Stock Exchange release August 10, 1999 10:01:00 AM CET

Valmet-Rauma's pro forma interim review January - June 1999: SIGNIFICANT MEASURES INITIATED TO IMPROVE COST-EFFECTIVENESS

Valmet-Rauma's net sales for January - June were EUR 1,583 million. The operating profit was EUR 1 million and income before extraordinary items and income taxes was EUR 5 million. During the second quarter, measures to improve cost-effectiveness were initiated and partly implemented on the basis of the merger plan.

Valmet-Rauma's market situation showed no improvement during the January - June period. An investment slump in customer industries limited demand, especially for the products of Fiber and Paper Technology, and Automation and Control Technology. In the Machinery business area, the demand for forest machines remained good in Europe, although the demand for forest machines declined as a whole. Demand for equipment delivered for construction and civil engineering continued to be brisk in Europe and North America.

Valmet-Rauma's net sales for January - June fell 17 percent on the corresponding period last year, which also weakened profitability due to the decreased volume of deliveries. It is not expected that the market situation will significantly improve in the near future. For this reason, measures to improve the cost-effectiveness of business operations and to preserve and improve competitiveness were initiated and partly implemented.

The merger of Rauma and Valmet proceeded on schedule and took effect on July 1, 1999. In May the Boards of Rauma and Valmet proposed Metso as the new name for Valmet-Rauma. The amendment of the articles of association required by the change of name needs approval by an extraordinary shareholders' meeting, to be held on August 18, 1999. It is estimated that annual savings of more than EUR 100 million will accrue from the synergy benefits of the merger, adaptation to the market situation and structural changes. The cost savings are estimated to be achieved in full in 2001.

APPENDIX
Valmet-Rauma Corporation, pro forma interim review for January - June 1999
Rauma Corporation, interim review for January - June 1999
Valmet Corporation, interim review for January - June 1999

The full Interim report including tables can be downloaded from the link below.