Metso's Company Release on April 28, 2009 at 12.00 p.m. local time
Cash flow improved. Market outlook unchanged.
Highlights of the first quarter of 2009
* New orders worth EUR 942 million were received in January-March
(EUR 1,509 million in Q1/08), i.e. 38 percent less than in the
comparison period.
* At the end of March, the order backlog was 4 percent lower than
at the end of December 2008, amounting to EUR 3,934 million (EUR
4,088 million at December 31, 2008).
* Net sales decreased by 13 percent, standing at EUR 1,220 million
(EUR 1,400 million in Q1/08).
* Earnings before interest, tax and amortization (EBITA) were EUR
68.8 million, i.e. 5.6 percent of net sales (EUR 133.7 million
and 9.6% in Q1/08).
* Operating profit (EBIT) was EUR 58.6 million, i.e. 4.8 percent of
net sales (EUR 119.6 million and 8.5% in Q1/08).
* Earnings before interest, tax and amortization (EBITA) and
operating profit (EBIT) include EUR 22 million of non-recurring
expenses relating to capacity adjustment measures.
* Earnings per share were EUR 0.18 (EUR 0.55 in Q1/08).
* Free cash flow was EUR 120 million positive (EUR 99 million
negative in Q1/08).
* Return on capital employed (ROCE) before taxes was 9.0 percent
(20.9% in Q1/08)."The overall market sentiment in our customer industries continues to
be cautious. There have been some weak positive signals, but it is
too early to say if this is enough to improve confidence levels and
to start gradual recovery," says Jorma Eloranta, President and CEO of
Metso Corporation. "In the continuing demanding market situation, it
is important for Metso to be prepared should the situation change -
for better or for worse. Our delivery capability is good and we are
continuing several long-term initiatives to enhance our
competitiveness. At the same time, we are prepared to launch
additional capacity adjustment measures quickly should the situation
demand it."
Eloranta notes that the order intake in the first quarter was low, in
line with the levels reached towards year end. "Our services business
net sales were on par with the corresponding period last year, which
I consider positive for Metso. I am also pleased that our efforts to
improve cash flow and release net working capital are showing
positive results," says Eloranta.
Metso's key figures
EUR million Q1/09 Q1/08 Change % 2008
Net sales 1,220 1,400 -13 6,400
Net sales of services business 506 501 1 2,343
% of net sales 42 36 37
EBITA before non-recurring capacity 90.8 133.7 -32 680.9
adjustment expenses
% of net sales 7.4 9.6 10.6
Earnings before interest, tax and
amortization (EBITA) 68.8 133.7 -49 680.9
% of net sales 5.6 9.6 10.6
Operating profit 58.6 119.6 -51 637.2
% of net sales 4.8 8.5 10.0
Earnings per share, EUR 0.18 0.55 -67 2.75
Orders received 942 1,509 -38 6,384
Order backlog at end of period 3,934 4,340 -9 4,088
Free cash flow 120 -99 n/a 29
Return on capital employed (ROCE) before
taxes, annualized, % 9.0 20.9 23.2
Equity to assets ratio at end of period, % 30.3 36.8 30.9
Gearing at end of period, % 72.6 39.1 75.7
Metso's first quarter 2009 review
Operating environment and demand for products
Due to the decline of the global economy and the uncertainty in the
financial markets, our operating environment continued to be
demanding during the first quarter. Our customers were cautious in
their investment decisions, which kept the demand for our new
equipment and project businesses weak. Even though our customers'
capacity utilization rates were lower than a year ago, the demand for
our services business remained satisfactory thanks to the strong
growth in our installed equipment base in recent years.
We estimate that the economic stimulus packages launched by a large
number of countries will at some point have a positive effect on the
construction industry in particular, and on the demand for power
plants utilizing renewable energy sources. However, these stimulus
packages did not effect our orders received during the early part of
the year.
Orders received and order backlog
Our orders received in the first quarter totaled EUR 942 million,
down 38 percent on the comparison period. There were significantly
fewer cancellations of orders received than in the last quarter of
2008. Cancellations in January-March amounted to some EUR 32 million.
The majority of the cancellations, EUR 23 million, related to the
Construction business line and the remaining EUR 9 million to the
Recycling business line. The share of emerging markets in orders
received, 43 percent, remained almost on par with the comparison
period. All of our reporting segments' orders received decreased as
our customers hesitated to make new investment decisions in the face
of the continuing uncertainty in the global markets and poor
availability of financing.
The orders received by the Mining and Construction Technology segment
in January-March fell 44 percent on the corresponding period in 2008
and totaled EUR 385 million (EUR 687 million). Orders received were
primarily smaller replacement and services orders, no larger project
orders were received. The new orders received by the Mining business
line fell over 30 percent on the comparison period. The decline in
orders for the Construction business line was more than 50 percent.
The orders received by our Energy and Environmental Technology
segment totaled EUR 265 million, down 31 percent on the comparison
period. Orders received went down more than 20 percent in the Power
business line and almost 30 percent in the Automation business line.
Orders received by the Recycling business line decreased to half on
the comparison period. Among the orders received for the first
quarter of 2009 was the modernization of the chemical recovery line
for Korsnäs in Sweden.
Orders received by the Paper and Fiber Technology segment in
January-March fell by 36 percent from the comparison period and
totaled EUR 279 million. Very few capital equipment orders were
received by any of the business lines in the segment. Among the more
significant orders received in the first quarter were a fine paper
machine to be supplied to Sun Paper Group in China and the rebuild of
a board machine line for a Stora Enso mill in Finland.
At the end of March, our order backlog was EUR 3,934 million, which
is 4 percent less than at the end of 2008. Some 60 percent of the
order backlog is expected to be delivered in 2009. The order backlog
includes projects worth around EUR 900 million which have uncertain
delivery times and are projected to be delivered after 2009. These
orders include the pulp mill projects for Zhanjiang Chenming in China
and Aracruz in Brazil. The situation of both projects remained
virtually unchanged since the review presented in our annual
financial statements.
Orders received by reporting segments
Q1/2009 Q1/2008
EUR million % of orders EUR % of orders
received million received
Mining and Construction
Technology 385 41 687 45
Energy and Environmental
Technology 265 28 382 25
Paper and Fiber 279 29 433 28
Technology
Valmet Automotive 21 2 23 2
Intra-Metso orders
received -8 -16
Total 942 100 1,509 100
Orders received by market area
+-------------------------------------------------------------------+
| | Q1/2009 | Q1/2008 |
|----------------------+-----------------------+--------------------|
| | EUR | % of orders | EUR | % of |
| | million | received | million | orders |
| | | | | received |
|----------------------+---------+-------------+---------+----------|
| Europe | 386 | 41 | 608 | 40 |
|----------------------+---------+-------------+---------+----------|
| North America | 167 | 18 | 300 | 20 |
|----------------------+---------+-------------+---------+----------|
| South and Central | 134 | 14 | 150 | 10 |
| America | | | | |
|----------------------+---------+-------------+---------+----------|
| Asia-Pacific | 201 | 21 | 319 | 21 |
|----------------------+---------+-------------+---------+----------|
| Rest of the world | 54 | 6 | 132 | 9 |
|----------------------+---------+-------------+---------+----------|
| Total | 942 | 100 | 1,509 | 100 |
+-------------------------------------------------------------------+
Net sales
Our net sales for the first quarter declined 13 percent on the
comparison period and totaled EUR 1,220 million. The net sales of
Mining and Construction Technology remained at last year's level, the
net sales of Energy and Environmental Technology grew by 6 percent
and those of Paper and Fiber Technology declined by 41 percent. The
net sales of our services business remained at the level of
comparison period and its share of total net sales grew to 42 percent
(36% in Q1/08).
Measured by net sales, the largest countries were the United States,
China and Brazil, which together accounted for about 29 percent of
our total net sales.
