Stock Exchange release November 10, 1999 10:00:00 AM CET
Metso Corporation's Interim Review, January 1– September 30, 1999: MARKET SITUATION AND RESTRUCTURING COSTS LED METSO TO SMALL OPERATING LOSS
- Metso's net sales for January-September totaled EUR 2,315 million (EUR 2,729 million for January-September, 1998).
- After non-recurring merger and restructuring costs of EUR 14 million, the operating loss was EUR 9 million (operating profit EUR 171 million).
- New orders worth EUR 2,372 million (EUR 2,589 million) were received. By September 30, the order backlog had grown to EUR 1,463 million (EUR 1,342 million at the turn of the year).
Metso's market situation remained weak on average in July-September. The paper industry focused on small replacement investments, process parts rebuilds, and spare parts and maintenance investments, for which demand remained brisk. The investments of the energy and chemical industries were also on a low level, which decreased demand for automation and control technology products. The demand for fiberboard products, on the other hand, improved. The sales of crushers for the construction and civil engineering industries continued good in Europe, but slackened somewhat in North America. The demand for forest machines remained on a good level in Europe due to the large felled volumes, and the first signs of recovery could also be seen in the North American markets.
The integration of Metso's businesses was continued in July-September by combining and dismantling overlaps in distribution, administration and production. Altogether, 32 sales offices will be closed due to overlapping functions in the sales companies. Downsizing in response to the market situation, weak profit performance and business restructuring will lead to an estimated 2,000 job reductions throughout the Corporation by the end of the year 2000.
No significant change is expected in the market situation in the last quarter of the year. Total non-recurring merger and restructuring costs of EUR 60 million will accrue. The remainder of these expenses will be booked during the last quarter of the year and are expected to be covered by the operating result for October-December. The operating result for the whole year is estimated to either break even or be a slight loss although expectations for improved profitability in the year 2000 have been strengthened due to the ongoing restructuring and the improved outlooks in customer industries.