Paper and Packaging Giants Go Head-to-Head

• Mercer International (MERC) reported Q4 EPS of -$4.61 versus consensus of -$0.83, driven by a $238.7 million impairment on its Peace River hardwood pulp mill, leaving shareholders’ equity at just $68 million (down 84% year-over-year) with minimal financial cushion. International Paper (IP) posted adjusted EBITDA of $859 million, up 28% sequentially, and is divesting its Global Cellulose Fibers business to American Industrial Partners for $1.5 billion while transitioning to a pure-play global packaging company via its DS Smith integration.

• Mercer faces existential pressure from a commodity pulp cycle downturn with no margin for error, while International Paper is strategically exiting low-margin pulp assets to build a higher-margin, diversified packaging business with stronger financial footing.

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Mercer International (NASDAQ:MERC) just reported a Q4 2025 that was, in a word, brutal. International Paper (NYSE:IP) had its own messy quarter, buried under restructuring charges from its DS Smith transformation. Both companies deal in forest products and pulp, but they are moving in opposite directions at very different speeds.

Mercer posted Q4 EPS of -$4.61 against a consensus estimate of -$0.83, a miss that signals the commodity cycle has gone from painful to existential. The headline driver was a $238.7 million non-cash impairment charge, including a $203.5 million write-down on its Peace River hardwood pulp mill. Shareholders’ equity has collapsed to $68.06 million, down 84% year-over-year, while total liabilities sit at $1.97 billion against total assets of $2.04 billion. That is a company operating with almost no financial cushion.

International Paper’s Q3 2025 losses look alarming on the surface, with a $1.01 billion impairment on its Global Cellulose Fibers business and $675 million in accelerated depreciation from mill closures. But adjusted EBITDA came in at $859 million, up 28% sequentially, and operating cash flow reached $605 million. IP is taking pain by choice. Mercer is absorbing pain it cannot control.

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Mercer is trapped in hardwood pulp. NBHK realizations fell to $528 per ADMT, down roughly 9% year-over-year, and the Peace River mill has become a liability. CEO Juan Carlos Bueno said the company is “considering all options in respect of this asset.” That is corporate language for a difficult decision ahead.