Mercer International reported sharply weaker results for the fourth quarter and full year 2025, reflecting a prolonged downturn in hardwood pulp markets, significant non-cash impairments, and continued pressure on fibre and energy costs.
For the fourth quarter of 2025, Mercer posted operating EBITDA of –$20.1 million, an improvement from –$28.1 million in the third quarter, but well below $99.2 million recorded a year earlier. The company reported a net loss of $308.7 million, driven largely by $238.7 million in non-cash impairment charges, primarily related to long-lived assets at its Peace River mill and to pulp inventories impacted by low prices and high fibre costs.
On a full-year basis, operating EBITDA reached –$22.0 million, compared with $243.7 million in 2024, while the net loss widened to $497.9 million. Management attributed the year-over-year decline to weak pulp pricing, higher input costs and adverse foreign exchange impacts, partially offset by cost-reduction initiatives.
Impairments and operational focus
The largest impairment charge—$203.5 million—was recorded against assets at the Peace River mill, reflecting ongoing challenges in hardwood pulp markets. Additional write-downs included obsolete equipment and pulp inventory. Management said it is actively evaluating strategic options for the mill, including adjustments to the production mix toward softwood grades and engagement with governments on potential energy and carbon-capture opportunities.
Despite the challenging environment, Mercer noted that underlying operational performance improved sequentially in the fourth quarter. Cash flow from operations increased by approximately $76 million compared with the prior quarter, supported by working-capital improvements and cost controls.
Cost-reduction program advances
Mercer continues to advance its “One Goal One Hundred” program, launched in mid-2025, which targets $100 million in cost savings and operational improvements by the end of 2026, using 2024 as a baseline. The company achieved approximately $30 million in savings and reliability improvements in 2025 and reiterated confidence in meeting its target.
Market conditions and outlook
Pulp pricing remained mixed across regions. In the fourth quarter, softwood pulp prices were relatively stable in Europe but declined in North America and China due to weak demand and global trade uncertainty. Hardwood pulp prices in China increased modestly, supported by higher domestic fibre costs, while North American prices remained flat. Mercer expects modest pulp price increases in the first quarter of 2026, citing stable demand and global supply constraints.
In solid wood, lumber prices in Europe were steady, while U.S. prices softened amid weak demand. Management expects modest price improvements in early 2026, supported by supply constraints, including reduced Canadian production following new U.S. tariffs on imported lumber.
Mass timber provides a bright spot
Within its solid wood segment, Mercer highlighted continued momentum in mass timber, with an order book of approximately $163 million, including large-scale data center projects. The company expects production to scale significantly in 2026, contributing positively to results as market conditions normalize.
While near-term conditions remain challenging, Mercer said it will continue prioritizing liquidity, operating discipline and portfolio rebalancing to navigate the current cycle and position the business for recovery.
Mercer International is a global producer of market pulp and solid wood products, with operations in Europe, North America and Australia. The company supplies hardwood and softwood pulp to customers worldwide and is also active in lumber and mass timber products. Headquartered in New York, Mercer operates multiple pulp mills and wood manufacturing facilities and is listed on the Nasdaq under the symbol MERC.
Source: Mercer International
