lower price cycles [4][5] - EBITDA for Q4 2025 reached $4.8 billion, an 8% increase quarter-over-quarter, supported by higher volumes and better prices in US dollar terms [14][25] - Net debt was reduced to $12.6 billion by the end of 2025, with leverage declining to 3.2 times [25] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, with a price recovery noted across all markets [3][12] - The paper and packaging business unit also delivered strong volumes, particularly in the U.S., with a 21% year-over-year increase in packaging prices [6][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results [11] Market Data and Key Metrics Changes - In Brazil, print and write demand increased by 1% in the first two months of Q4 2025, while paperboard demand grew by 2% [7][8] - The U.S. market saw stable shipments in Q4, but production increased by 2% due to new capacity, impacting operating rates [9] - International markets remained weak, with declining demand and oversupply, particularly in Europe [7] Company Strategy and Development Direction - The company aims to improve competitiveness through a multi-year program focused on reducing total operational disbursement (TOD) [23] - The management highlighted the importance of maintaining liquidity and reducing net debt as part of their strategic objectives [28] - The joint venture with KC is progressing as planned, with expectations for closing in mid-2026 [28] Management's Comments on Operating Environment and Future Outlook - Management noted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [28] - The company expects to maintain cash costs in line with Q4 2025 levels, despite challenges in the first half of 2026 [21][25] - Positive developments in the pulp market were attributed to supply-side changes, including the revocation of forestry licenses in Indonesia [70] Other Important Information - The company announced a new buyback program to acquire up to 40 million shares over the next 18 months [27] - A comprehensive review of CAPEX for 2026 indicated a nearly 20% reduction year-on-year [25] Q&A Session Summary Question: Insights on pulp market dynamics in China - Management indicated that new pulp capacity in China is expected to be offset by lower operating rates, resulting in a net zero effect on verticalization for 2025 [34][35] Question: CAPEX trends for 2027 - Management acknowledged non-recurring items impacting CAPEX in 2026 but suggested potential for lower numbers in the future [33][37] Question: Buyback execution strategy - The company emphasized a focus on reducing net debt while being opportunistic with buybacks based on various market factors [40][42] Question: Potential divestments and their impact - Management clarified that divestments are not a primary strategy for deleveraging, focusing instead on operational improvements [41][44] Question: Paper prices in China and their impact on pulp - Management noted that while paper prices are a factor, pulp prices generally drive paper prices, and they expect a recovery in paper margins [47][50] Question: U.S. packaging market performance - The company highlighted its strong position in the U.S. packaging market, insulated from broader market pressures due to long-term contracts [52][53] Question: Cost reduction levers in the pulp business - Management indicated that cash costs are expected to remain stable, with efforts focused on operational efficiency [78]

Earnings Conference Call 4Q25 The forward-looking statements include, without limitation, statements related to the declaration or payment of dividends, implementation of the key operational and financial strategies and investment plans, guidance about future operations and factors or trends that influence the financial situation, liquidity or operational results. Such statements reflect the current view of the management and are subject to diverse risks and uncertainties. These are qualified in accordance ...

Core Insights - Suzano, the world's largest pulp producer, reported record annual sales volumes and net revenue for both the final quarter (4Q25) and the full year (2025) [1] - The company achieved a 15% increase in pulp and paper sales, reaching 14.2 million tonnes compared to 2024 [1] - An improvement in cash cost of pulp production was noted, indicating enhanced operational efficiency [1] Financial Performance - Record annual sales volumes and net revenue were achieved in 2025 [1] - Pulp and paper sales increased to 14.2 million tonnes, reflecting a 15% growth from the previous year [1] Operational Efficiency - The company reported an improvement in cash cost of pulp production, highlighting efforts towards operational efficiency [1]