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Short-term outlook history 2008

This short-term outlook was published in accordance of Metso's Financial Statements Review 2008 on February 4, 2009.

As a result of the uncertainty in the financial markets and the slowdown of global economic growth, Metso's operating environment is expected to be demanding in 2009. Metso’s customers are cautious in their decisions to invest, which will especially affect the demand for Metso's new equipment and project business.

Mining companies are expected to make substantial cuts in their investment plans compared with the peak investment levels of recent years and further limit their production during the year. Based on the strong product and services offering, the demand for Metso’s mining equipment is expected to be satisfactory in 2009. In the construction industry, the demand for equipment relating to aggregates production is estimated to be weak at least during the first half of the year. Many countries have introduced stimulus measures relating to infrastructure development, which, at some point, are expected to have a positive effect on the demand for construction industry products. The demand for Mining and Construction Technology's services business is expected to be satisfactory.

The demand for power plants utilizing renewable energy sources is expected to be satisfactory in Europe and North America in 2009. The goals set for the use of renewable energy sources and the efforts to secure and increase energy self-sufficiency are expected to boost the demand for these power plants. The demand for Metso’s automation products is expected to be satisfactory in 2009. The demand for metals recycling equipment is expected to be weak, owing to the low demand of scrap metal and reduction in steel production. Demand for services business in Energy and Environmental Technology is expected to be satisfactory.

The demand for paper, pulp and fiber lines is expected to be weak in 2009. The delivery schedules of some large paper and board machine and fiber line projects in the order backlog have been prolonged. In the pulp and paper industry, low capacity utilization rates are expected to weaken the demand for Metso’s services business, particularly in North America and Europe.

Metso’s total net sales in 2009 are estimated to exceed EUR 5 billion. Metso’s order backlog is over EUR 4 billion, out of which about EUR 3 billion is scheduled for 2009. Metso’s services business volumes are expected to remain satisfactory in 2009.

The focus of Metso's management has shifted from growth to profitability and cash flow. The aim is to quickly adjust the capacity and the cost structure to correspond with the demand. Metso's profitability is expected to be satisfactory in 2009. Free cash flow is expected to improve considerably on 2008 owing to the measures aimed at releasing working capital.

The net sales and profitability estimates are based on Metso’s current market outlook and business scope.


Metso updates operating environment and demand outlook
(Metso’s Company release on December 18, 2008)

Metso is publishing a trading update due to further weakening in its operating environment and demand outlook since the publication of the third-quarter interim review in the end of October. Metso's order intake in October-November was clearly lower than a year ago and timing of some 20 percent of current order backlog can be considered uncertain. Metso's net sales and operating profit continued to develop in October-November in line with Metso's full year guidance. Metso’s short-term and long-term liquidity and balance sheet structure continue to be satisfactory.

A majority of Metso’s customers are currently hesitant to make new investment commitments due to the uncertain economic environment. Metso’s order intake slowed down in October-November and orders received in the first eleven months of 2008 were EUR 6.1 billion, which is about 4 percent less than during the same period in 2007.

In October-November, Metso booked new orders worth EUR 735 million. At the same time, about EUR 100 million of orders were cancelled from the order backlog, so the net order intake for October-November was EUR 635 million. The decline in order intake was coming from all businesses and was strongest in pulp and paper orders.

At the end of November, Metso’s order backlog was at EUR 4.8 billion. Timing of about 20 percent of the order backlog can be considered uncertain, meaning that some customers have initiated discussions with Metso about either extending the delivery times or putting the projects on hold.

Metso is taking actions to prepare for the possibility of prolonged weakening in demand by prioritizing profitability improvement and cash generation in the short term. Actions to adjust capacity to lower demand levels have started in early October and are continuing into 2009. Initially the capacity adjustments have focused on reducing the use of temporary work force and subcontractors. In some units, primarily in Finland and Sweden, Metso has also initiated temporary lay-offs of personnel or permanent reductions of personnel.

The recent weak order intake is not estimated to have material impact on the 2008 performance. In 2008, Metso’s operating profit margin is estimated to be about 10 percent and net sales, at comparable exchange rates, are expected to grow by about 5 percent on 2007 (previously net sales growth of 5-10 percent).


This is the short-term outlook from Metso's 2008 January-September interim report published on October 28, 2008.

Metso’s profit estimate for 2008 remains unchanged on the basis of the order backlog and profit development during January-September. At comparable exchange rates, Metso’s net sales in 2008 are expected to grow by 5-10 percent compared with 2007, and the operating profit margin is estimated to be about 10 percent.

The uncertainty regarding the financial markets and the development of the global economy is expected to affect the demand for Metso’s products and services during the coming months.

Mining companies are expected to continue with capacity expansion projects despite the growing concern about the global economy, but demand is expected to level off. In the construction industry, the demand for equipment relating to aggregates production is estimated to be good in the emerging markets but to slow down in the developed markets. In the mining and construction industry, the demand for the services business is expected to remain good owing to the rapid growth of the equipment base installed over the past few years.

The demand for paper and board lines is expected to be weak in 2009. The demand for fiber lines is also expected to slow down. The delivery schedules of large paper and board machine and fiber line projects in the order backlog may be prolonged. In the pulp and paper industry, lower capacity utilization rates are expected to weaken the demand for Metso’s services business in North America and Europe.

