Metso's operating environment
Our operating environment changed significantly at the end of the third quarter of 2008 when the financial crisis that started with the United States expanded into a global economic crisis. The impacts on our customer industries have been substantial – demand for our customers’ end products has weakened and their machine and equipment investments have been reduced or postponed.
We serve customers in the mining, construction, power generation, oil and gas, metal recycling, and pulp and paper industries. Most of our customers are major industrial companies, like mining companies, oil companies or pulp and paper companies.
The construction and metal recycling industry customers are mainly contractors. The majority of our customers operate in the process industry and use natural raw materials or recycled materials in their operations.
Our life-cycle business includes project and product business as well as the services business. Large-scale project deliveries are typical to the mining, power generation and the pulp and paper industries. Correspondingly, our deliveries to the construction and the oil and gas industry consist primarily of individual equipment components and smaller solutions.
We operate globally. Our traditional market areas are Western Europe and North America. We consider Eastern Europe, South and Central America, the Middle East, Africa, and Asia-Pacific, excluding Japan, Australia and New Zealand, as emerging markets. In 2008, about 48 percent of our orders received and 44 percent of our net sales came from emerging markets.
The majority of our business in emerging markets is for new production lines and equipment, although the demand for the services business is also increasing as the markets evolve and the installed machine base grows. Correspondingly, in developed markets, the services business, such as machine and process rebuilds, wear and spare parts sales and preventive maintenance and service, is on the rise. In developed markets, new equipment and line deliveries mainly replace equipment that has reached the end of its useful life, but do not bring additional capacity to the markets.
In emerging markets, population and economic growth as well as urbanization are increasing the consumption of metals and minerals, infrastructure construction, the demand for paper and packaging materials, and energy consumption.
In developed markets, our wide installed base of machinery and equipment requires process optimization and maintenance services, and we have strengthened our portfolio and competence accordingly. In our view, the services business offsets the fluctuations in demand in the project and product business over the long-term, strengthens customer relationships and supports new equipment sales when customers again invest in new capacity.
Last updated: May 26, 2009