Net sales by reporting segments
Q1/2009 Q1/2008
EUR million % of net EUR million % of net
sales sales
Mining and Construction
Technology 528 43 534 38
Energy and Environmental
Technology 397 32 373 26
Paper and Fiber Technology 287 23 483 34
Valmet Automotive 21 2 23 2
Intra-Metso net sales -13 -13
Total 1,220 100 1,400 100
Net sales by market area
Q1/2009 Q1/2008
EUR million % of net EUR million % of net
sales sales
Europe 526 43 569 40
North America 197 16 213 15
South and Central 160 13 175 13
America
Asia-Pacific 234 19 365 26
Rest of the world 103 9 78 6
Total 1,220 100 1,400 100
Financial result
Our earnings before interest, tax and amortization (EBITA) for the
first quarter declined substantially from the comparison period and
were EUR 68.8 million, or 5.6 percent of net sales (EUR 133.7 million
and 9.6% in Q1/08). Our financial results include non-recurring
expenses of EUR 22 million related to capacity adjustment measures,
out of which close to EUR 17 million relate to Paper and Fiber
Technology segment. The EBITA of Paper and Fiber Technology weakened
by more than EUR 40 million and was EUR 14.0 million negative. In
addition to the significant one-time cost related to the capacity
adjustment measures, the profitability of Paper and Fiber Technology
segment was weakened by the low capacity utilization rates of several
units. Also the financial result of Mining and Construction
Technology segment was lower than that in the comparison period due
to the markedly weakened profitability of the Construction business
line. The Construction business line's profitability weakened due to
a decline in market prices, the high average prices of inventories
carried over from 2008 and the low capacity utilization rates of
production facilities. The profitability of Energy and Environmental
Technology was on par with the comparison period.
Our first-quarter operating profit (EBIT) was EUR 58.6 million, i.e.
4.8 percent of net sales (EUR 119.6 million and 8.5% in Q1/08).
Our net financing expenses in January-March were EUR 22 million (EUR
9 million). Due to the higher debt level compared to last year, our
interest expenses increased by EUR 8 million. Other financial
expenses include a EUR 4 million reversal of translation adjustments
resulting from the liquidation of two subsidiaries.
Our profit before tax was EUR 37 million (EUR 111 million) and our
tax rate for 2009 is estimated to be about 30 percent.
The profit attributable to shareholders was EUR 26 million (EUR 78
million in Q1/08) in the first quarter, corresponding to earnings per
share (EPS) of EUR 0.18 (EUR 0.55 in Q1/08).
In January-March, the annualized return on capital employed (ROCE)
before taxes was 9.0 percent (20.9%) and return on equity (ROE) was
7.1 percent (20.1%).
Cash flow and financing
The net cash generated by operating activities for January-March was
EUR 136 million positive (EUR 69 million negative in Q1/08).
During the first quarter, EUR 94 million of net working capital was
released. EUR 62 million of the release came from inventories and EUR
141 million from trade receivables. Simultaneously, trade payables
decreased by EUR 117 million and advances received by EUR 26 million.
Inventories in Mining and Construction Technology decreased by EUR 72
million, as a result of the ongoing special inventory reduction
initiative.
Free cash flow was EUR 120 million positive in January-March (EUR 99
million negative in Q1/08).
Net interest-bearing liabilities totaled EUR 1,022 million at the end
of March (EUR 1,099 million at December 31, 2008).
The total amount of short-term debt maturing within the next 12
months was EUR 399 million at the end of March. EUR 127 million of
the short-term debt consists of commercial papers issued in the
Finnish markets, EUR 189 million are current portions of long-term
debt and the remainder is local working capital financing of certain
subsidiaries, primarily in Brazil. About EUR 90 million of existing
long-term debt will mature during the last three quarters of 2010.
The total amount of net funding we acquired in January-March was EUR
13 million, which included EUR 50 million new long-term debt. Metso's
liquidity position continues to be satisfactory. Our cash and liquid
assets totaled EUR 436 million at the end of the first quarter. The
syndicated EUR 500 million revolving loan facility is available until
late 2011, and it is currently undrawn.
At the end of March, our gearing was 72.6 percent (39.1%) and the
equity-to-assets ratio was 30.3 percent (36.8%). In April, following
the Annual General Meeting, we paid EUR 99 million in dividends for
2008.
Capital expenditure
Our gross capital expenditure for January-March decreased by 29
percent on the comparison period, and was EUR 30 million (EUR 42
million in Q1/08).
We estimate our capital expenditure, excluding business acquisitions,
to be some EUR 150 million this year. Due to the changed global
economic situation, we have decided to restrict the amount of new
investments and will also consider extending the implementation
schedules of ongoing investment projects when feasible.
In China, we are constructing new plant and office premises for our
Automation business in Shanghai. The Metso Park industrial facility,
designed especially to serve the mining and construction industry, is
under construction in Rajasthan, India. In Finland, we are upgrading
a pilot machine at the Paper Technology Center in Jyväskylä. We are
establishing a third service center for the pulp and paper industry
in China, to Zibo in Shandong province. Investment projects in
enterprise resource planning systems are underway in Mining and
Construction Technology and in the Automation business line. Due to
the changed market conditions, we have extended the implementation
schedules for the Metso Park and Zibo service center investments.
Acquisitions, divestments and joint ventures
In January, we sold our composites manufacturing business and related
assets in Oulu, Finland, to xperion Oy. Annual net sales of the
divested business have been less than EUR 5 million. The entire
personnel of the business, 21 people, were transferred to xperion Oy.
The divested business was part of our Paper business line.
Late 2008, we made an agreement with Wärtsilä to combine our Heat &
Power business (a business unit within the Power business line) and
Wärtsilä's Biopower business into a joint venture as of January 1,
2009. The joint venture was named MW Power Oy. We own 60 percent and
Wärtsilä owns 40 percent of the joint venture. An order backlog of
approximately EUR 116 million was transferred with Wärtsilä Biopower
Oy to the joint venture. In 2008, the consolidated annual pro forma
net sales of the company were approximately EUR 130 million and the
number of employees about 200.
Adjusting capacity to demand
We began adjusting our capacity and cost structure immediately when
the market situation started to weaken in September 2008 and have
continued these measures in 2009. The aim is to ensure the
competitiveness of our operations.
Our first steps were to reduce the number of temporary personnel and
the use of subcontractors. In addition we have initiated temporary
lay-offs and permanent reductions at several of our units. In most
cases, the temporary lay-offs concern all employee groups, and their
duration varies, depending on the work load, from few weeks to longer
periods. The temporary lay-offs are mainly in use in Finland where
local agreements allow for this type of flexibility. In other
countries we have applied alternative options made possible by labor
legislation, such as a shortened work week. Through the
implementation of temporary lay-offs in Finland, we estimate that we
will achieve some EUR 25-30 million in savings in personnel costs
over the course of this year. Furthermore, during the first quarter
we have concluded negotiations to make about 1,800 permanent
employees redundant. During the first quarter, we recorded EUR 22
million in non-recurring expenses resulting from these personnel
reductions and the closures of units connected with them. With these
measures we estimate that we will achieve annual savings of about EUR
90 million, of which about EUR 40 million is estimated to be realized
in 2009.
The table below details the most significant capacity adjustment
measure decisions.
+-------------------------------------------------------------------+
| Segment | Business line | Measures | Implementation |
| | | | starting |
|-----------------+---------------+----------------+----------------|
| Mining and | Mining | Reduction of | December 2008 |
| Construction | | about 300 | |
| Technology | | people, | |
| | | temporary | |
| | | lay-offs | |
| | | according to | |
| | | work load, | |
| | | unit closures. | |
|-----------------+---------------+----------------+----------------|
| Mining and | Construction | Reduction of | December 2008 |
| Construction | | about 300 | |
| Technology | | people, | |
| | | temporary | |
| | | lay-offs, unit | |
| | | closures. | |
|-----------------+---------------+----------------+----------------|
| Energy and | Power | Reduction of | March 2009 |
| Environmental | | about 20 | |
| Technology | | people, | |
| | | temporary | |
| | | lay-offs. | |
|-----------------+---------------+----------------+----------------|
| Energy and | Automation | Reduction of | March 2009 |
| Environmental | | about 80 | |
| Technology | | people | |
| | | including | |
| | | closure of a | |
| | | unit and | |
| | | temporary | |
| | | lay-offs. | |
|-----------------+---------------+----------------+----------------|
| Energy and | Recycling | Reduction of | September 2008 |
| Environmental | | about 20 | |
| Technology | | people, | |
| | | temporary | |
| | | revoking of | |
| | | contracts, | |
| | | shortened | |
| | | working hours. | |
|-----------------+---------------+----------------+----------------|
| Paper and Fiber | Paper | Reduction of | December 2008 |
| Technology | | about 750 | |
| | | people, | |
| | | temporary | |
| | | lay-offs, unit | |
| | | closures, | |
| | | transfers of | |
| | | personnel to | |
| | | other units. | |
|-----------------+---------------+----------------+----------------|
| Paper and Fiber | Fiber | Reduction of | December 2008 |
| Technology | | about 250 | |
| | | people, | |
| | | temporary | |
| | | lay-offs, | |
| | | reduction of | |
| | | temporary | |
| | | personnel. | |
|-----------------+---------------+----------------+----------------|
| Paper and Fiber | Tissue | Reduction of | January 2009 |
| Technology | | about 80 | |
| | | persons. | |
+-------------------------------------------------------------------+
Personnel
At the end of March, Metso had 28,312 employees, which was 1,010 less
than at the end of 2008. The number of employees fell especially in
Finland and Sweden, as a result of the capacity adjustment measures
in Paper and Fiber Technology. During the first quarter of the year,
we had an average of 28,817 employees.
