Stock Exchange release October 29, 2003 12:10:17 PM CET
Metso's Interim Review, January-September 2003: GOODWILL IMPAIRMENT AND NONRECURRING EXPENSES OF EFFICIENCY IMPROVEMENT PROGRAM BURDENED RESULT
Operating profit before nonrecurring items and amortization of goodwill for January-September was EUR 80.7 million (EUR 156.0 million). Nonrecurring items included, the operating loss was EUR 273.7 million (operating profit EUR 94.0 million). This includes the costs of the efficiency improvement program and, in contrast to earlier announcement, the goodwill impairment in Metso Minerals.
Income before taxes was EUR 327 million negative (EUR 39 million positive).
The order backlog at the end of September increased to EUR 1,777 million (Dec 31, 2002: EUR 1,589 million).
- Metso's net sales in January-September amounted to EUR 3,046 million (1-9/2002: EUR 3,394 million). Aftermarket and maintenance services accounted for 34 percent of net sales (33%).
- Earnings per share excluding nonrecurring items and amortization of goodwill were EUR 0.16 (EUR 0.50). Earnings/share were EUR 2.36 negative (EUR 0.13 positive).
- At the end of September, gearing was 118.5 percent (92.5 percent at end of June 2003). The goodwill impairment increased the gearing ratio by about 20 percentage points.
Due to the uncertainty of the global economy, investments in Metso's customer industries in Europe and North America remained at a low level. The Chinese market returned to the situation prevailing before the SARS epidemic.
Metso's net sales for January-September decreased by 10 percent from the comparison period in 2002. Excluding the effects of exchange rate changes, net sales remained almost at their previous level.
The Corporation's operating profit before nonrecurring items and amortization of goodwill was down on the comparison period mainly due to lower margins from Metso Paper's large projects than in the comparison period, the continuing tight competition faced by Metso Minerals' crushing and screening equipment and the strengthening of the euro.
Net nonrecurring expenses of the review period amounted to EUR 314 million. These include the goodwill impairment of EUR 205 million in Metso Minerals, which reduces Metso Mineral's operating profit, and restructuring expenses of EUR 102 million related to the 2003 efficiency improvement program. The increase in the nonrecurring expenses of the efficiency improvement program is due to expansion of the program and the higher than anticipated expenses of closing down Metso Minerals' units. The annual profit improvement targeted through the efficiency improvement program has been raised to over EUR 100 million, including the savings measures at Metso Ventures and Metso's corporate headquarters.
Metso's market environment is not expected to show improvement in the last quarter of the year. The Corporation's full year income before taxes will be negative.
Metso's Board of Directors has reviewed the strategic plans prepared during the year by management. According to the plans, on the basis of the estimated market situation, Metso will not achieve its long-term profitability targets in the next two years.
The primary focus in managing Metso Corporation will the decisive implementation of the ongoing efficiency improvement actions and on other measures to improve profitability and strengthen the balance sheet.
The full report including tables can be downloaded from the enclosed link.