MERC vs IP: Paper and Packaging Giants Go Head-to-Head

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.

One Is Surviving. The Other Is Rebuilding.

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.

Pulp Is a Trap for One and an Exit for the Other

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.

International Paper, meanwhile, is actively selling its pulp and cellulose fiber assets, agreeing to divest its Global Cellulose Fibers business to American Industrial Partners for $1.5 billion. CEO Andy Silvernail framed the quarter as proof of progress: “We are accelerating actions and remain fully committed to executing our transformation plan — delivering commercial excellence, securing an advantaged cost position, and building a differentiated, sustainable global packaging company.”

IP’s pivot to pure-play global packaging via DS Smith gives it pricing leverage and diversified end markets. Mercer’s mass timber order book, at roughly $163 million in contracts including data center projects, is a genuine bright spot, but it cannot offset a pulp business bleeding cash.

What Needs to Happen Next

For Mercer, the “One Goal One Hundred” cost savings program is the rope it is climbing. About $30 million of the $100 million target was realized in 2025, with the balance due by end of 2026. The key question is whether pulp prices recover enough to make Peace River viable, or whether a sale or closure becomes the only realistic path.

For IP, EMEA demand softness is the variable to watch. The DS Smith integration added scale but also complexity and currency exposure. North America showed year-over-year box shipment growth in September, which matters as a demand signal, but Europe needs to stabilize.

The Gap Between These Two Is Hard to Ignore

MERC trades at $1.46, down about 76% over the past year. IP sits at $37.54, off roughly 24% over the same period. If pulp prices recover sharply and Mercer executes its cost program, the balance sheet still leaves almost no margin for error. IP has the financial scale to absorb integration pain and still generate meaningful cash. The contrast in financial positioning between the two companies reflects how differently the same commodity downturn can play out depending on balance sheet strength and strategic direction.