Personnel by area
March 31, % of total December % of total Change
2009 personnel 31, 2008 personnel %
Finland 8,906 32 9,252 32 -4
Other Nordic 3,167 11 3,332 11 -5
countries
Other Europe 3,729 13 3,842 13 -3
North America 3,747 13 3,964 14 -5
South and Central 2,931 10 2,991 10 -2
America
Asia-Pacific 4,390 16 4,469 15 -2
Rest of the world 1,442 5 1,472 5 -2
Total 28,312 100 29,322 100 -3
REPORTING SEGMENTS
Mining and Construction Technology
+-------------------------------------------------------------------+
| EUR million | Q1/09 | Q1/08 | Change % | 2008 |
|-------------------------+--------+--------+----------+------------|
| Net sales | 528 | 534 | -1 | 2,586 |
|-------------------------+--------+--------+----------+------------|
| Net sales of services | 243 | 238 | 2 | 1,078 |
| business | | | | |
|-------------------------+--------+--------+----------+------------|
| % of net sales | 46 | 45 | | 42 |
|-------------------------+--------+--------+----------+------------|
| Earnings before | | | | |
| interest, tax and | 55.6 | 78.9 | -30 | 361.2 |
| amortization (EBITA) | | | | |
|-------------------------+--------+--------+----------+------------|
| % of net sales | 10.5 | 14.8 | | 14.0 |
|-------------------------+--------+--------+----------+------------|
| Operating profit | 54.9 | 78.2 | -30 | 358.4 |
|-------------------------+--------+--------+----------+------------|
| % of net sales | 10.4 | 14.6 | | 13.9 |
|-------------------------+--------+--------+----------+------------|
| Orders received | 385 | 687 | -44 | 2,709 |
|-------------------------+--------+--------+----------+------------|
| Order backlog at end of | 1,347 | 1,562 | -14 | 1,492 |
| period | | | | |
|-------------------------+--------+--------+----------+------------|
| Personnel at end of | 10,826 | 10,063 | 8 | 11,259 |
| period | | | | |
+-------------------------------------------------------------------+
The net sales of our Mining and Construction Technology segment
remained on par with the comparison period, equaling EUR 528 million.
The Mining business line's net sales grew, while the net sales of the
Construction business line decreased. The net sales of services
business were on par with the comparison period and accounted for 46
percent of net sales (45% in Q1/08).
Mining and Construction Technology's operating profit for the first
quarter was EUR 54.9 million, or 10.4 percent of net sales (EUR 78.2
million and 14.6%). The segment's operating profit was burdened by
almost 4 million in non-recurring expenses relating to the capacity
adjustment measures. Strong profitability was maintained in the
Mining business line but profitability declined significantly in the
Construction business line. The profitability of the Construction
business line was weakened by the decline in market prices, the high
average prices of inventories carried over from 2008 and the low
capacity utilization rates of production facilities.
The value of orders received declined clearly from the comparison
period and was EUR 385 million in January-March (EUR 687 million in
Q1/08). The value of new orders decreased in both business lines in
all geographical areas. Investment activity in the mining industry
remained subdued due to the continuing low prices of metals and
uncertainty in the financial markets. The demand for the Construction
business line's products was depressed because of the major slowdown
in the construction industry and general uncertainty about short-term
outlook. The relative share of orders received from the emerging
markets declined slightly, equaling 49 percent (51%). During the
first quarter, earlier received orders worth EUR 23 million were
canceled in the Construction business line.
The order backlog declined by 10 percent from the end of 2008 and
totaled EUR 1,347 million at the end of March (EUR 1,492 million on
December 31, 2008). Around EUR 300 million of the mining equipment
orders in the order backlog have somewhat uncertain delivery
schedules.
Energy and Environmental Technology
+-------------------------------------------------------------------+
| EUR million | Q1/09 | Q1/08 | Change % | 2008 |
|--------------------------------+-------+-------+----------+-------|
| Net sales | 397 | 373 | 6 | 1,775 |
|--------------------------------+-------+-------+----------+-------|
| Net sales of services business | 132 | 111 | 19 | 549 |
|--------------------------------+-------+-------+----------+-------|
| % of net sales | 34 | 30 | | 32 |
|--------------------------------+-------+-------+----------+-------|
| Earnings before interest, tax | | | | |
| and amortization (EBITA) | 32.3 | 32.4 | 0 | 198.3 |
|--------------------------------+-------+-------+----------+-------|
| % of net sales | 8.1 | 8.7 | | 11.2 |
|--------------------------------+-------+-------+----------+-------|
| Operating profit | 27.7 | 24.6 | 13 | 176.0 |
|--------------------------------+-------+-------+----------+-------|
| % of net sales | 7.0 | 6.6 | | 9.9 |
|--------------------------------+-------+-------+----------+-------|
| Orders received | 265 | 382 | -31 | 1,658 |
|--------------------------------+-------+-------+----------+-------|
| Order backlog at end of period | 1,182 | 1,331 | -11 | 1,204 |
|--------------------------------+-------+-------+----------+-------|
| Personnel at end of period | 6,387 | 5,957 | 7 | 6,357 |
+-------------------------------------------------------------------+
The net sales of our Energy and Environmental Technology grew by 6
percent on the comparison period and totaled EUR 397 million. Both
Power and Automation business lines contributed to this growth while
the net sales of the Recycling business line decreased from the
comparison period. The services business grew by 19 percent,
accounting for 34 percent of net sales (30% in Q1/08).
Energy and Environmental Technology's operating profit improved
compared to the previous year and was EUR 27.7 million, which is 7.0
percent of net sales (EUR 24.6 million and 6.6% in Q1/08). The
operating profit for January-March improved in the Power and
Automation business lines but clearly weakened in the Recycling
business line. Operating profit included close to EUR 2 million
non-recurring expenses related to capacity adjustment measures.
The value of orders received fell by 31 percent from the comparison
period and totaled EUR 265 million. Orders received declined across
all of the business lines. EUR 9 million of orders earlier received
by the Recycling business line were cancelled.
The order backlog at the end of March, EUR 1,182 million, was 2
percent lower than at the end of 2008. Projects accounting for almost
EUR 200 million included in the order backlog are subject to
uncertainties relating to delivery schedules. These uncertain orders
include the delivery of power boiler and automation technology for
the pulp mill projects of Zhanjiang Chenming in China and Aracruz in
Brazil.
Paper and Fiber Technology
+-------------------------------------------------------------------+
| EUR million | Q1/09 | Q1/08 | Change % | 2008 |
|------------------------------+--------+-------+----------+--------|
| Net sales | 287 | 483 | -41 | 2,044 |
|------------------------------+--------+-------+----------+--------|
| Net sales of services | 132 | 151 | -13 | 716 |
| business | | | | |
|------------------------------+--------+-------+----------+--------|
| % of net sales | 46 | 31 | | 35 |
|------------------------------+--------+-------+----------+--------|
| Earnings before interest, | | | | |
| tax and amortization (EBITA) | -14.0 | 29.9 | n/a | 146.1 |
|------------------------------+--------+-------+----------+--------|
| % of net sales | -4.9 | 6.2 | | 7.1 |
|------------------------------+--------+-------+----------+--------|
| Operating profit | -18.2 | 24.9 | n/a | 130.1 |
|------------------------------+--------+-------+----------+--------|
| % of net sales | -6.3 | 5.2 | | 6.4 |
|------------------------------+--------+-------+----------+--------|
| Orders received | 279 | 433 | -36 | 2,021 |
|------------------------------+--------+-------+----------+--------|
| Order backlog at end of | 1,438 | 1,494 | -4 | 1,434 |
| period | | | | |
|------------------------------+--------+-------+----------+--------|
| Personnel at end of period | 10,090 | 9,892 | 2 | 10,544 |
+-------------------------------------------------------------------+
Net sales of our Paper and Fiber Technology were EUR 287 million, a
decrease of 41 percent in the first quarter. The decrease was
primarily due to timing of revenue recognition of some larger
projects in the backlog. Net sales decreased clearly across all three
business lines. The net sales of the services business declined by 13
percent in January-March and its share of the segment's net sales was
46 percent (31% in Q1/08).