The demand for power plants using renewable energy sources is expected to be satisfactory in Europe and North America. The demand for Metso’s automation products is expected to be satisfactory in the pulp and paper industry and good in the power, oil and gas industry. The demand for metals recycling equipment is expected to be good.

Metso’s customers operate in different industrial sectors. Metso’s operations have a wide geographical spread, and Metso has a strong market position in many products. The services business, subcontracting and emerging markets have rapidly become more important for Metso over the past few years. Metso’s management estimates that the measures carried out in recent years have placed Metso in a better position to weather storms in the global economy. In the past few weeks Metso has launched new measures to adapt to its rapidly-changing operating environment. Metso’s priorities are to secure new orders, continue strict cost control and to secure healthy cash flows. All potential investments and M&A activities will be critically evaluated. The company is quickly adjusting its capacity to meet demand.

As there is a lot of uncertainty associated with the development of the global economy and Metso’s operating environment, Metso will, before publishing 2008 financial statements, refrain from establishing a guidance for its net sales and profitability in 2009.


This is the short-term outlook from Metso's 2008 January-June interim report published on July 24, 2008.

The market situation for Metso’s products and services is expected to continue to be favorable during the second half of the year in the mining, construction and energy customer segments and satisfactory in the pulp and paper segment. However, uncertainty about the development of the global economy may have an impact on the decision-making schedules of certain new customer projects and on the demand in certain geographical areas, particularly at Metso Paper.

The demand for Metso Paper’s new paper, board and fiber lines is expected to remain at the current satisfactory level in second half of the year. The decision-making schedules of paper and board machine projects may continue to be longer than last year due to economic uncertainty. The market for fiber lines is expected to be active and decisions on large projects are expected to be made in the second half of the year. For tissue lines the demand is estimated to be good. In Europe and North America, the demand is expected to focus mainly on machine rebuilds and the services business. The demand for power plants utilizing renewable energy sources is expected to continue at a good level in Metso’s main market areas, Europe and North America. Metso Paper aims to grow its services business, and the demand for services is expected to remain satisfactory.

Metso Minerals’ favorable market situation is expected to continue in the second half of 2008. As a result of the continuing rapid growth of emerging economies, the demand and prices for metals and minerals are expected to remain high and the investment activity of Metso’s mining customers to remain excellent. In construction, the demand for Metso Minerals’ equipment relating to aggregates production is expected to continue to be good. Construction demand is sustained by road network and other transportation infrastructure development projects underway around the world. The demand for metals recycling equipment is expected to be at a good level. Demand for the services business is estimated to remain excellent.

The demand for Metso Automation’s products is expected to be satisfactory in the pulp and paper industry in the second half of 2008. In the power, oil and gas industry, the demand for process automation systems is expected to be good and the demand for flow control systems excellent. The increasing consumption of energy and high oil prices will boost energy industry investments.

Due to postponements in some of Metso Paper’s projects under negotiation, Metso estimates that in 2008 its net sales growth, at comparable exchange rates, will stay below the earlier-estimated 10 percent. The new net sales growth estimate for 2008 is in the range of 5-10 percent, at comparable exchange rates. The operating margin estimate for 2008 is unchanged at about 10 percent.

The profit performance estimates are based on Metso’s current outlook, order backlog and business scope.


This is the short-term outlook from Metso's 2008 January-March interim report published on April 24, 2008.

The market situation for Metso’s products and services is expected to continue favorable in the mining, construction and energy customer segments and satisfactory in the pulp and paper segment. However, uncertainty about the development of the global economy may have an impact on decision schedules of certain new customer projects and on the demand in certain geographical areas.

No significant changes are expected in Metso Paper’s market situation in 2008. The demand for new paper, board and fiber lines is expected to remain at the current level, even though the timing of projects may, in some cases, be affected by factors relating to our customers’ financing and permit issues. For tissue lines the demand is estimated to be good. Paper, board and tissue consumption growth in China is expected to continue driving investments in new production capacity. In Europe and North America, the demand is expected to focus mainly on machine rebuilds and the services business. The demand for power plants utilizing renewable energy sources is expected to continue at an excellent level in Metso’s main market areas, Europe and North America. Metso Paper aims to substantially grow its services business, and the
demand for services is expected to remain satisfactory.

Metso Minerals’ favorable market situation is expected to continue in 2008. As a result of the continuing rapid growth of emerging economies, it is estimated that the demand and prices for metals and minerals will remain high and that the investment activity of Metso’s mining customers will remain excellent. In construction, the demand for Metso Minerals’ equipment relating to aggregates production is expected to continue to be good. Construction demand is sustained by road network and other transportation infrastructure development projects underway around the world. The demand for metals recycling equipment is expected to be at a good level. Demand for the services business is estimated to remain excellent.

The demand for Metso Automation’s products is expected to be satisfactory in the pulp and paper industry in 2008. In the power, oil and gas industry, the demand for process automation systems is expected to be good and the demand for flow control systems excellent. The increasing consumption of energy and high oil prices will boost energy industry investments.

In 2008 Metso targets to achieve, at comparable exchange rates, net sales growth of about 10 percent compared to 2007, and to reach an operating profit margin level of about 10 percent.

The profit performance estimates are based on Metso’s current market outlook, order backlog and business scope.