Mercer International (MERC) risk factors, FY2024 10-K

Risks Related to our Business

1. 01Our business is highly cyclical in nature
2. 02Cyclical fluctuations in the price and supply of our raw materials, particularly fiber, could adversely affect our business
3. 03The cyclical nature of pricing for fiber represents a potential risk to our profit margins if pulp and lumber producers are unable to pass along price increases to their customers or we cannot offset such costs through higher prices for our surplus energy
4. 04Inflation or a sustained increase in our key production and other costs would lead to higher manufacturing costs which could reduce our margins
5. 05Continued inflationary pressures would increase our manufacturing costs. If we are unable to pass along such operating cost increases to our customers, it could reduce our margins, contribute to earnings volatility and adversely affect our results of operations
6. 06The global economy has been negatively impacted by increasing tension, uncertainty and tragedy resulting
7. 07The impacts of proposed tariffs or other trade barriers by the United States, or other nations, may adversely impact our business, financial condition and results of operations
8. 08We face intense competition in the forest products industry
9. 09Our business is subject to risks associated with climate change and social and government responses thereto
10. 10lower harvest levels decreasing the supply of harvestable timber and, as a consequence, wood residuals
11. 11Fluctuations in prices and demand for lumber and mass timber products could adversely affect our business
12. 12Our solid wood segment lumber products are vulnerable to declines in demand due to competing technologies or materials
13. 13We may experience material disruptions to our production
14. 14other operational problems
15. 15Acquisitions may result in additional risks and uncertainties in our business
16. 16Our operations require substantial capital and we may be unable to maintain adequate capital resources to provide for such capital requirements
17. 17Trends in non-print media and changes in consumer habits regarding the use of paper have and are expected to continue to adversely affect the demand for market pulp
18. 18We are subject to risks related to our employees
19. 19We are dependent on key personnel
20. 20If our long-lived assets become impaired, we may be required to record non-cash impairment charges that could have a material impact on our results of operations
21. 21Our insurance coverage may not be adequate
22. 22We rely on third parties for transportation services
23. 23If we are unable to offer products certified to globally recognized forestry management and chain of custody standards or meet customers’ product or project specifications, it could adversely affect our ability to compete
24. 24Failures or security breaches of our information technology systems could disrupt our operations and negatively impact our business
25. 25Evolving sustainability reporting and environmental, social and governance preferences of customers, investors and other stakeholders may impact our business

Risks Related to our Debt

1. 26Our level of indebtedness could negatively impact our financial condition, results of operations and liquidity
2. 27our level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay the principal or interest due in respect of our indebtedness
3. 28Certain of the agreements governing our indebtedness have covenants that require us to maintain prescribed financial ratios and tests. Failure to comply with such covenants could result in events of default and could have a material adverse effect on our liquidity, results of operations and financial condition
4. 29Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely affect our cost of financing and have an adverse effect on the market price of our securities

Risks Related to Macroeconomic Conditions

1. 30A weakening of the global economy, including capital and credit markets, could adversely affect our business and financial results and have a material adverse effect on our liquidity and capital resources
2. 31Political uncertainty, an increase in trade protectionism or geopolitical conflict could have a material adverse effect on global macroeconomic activities and trade and adversely affect our business, results of operations and financial condition
3. 32International security issues and adverse developments in respect thereof such as the war in Ukraine and the conflicts in the Middle East could materially adversely affect global trade and economic activity and cause logistics disruptions or delays
4. 33We are exposed to currency exchange rate fluctuations
5. 34on our business, financial condition, results of operations and cash flows
6. 35Globally, various central banks raised interest rates in 2022 and 2023 in response to high inflation rates, leading to a relatively high interest rate environment, which could dampen macroeconomic conditions and business activity and reduce demand for our products
7. 36Health epidemics or pandemics could adversely affect our business and financial results
8. 37We may incur losses as a result of unforeseen or catastrophic events, including terrorist attacks or natural disasters

Legal and Regulatory Risks

1. 38We are subject to extensive environmental regulation and we could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations
2. 39employee health and safety
3. 40We have incurred, and we expect to continue to incur, significant capital, operating and other expenditures as a result of complying with applicable environmental laws and regulations
4. 41We sell surplus green energy in Germany and are subject to changing energy legislation in response to high prices and energy shortages
5. 42Our international sales and operations are subject to applicable laws relating to trade, export controls, foreign corrupt practices and competition laws, the violation of which could adversely affect our operations
6. 43Product liability claims could adversely affect our operating results

Risks Related to Ownership of our Shares

1. 44The price of our common stock may be volatile
2. 45changes in laws and regulations
3. 46A small number of our shareholders could significantly influence our business