Paper and Fiber Technology's EBITA was EUR 14.0 million negative in
January-March (EUR 29.9 million positive and 6.2% of net sales in
Q1/08). Profitability was negative across all business lines.
The operating loss was EUR 18.2 million (operating profit of EUR 24.9
million and 5.2% of net sales). The financial result for Paper and
Fiber Technology includes about EUR 17 million in non-recurring
expenses resulting from capacity adjustment measures. The
profitability of the first quarter was also weakened by the low
capacity utilization rates in several units.
The weak demand for pulp and paper industry machinery and equipment
continued during the beginning of the year. The value of orders
received decreased by 36 percent from the comparison period and was
EUR 279 million. The order backlog at the end of March, EUR 1,438
million, was at the same level as at the end of 2008. Around
one-third of the projects in the order backlog are subject to
uncertainties relating to delivery schedules. These include the large
Zhanjiang Chenming and Aracruz pulping equipment deliveries.
In the fourth quarter of 2008, we initiated strong measures in our
Paper and Fiber Technology to adjust our capacity to the decreased
demand. The target is to secure our competitiveness by streamlining
the cost structure of operations. We are continuing a strong
transformation to services business in our Paper and Fiber Technology
segment.
Smurfit-Stone Container Corporation, one of our North American
customers, announced on January 26, 2009 that it has filed a
voluntary petition for reorganization under Chapter 11. For the first
quarter, we have recognized a EUR 1 million credit loss reserve to
cover the risks related to this reorganization.
Valmet Automotive
Valmet Automotive's net sales in January-March totaled EUR 21 million
(EUR 23 million). The operating loss was EUR 0.3 million (operating
profit EUR 1.0 million). In January-March, Valmet Automotive produced
an average of 87 vehicles (113 vehicles in Q1/08) per day. At the end
of March, Valmet Automotive employed 618 people (783 people on
December 31, 2008).
In January, Valmet Automotive signed an agreement with the Danish
company Garia A/S for the engineering and manufacturing of an
electric vehicle, Garia golf car. Production is planned to start
during the third quarter of this year. The agreement spans several
years and involves the production of a few thousand Garia golf cars
annually. At the end of 2008, Valmet Automotive and the U.S. company
Fisker Automotive signed a cooperation agreement on the manufacture
of Fisker Karma hybrid cars in Finland. Production is planned to
start during the last quarter of this year. The agreement spans
several years and annual production is projected to be 15,000 cars.
Valmet Automotive's current assembly contract with Porsche will
continue until 2012.
Decisions of our Annual General Meeting
Our Annual General Meeting on March 31, 2009 approved the accounts
for 2008 and decided to discharge the members of the Board of
Directors and the President and CEO from liability for the financial
year 2008. In addition, the Annual General Meeting approved the
proposals of the Board of Directors to authorize the Board of
Directors to resolve of a repurchase of Metso's own shares, to issue
new shares and to grant special rights.
The Annual General Meeting decided that a dividend of EUR 0.70 per
share will be paid for the financial year which ended on December 31,
2008. The dividend was paid on April 15, 2009. In addition, the
Annual General Meeting authorized the Board of Directors to decide,
at its discretion and when the economic situation of Metso favors it,
on the payment of a dividend of no more than EUR 0.68 per share in
addition to the above mentioned dividend.
Jukka Viinanen was elected Chairman of the Board and Jaakko Rauramo
was elected Vice Chairman of the Board. Pia Rudengren was elected a
new member of the Board. The Board members re-elected were
Maija-Liisa Friman, Christer Gardell, Arto Honkaniemi and Yrjö Neuvo.
Our long-term chairman of the board, Matti Kavetvuo informed that he
is not available for re-election. The term of office of Board members
lasts until the end of the next Annual General Meeting.
The Annual General Meeting decided that the annual remunerations for
Board members be EUR 92,000 for the Chairman, EUR 56,000 for the Vice
Chairman and EUR 45,000 for the members and that the meeting fee
including committee meetings be EUR 600 for each meeting they attend.
The auditing company, Authorized Public Accountant
PricewaterhouseCoopers Oy was re-elected to act as the Auditor of
Metso until the end of the next Annual General Meeting.
The Annual General Meeting decided to establish a Nomination
Committee of the Annual General Meeting to prepare proposals for the
following Annual General Meeting regarding the composition of the
Board of Directors and director remuneration. Representatives of the
four biggest shareholders are elected to the Nomination Committee;
the Committee additionally comprises as expert members the Chairman
of the Board of Directors as well as one member who is appointed by
the Board of Directors from among its members who is independent of
significant shareholders.
Members of Metso board committees and personnel representative
Our Board of Directors elected members from among the Board for the
Audit Committee and Remuneration and HR Committee at its assembly
meeting on March 31, 2009. The Board's Audit Committee consists of
Maija-Liisa Friman (Chairman), Arto Honkaniemi and Pia Rudengren. The
Board's Remuneration and HR Committee consists of Jukka Viinanen
(Chairman), Christer Gardell, Yrjö Neuvo and Jaakko Rauramo.
Metso's personnel groups in Finland have elected Jukka Leppänen as
the personnel representative. He participates in the meetings of our
Board of Directors as an invited expert, and his term of office is
the same as the Board members' term.
Events after the review period
AbitibiBowater Inc. files for Chapter 11 bankruptcy
AbitibiBowater Inc., one of our North American paper industry
customers, announced on April 16, 2009 that it has filed a voluntary
petition for reorganization under Chapter 11. We estimate that the
maximum credit risk related to receivables resulting from the
reorganization of AbitibiBowater will be EUR 4 million, which has
been recognized on March 31, 2009.
Short-term risks of business operations
Based on the uncertainty in the global economy and financial markets,
our business environment for 2009 is continuing to be demanding.
The global economic recession and the financial crisis may have
adverse effects on projects in our order backlog. Some projects may
be postponed or they may be suspended or canceled. We estimate that
slightly over 20 percent of the projects currently in our order
backlog are subject to uncertainties relating to delivery schedules.
We apply the percentage of completion method to long-term delivery
agreements. The customer advance payment is typically 10-30 percent,
in addition to which the customer makes progress payments based on
the milestones during the project execution. We assess our customers'
creditworthiness and ability to fulfill their obligations. If a
customer faces liquidity problems, we will discuss the possibility of
changing project delivery schedules and the resulting cost escalation
effects or any other measures needed. As a rule, we do not finance
customer projects.
We have launched many measures to adjust to the rapidly changing
operating environment. We are adjusting our capacity as well as cost
and operational structure to correspond with the demand, in order to
maintain our competitiveness. As a result of the global recession,
the markets for our products will decrease, leading to tightening
cost competition.
Securing the continuity of our operations requires that sufficient
funding is available under all circumstances. The financial crisis
may have adverse effects on the availability of our debt financing
and increase the costs relating to it. We estimate that our financial
assets and available credit facilities are sufficient to secure
short-term liquidity. At the end of March, cash and cash equivalents
totaled EUR 436 million and credit facilities available for
withdrawal amounted to EUR 500 million. The average repayment period
for our long-term loan capital is 3.7 years. More than half of our
long-term debt will mature after 2011. There are no prepayment
covenants in our debt facilities that would be triggered by changes
in credit ratings. Some of our debt facilities include financial
covenants related to capital structure. Currently we fully meet the
covenants and other terms related to our financing agreements. We
consider our flexibility in relation to the covenants to be adequate.
The levels of net working capital and the level of capital
expenditure have a fundamental effect on the adequacy of financing.
Our aim is to decrease the level of our net working capital, and this
could be difficult to achieve if the economic downturn is prolonged.
