Schweitzer Profit Up on Sales Down Slightly

Source from:  Tobacco Reporter 08/09/2010

Schweitzer-Mauduit International yesterday reported net sales for the three months to the end of June at $182.9 million, 0.2 per cent lower than during the three months to the end of June 2009. The slight fall in sales was due to a $6.9 million decrease from the company's Malaucene facility, which is no longer operating, and $0.6 million in unfavorable foreign currency exchange rate impacts, mostly offset by a $3.8 million increase due to a volume increase and a $3.3 million improvement primarily from increased sales of higher priced LIP [lower ignition propensity] products. At the same time, operating profit was up by 96.7 per cent to $23.6 million though, excluding pre-tax restructuring and impairment expenses, operating profit would have been increased by 9.1 per cent from $25.3 million to $27.6 million. The higher operating profit was primarily due to $8.5 million of benefits from cost savings programs and lower manufacturing costs, including the benefits of restructuring, and $1.2 million from lower nonmanufacturing expenses. These improvements were partially offset by $4.7 million in inflationary cost increases, primarily from higher wood pulp costs, $2.1 million from a less favorable product mix and $0.9 million from unfavorable currency impacts. Schweitzer-Mauduit said that it had continued to benefit during the second quarter from the full conversion to LIP cigarette paper by all its US customers, which caused a 48 per cent increase in sales volume of this high-value product over those of the second quarter of 2009. For the first half of 2010, RTL (reconstituted tobacco) sales volume was essentially flat compared to that of the first half of 2009, which reflected a lower rate of RTL shipments during the second quarter of this year relative to strong first quarter shipments, primarily due to the timing of customer orders. For the full year, however, RTL net sales are expected to grow on those of the previous year. The company reported that volume improved for traditional tobacco-related papers during the second quarter at a rate consistent with its expectations, reflecting more stable demand in the North American and western European markets and completion of the transfer of cigarette paper volume to its unconsolidated joint venture, CTM [China]. Frederic Villoutreix, chairman of the board and CEO, said the company remained confident in and focused upon successfully executing its strategy of growing its high-value RTL and LIP franchises while sustaining the profitability of its base paper business. "We made progress throughout the second quarter in advancing the initiatives underway to expand capacity to meet expected new demand for high-value products in Asia and Europe…," said Villoutreix. Enditem