Schweitzer-Mauduit International reported 3Q operating profit of $30.7 million

Nov 09, 2010. /Lesprom Network/. Schweitzer-Mauduit International reported 3Q net sales of $182 million, unchanged versus the prior-year quarter. Net sales were unchanged as $8.3 million improvement in average selling prices, primarily from increased sales of higher priced LIP products, and $1.1 million favorable effect of changes in sales volume were offset by $9.4 million in unfavorable foreign currency exchange rate impacts. Operating profit was $30.7 million in the three month period ended September 30, 2010 versus an operating profit of $19.3 million in the prior-year quarter. Excluding pre-tax restructuring and impairment expenses, operating profit would have been $31.4 million during the 3Q 2010 compared with $37.8 million during the 3Q 2009. The lower operating profit was due to $6.4 million in inflationary cost increases, primarily from higher wood pulp costs, $3.3 million from unfavorable currency impacts, a $0.9 million increase in non-manufacturing expenses including costs associated with a major computer system installation and $1.2 million from decreased sales volumes. These negative impacts were partially offset by $3.2 million in higher average selling prices, including a favorable product mix, and $2.7 million from cost improvements more than offsetting the unfavorable impact of reduced fixed cost absorption due to decreased production volume. Frederic Villoutreix, Chairman of the Board and CEO, commented, "Our 3Q financial results reflect a relatively stable internal and external business environment. Year-over-year comparisons continue to be negatively impacted by increased wood pulp prices and unfavorable foreign currency exchange impacts. Sales and production volumes decreased versus the 3Q 2009 primarily due to decreased sales of RTL as a result of timing of customer orders. Operationally, performance across SWM's production sites improved during the 3Q. We reiterate expectations for 2010 earnings, excluding restructuring and impairment expense, of at least $4.25 per share. Until EU LIP demand commences, SWM's business is expected to be relatively stable at or near current earnings levels. At present, the exact timing of LIP regulatory enforcement is not yet clear and procurement decisions regarding LIP cigarette paper supply among the majority of the EU customer base remain open. Therefore, the level of benefit to SWM's future earnings from the advent of EU LIP requirements remains dependent upon actual sales volume and product pricing that is yet to be determined, but should become clearer in the coming months." SWM is a diversified producer of premium specialty papers for the tobacco industry. It also manufactures specialty papers for other applications.