We have not any particularly large-scale investment projects
underway, and we estimate that we are well positioned to keep our
capital expenditure at a moderate level in the coming years.
We have EUR 789 million of goodwill on our balance sheet related to
corporate acquisitions made over the last 10 years. We monitor our
goodwill quarterly and regularly carry out comprehensive impairment
testing annually in September. Following the significant changes in
our business environment, we conducted additional impairment testing
in December 2008 and did not find any impairments necessary. Around
EUR 350 million of the goodwill on our balance sheet arises from the
acquisition of Svedala in 2001 and thereby is related to Mining and
Construction Technology and Recycling business line. EUR 260 million
derive from the Aker Kvaerner's Pulping and Power operations acquired
at the end of 2006, being allocated on our Power and Fiber business
lines. EUR 50 million is related to the Beloit paper machine
maintenance operations acquired in 2000 and is allocated on Paper and
Fiber Technology. The rest stems from several smaller acquisitions.
Our Power business line has the largest share of goodwill in
proportion to net sales and profitability. The demand for power
production solutions based on renewable energy sources is expected to
develop favorably, and consequently the outlook for the Power
business continues to be satisfactory.
Changes in the prices of raw materials and components could affect
our profitability. On one hand, the risk of increases in procurement
costs typically diminishes during economic downturn. On the other
hand, some of our customers are raw material producers, whose ability
to operate and invest may be hampered by declining raw material
prices. Changes in raw material and component prices also affect the
value of our inventories. Over the past few months, we have sold
finished construction equipment from the inventory with a lower
contribution margin than during the past few years.
Of the financial risks that affect our profit, currency exchange rate
risks are among the most substantial ones. Exchange rate changes can
affect our business, although the geographical scope of our
operations decreases the significance of any individual currency. The
prevailing uncertainty in the markets is likely to increase exchange
rate fluctuations.
Short-term outlook
Based on the global economic recession and uncertain financial
markets, we estimate that our business environment will be demanding
this year. Our customers are being cautious in their investment
decisions, which affects our new equipment sales and project business
in particular.
Several mining companies are making substantial cuts in their
investment plans compared with the peak investment levels of recent
years and limit their production during the year. Due to our strong
product and service offering, as well as our large installed
equipment base which has further grown significantly over the last
few years, the demand for our mining equipment and services are
expected to be satisfactory in 2009. In the construction industry, we
estimate that the demand for equipment relating to aggregates
production will be weak. Many countries have introduced stimulus
measures relating to infrastructure development, which we expect to
have a positive effect on the demand for our construction industry
products on longer term. We estimate that the demand for our services
offering in the construction industry will be satisfactory.
We estimate that the demand for power plants utilizing renewable
energy sources will be satisfactory in Europe and North America in
2009. Many countries have initiated plans to increase the use of
renewable energy sources. This is expected to support the demand for
power plants based on biomass and waste utilization. We estimate that
the demand for our automation products will be satisfactory in 2009.
The demand for metals recycling equipment is expected to be weak,
owing to the low price of scrap metal and decline in steel
production. We expect that the demand for the services offering of
Energy and Environmental Technology will be satisfactory.
We estimate that the demand for paper, pulp and fiber lines will be
weak in 2009. The delivery schedules of some of the major paper and
board machine and fiber line projects in our order backlog have been
prolonged. We estimate that the low capacity utilization rates in the
pulp and paper industry will have a negative impact on the demand for
our services business, particularly in North America and Europe.
We estimate that our net sales in 2009 will exceed EUR 5 billion in
2009. Our order backlog stands at EUR 3.9 billion, of which EUR 2.3
billion consists of deliveries for 2009. We excpect our services
business to remain satisfactory in 2009.
We expect our profitability level to be satisfactory in 2009. We also
expect our free cash flow to improve considerably in 2008 owing to
the measures aimed at releasing net working capital.
The net sales and profitability estimates are based on our current
market outlook and business scope.
Helsinki, April 28, 2009
Metso Corporation's Board of Directors
The Interim Review is unaudited
CONSOLIDATED STATEMENT OF INCOME
EUR million 1-3/2009 1-3/2008 1-12/2008
Net sales 1,220 1,400 6,400
Cost of goods sold -925 -1,038 -4,733
Gross profit 295 362 1,667
Selling, general and administrative
expenses -239 -249 -1,043
Other operating income and expenses,
net 3 6 11
Share in profits of associated
companies 0 1 2
Operating profit 59 120 637
% of net sales 4.8% 8.5% 10.0%
Financial income and expenses, net -22 -9 -89
Profit before taxes 37 111 548
Income taxes -11 -33 -158
Profit 26 78 390
Attributable to:
Shareholders of the company 26 78 389
Minority interests 0 0 1
Profit 26 78 390
Earnings per share, EUR 0.18 0.55 2.75
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 1-3/2009 1-3/2008 1-12/2008
Profit 26 78 390
Cash flow hedges, net of tax -5 4 -33
Available-for-sale equity investments,
net of tax 6 - -19
Currency translation on subsidiary net
investments 38 -65 -49
Net investment hedge gains (losses),
net of tax -9 13 -11
Defined benefit plan actuarial gains
(losses), net of tax 0 - -22
Other comprehensive income (expense) 30 -48 -134
Total comprehensive income (expense) 56 30 256
Attributable to:
Shareholders of the company 56 30 255
Minority interests 0 0 1
Total comprehensive income (expense) 56 30 256
CONSOLIDATED BALANCE SHEET
ASSETS
Mar 31, Dec 31,
EUR million Mar 31, 2009 2008 2008
Non-current assets
Intangible assets
Goodwill 789 764 778
Other intangible assets 254 241 254
1,043 1,005 1,032
Property, plant and equipment
Land and water areas 59 54 58
Buildings and structures 245 211 239
Machinery and equipment 372 309 366
Assets under construction 55 62 63
731 636 726
Financial and other assets
Investments in associated companies 14 19 14
Available-for-sale equity investments 26 44 18
Loan and other interest bearing
receivables 8 11 8
Available-for-sale financial investments 5 5 5
Derivative financial instruments 0 1 0
Deferred tax asset 173 126 174
Other non-current assets 23 14 26
249 220 245
Total non-current assets 2,023 1,861 2,003
