Alpharetta, Georgia, USA, 20 April 2009 -- /PRNewswire/ -- Schweitzer-Mauduit International, Inc. (NYSE: SWM) announced today expected improvement in first quarter 2009 financial results and the planned closure of its finished tipping paper production facility in France.
The company anticipates earnings for the first quarter of 2009 in the range of USD 0.80 to USD 0.90 per share. The expected earnings reflect the benefits of strategic actions undertaken during the last three years to restructure its business and higher average selling prices, improved mill operations, favorable inflation, and currency effects.
Schweitzer-Mauduit plans to issue its first quarter 2009 earnings on 07 May and will include an update of the full year 2009 outlook of its business. At this time, the company confirms that full year 2009 guidance for earnings per share, excluding restructuring expenses, will be increased; however, the extent is dependent upon the balance of several business developments. The improvement in first quarter results likely will be partially offset by increased losses associated with the mill closure being announced today and expectations of a more challenging outlook for selling prices and volumes during the remainder of the year.
On 17 April, employees at Schweitzer-Mauduit's French finished tipping paper facility, Papeteries de Malaucene SAS, located in Provence, were notified of the initiation of consultations with the unions and the Work's Council with a goal to divest the site through closure of the facility. As a result, employment is expected to be reduced by approximately 210 people, with the possibility of subsequently selling the mill assets, partially reducing the social and financial effects of shutting down the mill.
Meetings with the unions and the Work's Council must be completed before the amount of the restructuring expenses, timing, and ongoing benefits of the targeted changes can be definitively known. However, restructuring expenses associated with this action are expected to total approximately USD 22 million, including anticipated cash severance payments of USD 20 million and noncash charges of USD 2 million, to be recorded beginning in the second quarter of 2009 through the planned completion of the actions in the fourth quarter of 2009.
Financing of the approximate USD 20 million in projected cash restructuring expenses, which are expected to be paid by the end of 2010, can be fully secured through internally generated funds and Schweitzer-Mauduit's existing bank credit facilities. The company recorded a USD 13.4 million fixed asset impairment charge related to the Malaucene facility in the fourth quarter of 2008, which represented the majority of the related fixed asset values. Operating losses for the Malaucene facility likely will increase from current levels, given the anticipated loss of customer orders during the divestiture process. Incremental operating losses could negatively affect Schweitzer-Mauduit's earnings by approximately USD 0.30 per share during the remainder of 2009. The absence of losses from the Malaucene facility is expected to benefit Schweitzer-Mauduit's earnings in 2010 by more than USD 0.30 per share.
"We believe the expected improvement in first quarter results validates our strategy to revitalize our base tobacco-related paper business while aggressively growing the franchises for our higher value lower ignition propensity cigarette paper and reconstituted tobacco leaf products," said Frederic Villoutreix, chairman of the board and chief executive officer. "The divestiture action being announced today, although regrettable in terms of the impact on the employees and communities affected, further advances this strategy and highlights our resolve to rationalize our global manufacturing footprint and refocus resources to achieve leading positions in core product categories that provide opportunity for competitive advantage. Following the divestiture of our finished tipping paper facility in France, all of Schweitzer-Mauduit's focus will be on product lines that represent core technologies and in which we hold a number one or two world-wide market position, whether measured by share of the market or major customer's requirements."
Schweitzer-Mauduit International, Inc. is a diversified producer of premium specialty papers and the world's largest supplier of fine papers to the tobacco industry. It also manufactures specialty papers for other applications. Schweitzer-Mauduit and its subsidiaries conduct business in over 90 countries and employ 3200 people worldwide, with operations in the United States, France, Brazil, the Philippines, Indonesia, Canada, and a joint venture in China. For further information, visit the company's Web site at www.schweitzer-mauduit.com.