SWM International boosted sales by 11.8 per cent in the business quarter ending 31 March, but reported lower profit due to impairment charges from a contract change with Philip Morris USA, the company said.

Sales of USD 202.1 million (EUR 153.3 million) break down to a 13.7 per cent gain in paper sales to USD 142.2 million and 7.7 per cent increase in revenue to USD 59.9 million from reconstituted tobacco. Combined operating profit declined 7.6 per cent to USD 24.4 million, SWM said in a statement on 2 May.
Sales of lower ignition propensity (LIP) paper increased 47 per cent after the European Union late in 2011 mandated the fire-retardant paper for cigarettes. Company performance also benefited from an end to start-up expenses that weighed on results last year.
Restructuring and impairment charges amounted to USD 18.7 million, of which USD 16.9 million was a non-cash impairment charge on North American property, plant and equipment. The charge resulted from an amendment in SWM’s cost-plus contract with PM USA, the company said.
SWM said it expects to continue supplying banded paper to the Altria subsidiary under terms of the amended agreement until 2016, and that PM USA has withdrawn objections to the manner in which the specialty-paper supplier calculated costs on some banded cigarette papers. (ci)