Current assets
Inventories 1,591 1,510 1,606
Receivables
Trade and other receivables 1,035 1,350 1,146
Cost and earnings of projects under
construction in excess of advance
billings 334 357 362
Loan and other interest bearing
receivables 8 2 9
Available-for-sale financial assets - - -
Derivative financial instruments 27 44 48
Income tax receivables 22 23 23
1,426 1,776 1,588
Cash and cash equivalents 436 389 314
Total current assets 3,453 3,675 3,508
TOTAL ASSETS 5,476 5,536 5,511
SHAREHOLDERS' EQUITY AND
LIABILITIES
EUR million Mar 31, 2009 Mar 31, 2008 Dec 31, 2008
Equity
Share capital 241 241 241
Share premium reserve - 77 -
Cumulative translation
adjustments -107 -128 -136
Fair value and other reserves 489 465 490
Retained earnings 775 989 849
Equity attributable to
shareholders 1,398 1,644 1,444
Minority interests 9 7 9
Total equity 1,407 1,651 1,453
Liabilities
Non-current liabilities
Long-term debt 1,080 860 1,089
Post employment benefit
obligations 192 168 191
Provisions 41 32 36
Derivative financial
instruments 11 - 8
Deferred tax liability 47 37 45
Other long-term liabilities 3 2 4
Total non-current liabilities 1,374 1,099 1,373
Current liabilities
Current portion of long-term
debt 189 9 101
Short-term debt 210 183 245
Trade and other payables 1,150 1,240 1,189
Provisions 245 224 218
Advances received 484 653 479
Billings in excess of cost and
earnings
of projects under
construction 350 401 323
Derivative financial
instruments 59 25 82
Income tax liabilities 8 51 48
Total current liabilities 2,695 2,786 2,685
Total liabilities 4,069 3,885 4,058
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES 5,476 5,536 5,511
NET INTEREST BEARING
LIABILITIES
EUR million Mar 31, 2009 Mar 31, 2008 Dec 31, 2008
Long-term interest bearing
debt 1,080 860 1,089
Short-term interest bearing
debt 399 192 346
Cash and cash equivalents -436 -389 -314
Other interest bearing assets -21 -18 -22
Total 1,022 645 1,099
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
1-3/ 1-3/ 1-12/
EUR million 2009 2008 2008
Cash flows from operating activities:
Profit 26 78 390
Adjustments to reconcile profit to net cash provided
by operating activities
Depreciation and amortization 36 37 138
Interests and dividend income 16 9 57
Income taxes 11 33 158
Other 9 0 34
Change in net working capital 94 -187 -437
Cash flows from operations 192 -30 340
Interest paid and dividends received -11 -4 -49
Income taxes paid -45 -35 -154
Net cash provided by (used in) operating
activities 136 -69 137
Cash flows from investing activities:
Capital expenditures on fixed assets -30 -42 -255
Proceeds from sale of fixed assets 2 1 10
Business acquisitions, net of cash acquired -3 - -44
Proceeds from sale of businesses, net of cash
sold 2 2 12
(Investments in) proceeds from sale of
financial assets - 7 7
Other 0 -6 -7
Net cash provided by (used in) investing
activities -29 -38 -277
Cash flows from financing activities:
Redemption of own shares -2 - -
Dividends paid - - -425
Net funding 13 240 621
Other - 2 15
Net cash provided by (used in) financing
activities 11 242 211
Net increase (decrease) in cash and cash
equivalents 118 135 71
Effect from changes in exchange rates 4 -13 -24
Cash and cash equivalents at beginning of
period 314 267 267
Cash and cash equivalents at end of period 436 389 314
FREE CASH FLOW
1-3/ 1-3/ 1-12/
EUR million 2009 2008 2008
Net cash provided by operating activities 136 -69 137
Capital expenditures on maintenance investments -18 -31 -118
Proceeds from sale of fixed assets 2 1 10
Free cash flow 120 -99 29
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Cu- Eq-
mu- uity
la- at-
tive tri-
Share trans- Fair but- Mi-
pre- la- value Re- able nor-
mi- tion and tain- to ity To-
Share um ad- other ed share in- tal
capi- re- just- re- earn- hold- ter- eq-
EUR million tal serve ments serves ings ers ests uity
Balance at Jan 1,
2008 241 77 -76 456 910 1,608 7 1,615
Other comprehensive
income (expense) - - -52 4 - -48 - -48
Profit - - - - 78 78 0 78
Total comprehensive
income (expense) - - -52 4 78 30 0 30
Dividends - - - - - - - -
Share options
exercised - - - - - - - -
Redemption of own
shares - - - - - - - -
Share-based
payments, net of tax - - - 3 - 3 - 3
Decrease and
transfer of sharepremium and legal
reserve - - - - - - - -
Other - - - 2 1 3 - 3
Balance at Mar 31,
2008 241 77 -128 465 989 1,644 7 1,651
Balance at Jan 1,
2009 241 - -136 490 849 1,444 9 1,453
Other comprehensive
income (expense) - - 29 1 - 30 - 30
Profit - - - - 26 26 0 26
Total comprehensive
income (expense) - - 29 1 26 56 0 56
Dividends - - - - -99 -99 - -99
Share options
exercised - - - - - - - -
Redemption of own
shares - - - -3 - -3 - -3
Share-based
payments, net of tax - - - 1 - 1 - 1
Decrease and
transfer of share
premium and legal
reserve - - - - - - - -
Other - - - 0 -1 -1 - -1
Balance at Mar 31,
2009 241 - -107 489 775 1,398 9 1,407
ACQUISITIONS
Acquisitions in 2009
In January Metso and Wärtsilä finalized the combination of Metso's
Heat & Power business with Wärtsilä's Biopower business into a new
joint venture MW Power Oy. Metso owns 60% and Wärtsilä 40% of the new
company. In this non-cash transaction Wärtsilä contributed its
business into MW Power Oy in exchange of the shares in the company.
In accordance with IFRS, the company is fully consolidated into
Metso's Power business line.
In January Metso also acquired Oktokon Oy, a Finnish engineering
company, into its Power business line.
The acquired businesses contributed net sales of EUR 24 million and
net profit of EUR 1 million for the period from their acquisition to
March 31, 2009.
Summary information on acquisitions made in January-March 2009 is as
follows:
Carrying Fair value Fair
EUR million amount allocations value
Intangible assets 0 2 2
Property, plant and equipment 2 - 2
Inventories 19 - 19
Trade and other receivables 17 - 17
Deferred tax liabilities 0 -1 -1
Minority interest - - -
Other liabilities assumed -32 - -32
Non-interest bearing net assets 6 1 7
Cash and cash equivalents acquired 7
Debt assumed -17
Purchase price -5
Goodwill 8
Purchase price settled in cash -5
Deferred payments on prior year
acquisitions -5
Cash and cash equivalents acquired 7
Net cash outflow on acquisitions -3
ASSETS PLEDGED AND CONTINGENT
LIABILITIES
Dec 31,
EUR million Mar 31, 2009 Mar 31, 2008 2008
Mortgages on corporate debt 4 9 4
Other pledges and contingencies
Mortgages 1 1 1
Pledged assets 0 0 0
Guarantees on behalf of associated
company obligations - - -
Other guarantees 11 4 9
Repurchase and other commitments 6 6 6
Lease commitments 164 131 152
NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL
INSTRUMENTS
EUR million Mar 31, 2009 Mar 31, 2008 Dec 31, 2008
Forward exchange rate
contracts 1,254 1,600 1,460
Interest rate swaps 168 143 168
Option agreements
Bought - 17 12
Sold - 17 12
The notional amount of electricity forwards was 616 GWh as of March
31, 2009 and 434 GWh as of March 31, 2008.
The notional amount of nickel forwards to hedge stainless steel
prices was 210 tons as of March 31, 2009 and 390 tons as of March 31,
2008.
The notional amounts indicate the volumes in the use of derivatives,
but do not indicate the exposure to risk.
KEY RATIOS
1-3/2009 1-3/2008 1-12/2008
Earnings per share, EUR 0.18 0.55 2.75
Equity/share at end of period, EUR 9.89 11.61 10.19
Return on equity (ROE), % (annualized) 7.1 20.1 26.0
Return on capital employed (ROCE) before
tax, % (annualized) 9.0 20.9 23.2
Return on capital employed (ROCE) after
tax, % (annualized) 7.5 15.4 17.3
Equity to assets ratio at end of period,
% 30.3 36.8 30.9
Gearing at end of period, % 72.6 39.1 75.7
Free cash flow 120 -99 29
Free cash flow/share 0.85 -0.70 0.20
Cash conversion, % 462 -127 7
Gross capital expenditure (excl. business
acquisitions) 30 42 255
Business acquisitions, net of cash
acquired 3 - 44
Depreciation and amortization 36 37 138
Number of outstanding shares at end of
period (thousands) 141,349 141,625 141,624
Average number of shares (thousands) 141,491 141,506 141,595
EXCHANGE RATES
USED
1-3/ 1-3/ 1-12/ Mar 31, Mar 31, Dec 31,
2009 2008 2008 2009 2008 2008
USD (US dollar) 1.3171 1.5283 1.4726 1.3308 1.5812 1.3917
(Swedish
SEK krona) 10.9679 9.4214 9.6833 10.9400 9.3970 10.8700
(Pound
GBP sterling) 0.9186 0.7696 0.8023 0.9308 0.7958 0.9525
(Canadian
CAD dollar) 1.6391 1.5322 1.5656 1.6685 1.6226 1.6998
(Brazilian
BRL real) 3.0682 2.6310 2.6711 3.0767 2.7554 3.2441
FORMULAS FOR CALCULATION OF INDICATORS
Earnings/share:
Profit
Average number of shares during period
Equity/share:
Equity attributable to shareholders
Number of shares at end of period
Return on equity (ROE), %:
Profit x 100
Total equity (average for period)
Return on capital employed (ROCE) before tax, %:
Profit before tax + interest and other financial
expenses x 100
Balance sheet total - non-interest bearing liabilities
(average for period)
Return on capital employed (ROCE) after tax, %:
Profit + interest and other financial expenses
Balance sheet total - non-interest bearing liabilities x 100
(average for period)
Gearing, %:
Net interest bearing liabilities x 100
Total equity
Equity to assets ratio, %:
Total equity x 100
Balance sheet total - advances received
Free cash flow:
Net cash provided by (used in) operating activities
- capital expenditures on maintenance investments
+ proceeds from sale of fixed assets
= Free cash flow
Cash conversion:
Free cash flow x 100
Profit
SEGMENT INFORMATION
NET SALES
EUR million 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 528 534 2,580 2,586
Energy and Environmental
Technology 397 373 1,799 1,775
Paper and Fiber Technology 287 483 1,848 2,044
Valmet Automotive 21 23 63 65
Group Head Office and other - - - -
Group Head Office and
others total 21 23 63 65
Intra Metso net sales -13 -13 -70 -70
Metso total 1,220 1,400 6,220 6,400
OTHER OPERATING INCOME (+) AND
EXPENSES (-), NET
EUR million 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 2.1 5.5 0.5 3.9
Energy and Environmental
Technology -0.4 0.6 -2.2 -1.2
Paper and Fiber Technology 0.9 0.1 3.5 2.7
Valmet Automotive 0.0 0.0 0.0 0.0
Group Head Office and other 0.1 -0.7 6.0 5.2
Group Head Office and
others total 0.1 -0.7 6.0 5.2
Metso total 2.7 5.5 7.8 10.6
SHARE IN PROFITS OF ASSOCIATED
COMPANIES
EUR million 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 0.0 0.0 0.1 0.1
Energy and Environmental
Technology 0.3 0.2 1.3 1.2
Paper and Fiber Technology 0.0 0.4 0.8 1.2
Valmet Automotive - - - -
Group Head Office and other - - - -
Group Head Office and
others total - - - -
Metso total 0.3 0.6 2.2 2.5
OPERATING PROFIT (LOSS)
EUR million 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 54.9 78.2 335.1 358.4
Energy and Environmental
Technology 27.7 24.6 179.1 176.0
Paper and Fiber Technology -18.2 24.9 87.0 130.1
Valmet Automotive -0.3 1.0 -4.8 -3.5
Group Head Office and other -5.5 -9.1 -20.2 -23.8
Group Head Office and
others total -5.8 -8.1 -25.0 -27.3
Metso total 58.6 119.6 576.2 637.2
OPERATING PROFIT (LOSS), %
OF NET SALES
% 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 10.4 14.6 13.0 13.9
Energy and Environmental
Technology 7.0 6.6 10.0 9.9
Paper and Fiber Technology -6.3 5.2 4.7 6.4
Valmet Automotive -1.4 4.3 -7.6 -5.4
Group Head Office and other n/a n/a n/a n/a
Group Head Office and
others total n/a n/a n/a n/a
Metso total 4.8 8.5 9.3 10.0
EBITA
EUR million 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 55.6 78.9 337.9 361.2
Energy and Environmental
Technology 32.3 32.4 198.2 198.3
Paper and Fiber Technology -14.0 29.9 102.2 146.1
Valmet Automotive -0.3 1.0 -4.8 -3.5
Group Head Office and other -4.8 -8.5 -17.5 -21.2
Group Head Office and
others total -5.1 -7.5 -22.3 -24.7
Metso total 68.8 133.7 616.0 680.9
EBITA, % OF NET SALES
% 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 10.5 14.8 13.1 14.0
Energy and Environmental
Technology 8.1 8.7 11.0 11.2
Paper and Fiber Technology -4.9 6.2 5.5 7.1
Valmet Automotive -1.4 4.3 -7.6 -5.4
Group Head Office and other n/a n/a n/a n/a
Group Head Office and
others total n/a n/a n/a n/a
Metso total 5.6 9.6 9.9 10.6
ORDERS RECEIVED
EUR million 1-3/2009 1-3/2008 4/2008-3/2009 1-12/2008
Mining and Construction
Technology 385 687 2,407 2,709
Energy and Environmental
Technology 265 382 1,541 1,658
Paper and Fiber Technology 279 433 1,867 2,021
Valmet Automotive 21 23 63 65
Group Head Office and other - - - -
Group Head Office and
others total 21 23 63 65
Intra Metso orders received -8 -16 -61 -69
Metso total 942 1,509 5,817 6,384
QUARTERLY INFORMATION
NET SALES
EUR million 1-3/2008 4-6/2008 7-9/2008 10-12/2008 1-3/2009
Mining and
Construction
Technology 534 665 670 717 528
Energy and
Environmental
Technology 373 476 423 503 397
Paper and Fiber
Technology 483 493 441 627 287
Valmet Automotive 23 19 10 13 21
Group Head Office
and other - - - - -
Group Head Office and
others total 23 19 10 13 21
Intra Metso net sales -13 -20 -16 -21 -13
Metso total 1,400 1,633 1,528 1,839 1,220
OTHER OPERATING INCOME (+) AND EXPENSES (-), NET
EUR million 1-3/2008 4-6/2008 7-9/2008 10-12/2008 1-3/2009
Mining and
Construction
Technology 5.5 -4.0 3.0 -0.6 2.1
Energy and
Environmental
Technology 0.6 -0.7 -0.5 -0.6 -0.4
Paper and Fiber
Technology 0.1 1.8 1.4 -0.6 0.9
Valmet Automotive 0.0 0.0 0.0 0.0 0.0
Group Head Office
and other -0.7 0.7 0.4 4.8 0.1
Group Head Office and
others total -0.7 0.7 0.4 4.8 0.1
Metso total 5.5 -2.2 4.3 3.0 2.7
SHARE IN PROFITS OF ASSOCIATED COMPANIES
EUR million 1-3/2008 4-6/2008 7-9/2008 10-12/2008 1-3/2009
Mining and
Construction
Technology 0.0 0.1 0.0 0.0 0.0
Energy and
Environmental
Technology 0.2 0.3 0.4 0.3 0.3
Paper and Fiber
Technology 0.4 0.3 0.0 0.5 0.0
Valmet Automotive - - - - -
Group Head Office
and other - - - - -
Group Head Office and
others total - - - - -
Metso total 0.6 0.7 0.4 0.8 0.3
OPERATING PROFIT
(LOSS)
EUR million 1-3/2008 4-6/2008 7-9/2008 10-12/2008 1-3/2009
Mining and
Construction
Technology 78.2 91.0 97.9 91.3 54.9
Energy and
Environmental
Technology 24.6 44.2 51.2 56.0 27.7
Paper and Fiber
Technology 24.9 23.8 34.5 46.9 -18.2
Valmet Automotive 1.0 0.9 -2.9 -2.5 -0.3
Group Head Office
and other -9.1 -4.7 -8.4 -1.6 -5.5
Group Head Office and
others total -8.1 -3.8 -11.3 -4.1 -5.8
Metso total 119.6 155.2 172.3 190.1 58.6
EBITA
EUR million 1-3/2008 4-6/2008 7-9/2008 10-12/2008 1-3/2009
Mining and
Construction
Technology 78.9 91.8 98.6 91.9 55.6
Energy and
Environmental
Technology 32.4 49.7 55.7 60.5 32.3
Paper and Fiber
Technology 29.9 28.1 36.9 51.2 -14.0
Valmet Automotive 1.0 0.9 -2.8 -2.6 -0.3
Group Head Office
and other -8.5 -4.0 -7.7 -1.0 -4.8
Group Head Office and
others total -7.5 -3.1 -10.5 -3.6 -5.1
Metso total 133.7 166.5 180.7 200.0 68.8
CAPITAL EMPLOYED
Mar 31, June 30, Sep 30, Dec 31, Mar 31,
EUR million 2008 2008 2008 2008 2009
Mining and
Construction
Technology 1,067 1,120 1,226 1,230 1,221
Energy and
Environmental
Technology 524 621 640 647 686
Paper and Fiber
Technology 557 532 480 532 468
Valmet Automotive 22 22 23 21 19
Group Head Office
and other 533 496 390 458 493
Group Head Office and
others total 555 518 413 479 512
Metso total 2,703 2,791 2,759 2,888 2,887
ORDERS RECEIVED
EUR million 1-3/2008 4-6/2008 7-9/2008 10-12/2008 1-3/2009
Mining and
Construction
Technology 687 936 747 339 385
Energy and
Environmental
Technology 382 367 568 341 265
Paper and Fiber
Technology 433 441 940 207 279
Valmet Automotive 23 19 10 13 21
Group Head Office
and other - - - - -
Group Head Office and
others total 23 19 10 13 21
Intra Metso orders
received -16 -23 -19 -11 -8
Metso total 1,509 1,740 2,246 889 942
ORDER BACKLOG
Mar 31, June 30, Sep 30, Dec 31, Mar 31,
EUR million 2008 2008 2008 2008 2009
Mining and
Construction
Technology 1,562 1,850 1,964 1,492 1,347
Energy and
Environmental
Technology 1,331 1,253 1,402 1,204 1,182
Paper and Fiber
Technology 1,494 1,441 1,931 1,434 1,438
Valmet Automotive - - - - -
Group Head Office
and other - - - - -
Group Head Office and
others total - - - - -
Intra Metso order
backlog -47 -50 -53 -42 -33
Metso total 4,340 4,494 5,244 4,088 3,934
PERSONNEL
Mar 31, June 30, Sep 30, Dec 31, Mar 31,
2008 2008 2008 2008 2009
Mining and Construction
Technology 10,063 10,503 10,829 11,259 10,826
Energy and Environmental
Technology 5,957 6,311 6,317 6,357 6,387
Paper and Fiber Technology 9,892 10,089 10,661 10,544 10,090
Valmet Automotive 789 779 579 783 618
Group Head Office and
other 361 387 376 379 391
Group Head Office and others
total 1,150 1,166 955 1,162 1,009
Metso total 27,062 28,069 28,762 29,322 28,312
Notes to the Interim Review
We have prepared this Interim Review in accordance with IAS 34
'Interim Financial Reporting'. The same accounting policies have been
applied as in the annual financial statements. This Interim Review is
unaudited.
New accounting standards
IFRS 3 (Revised)
IASB has published IFRS 3 (Revised), 'Business combinations', which
maintains the requirement to apply the acquisition method to business
combinations, but with some significant changes such as expensing of
transaction costs. In addition, all payments to purchase a business
are to be recorded at fair value on the acquisition date, with some
contingent payments subsequently remeasured at fair value through
income. Goodwill may be calculated based on the parent's share of net
assets or it may include goodwill related to the minority interest.
We are currently evaluating the effects on our financial statements
but expect that the revision will affect only future business
combinations.
IFRS 3 (Revised) becomes effective for annual financial statements
for periods beginning on or after July 1, 2009. The standard is still
subject to endorsement by the European Union.
Provided the revision receives endorsement by the European Union, we
will apply the standard for the financial year beginning on January
1, 2010.
IAS 27 (Revised)
IASB has published IAS 27 (Revised), 'Consolidated and separate
financial statements'. The revised standard requires the effects of
all transactions with non-controlling interests to be recorded in
equity if there is no change in control. They will no longer result
in goodwill or gains and losses. The standard also specifies the
accounting when control is lost. Any remaining interest in the entity
is remeasured to fair value and a gain or loss is expensed. We do not
expect the standard to affect our financial statements.
IAS 27 (Revised) is effective for annual financial statements for
periods beginning on or after July 1, 2009. The standard is still
subject to endorsement by the European Union.
Provided the revision receives endorsement by the European Union, we
will apply the standard for the financial year beginning on January
1, 2010.
Subpoena from the United States Department of Justice requiring Metso
to produce documents
In November 2006, Metso Minerals Industries, Inc., which is our U.S.
subsidiary, received a subpoena from the Antitrust Division of the
United States Department of Justice calling for Metso Minerals
Industries, Inc. to produce certain documents. The subpoena relates
to an investigation of potential antitrust violations in the rock
crushing and screening equipment industry. We are cooperating fully
with the Department of Justice.
Shares, options and share capital
At the end of March, our share capital was EUR 240,982,843.80 and the
number of shares was 141,754,614. The number of shares includes
360,841 Metso shares held by the parent company and 44,318 Metso
shares held by a limited partnership consolidated in our consolidated
financial statements. Together these represent 0.29 percent of all
the shares and votes. The average number of shares outstanding in the
first quarter of 2009, excluding Metso shares held by the company,
was 141,491,453.
During February we executed a repurchase of 300,000 of our own shares
relating to our incentive program announced in October 2008 (Metso
Share Ownership Plan 2009-2011). We purchased our own shares with the
distributable funds thus reducing distributable non-restricted
equity. We purchased the shares at market price in public trading on
the NASDAQ OMX in Helsinki Exchange. The average purchase price per
share was EUR 8.28 and the total amount EUR 2,483,495.48.
Our market capitalization, excluding Metso shares held by the
company, was EUR 1,258 million on March 31, 2009.
Share ownership plans
Share-based rewards for the 2008 share ownership plan were
distributed in March 2009 based on the earnings criteria determined
by our Board of Directors. The plan targeted around 100 of our
executives, of which 60 met a certain part of the criteria, including
the entire Executive Team. The number of shares distributed as
rewards was 34,265 corresponding to approximately 0.02 percent of all
Metso shares. Members of our Executive Team received 6,996 shares.
The maximum reward from the plan was limited to each person's annual
salary.
In October 2008, our Board approved a new, share-based incentive plan
for the Metso Group management. The plan is called Metso Share
Ownership Plan 2009-2011 (SOP 2009-2011). The plan includes one
three-year earnings period and is initially targeted at about 100 key
managers, out of which 90 decided to participate. The maximum number
of shares to be allocated in the incentive plan is approximately
376,000 Metso shares obtained in public trading, therefore, the plan
will have no diluting effect on the share value. More information on
SOP 2009-2011 can be found in our Annual Report 2008.
Trading of Metso shares
The number of Metso Corporation shares traded on the NASDAQ OMX in
Helsinki Exchange in January-March 2009 was 111,205,094 shares,
equivalent to a turnover of EUR 935 million. The share price on March
31, 2009 was EUR 8.90 and the average trading price for the period
was EUR 8.41. The highest quotation during the review period was EUR
9.96 and the lowest EUR 7.03.
Metso's ADSs (American Depositary Shares) are traded in the United
States on the OTC market. At the end of March, the closing price of
an ADS was USD 11.66. Each ADS represents one share.
Disclosures of changes in holdings
On March 24, 2009, UBS AG's group holding in Metso's shares exceeded
the 5 percent threshold. The holding amounted to 7,541,753 shares,
which corresponds to 5.32 percent of the paid up share capital and
votes in Metso.
On March 27, 2009, UBS AG's group holding in Metso's shares fell
below the 5 percent threshold. The holding amounted to 561,306
shares, which corresponds to 0.40 percent of the paid up share
capital and votes in Metso.
Credit ratings
In January, Moody's Investor Service confirmed Metso's Baa2 long-term
credit rating and changed the outlook from stable to negative.
In February, Standard & Poor's confirmed Metso's BBB long-term credit
rating and changed the outlook from stable to negative. At the same
time our short-term credit rating was lowered from A-2 to A-3.
Metso's Financial Reporting in 2009
The Interim Review for January-June 2009 will be published on July 24
and Interim Review for January-September 2009 on October 29.
It should be noted that certain statements herein which are not
historical facts, including, without limitation, those regarding
expectations for general economic development and the market
situation, expectations for customer industry profitability and
investment willingness, expectations for company growth, development
and profitability and the realization of synergy benefits and cost
savings, and statements preceded by "expects", "estimates","forecasts" or similar expressions, are forward-looking statements.
These statements are based on current decisions and plans and
currently known factors. They involve risks and uncertainties which
may cause the actual results to materially differ from the results
currently expected by the company.
Such factors include, but are not limited to:
1) general economic conditions, including fluctuations in exchange
rates and interest levels, which influence the operating environment
and profitability of customers and thereby the orders received by the
company and their margins
(2) the competitive situation, especially significant technological
solutions developed by competitors
(3) the company's own operating conditions, such as the success of
production, product development and project management and their
continuous development and improvement
(4) the success of pending and future acquisitions and restructuring.
Further information, please contact:
Jorma Eloranta, President and CEO, Metso Corporation, tel. +358
(0)204 84 3000
Olli Vaartimo, Executive Vice President and CFO, Metso Corporation,
tel. +358 (0)204 84 3010
Johanna Sintonen, Vice President, Investor Relations, Metso
Corporation, tel. +358 (0)204 84 3253
Metso Corporation
Olli Vaartimo
Executive Vice President and CFO
Kati Renvall
Vice President, Group Communications
Distribution:
NASDAQ OMX Helsinki Ltd
Media
www.metso.com
