Stock Exchange release July 30, 2003 11:38:14 AM CET
Metso's Interim Review, January-June 2003: WEAK RESULT - EFFICIENCY IMPROVEMENT PROGRAM SEEKS FLEXIBILITY AND PROFITABILITY
- Metso Corporation's net sales in January-June totaled EUR 2,055 million (1-6/2002: EUR 2,289 million). Aftermarket and maintenance services accounted for 34 percent (34%) of the net sales.
- New orders worth EUR 2,309 million (EUR 2,547 million) were received. The order backlog totaled EUR 1,783 million at the end of June (June 30, 2002: EUR 1,925 million).
- Operating profit before nonrecurring items and amortization of goodwill was EUR 46.7 million (EUR 118.2 million). The operating profit was EUR 18.8 million (EUR 73.5 million).
- Income before extraordinary items and income taxes was negative EUR 16 million (positive EUR 36 million). Earnings per share were a negative EUR 0.13 (positive EUR 0.12).
- Gearing was 92.5 percent at the end of June (79.5% at end of March 2003).
Metso's operating environment showed no change in April-June. The uncertainty prevailing in the world economy and the SARS epidemic that affected Asia were reflected in the market situation and dampened the willingness of customer industries to invest. In addition, the strengthening of the euro tightened competition. On the whole, the demand for Metso's products was lower than expected.
The primary reasons for Metso's operating loss for January-June were the strengthening of the euro, the lower margins in Metso Paper's large projects and the tighter competition in Metso Minerals' crushing and screening equipment.
Metso is going through a strategic transformation. Due to the changes in market needs Metso has extend its knowhow to all phases of the customers' production process lifecycle in accordance with Metso Future Care business concept. Simultaneously with the strengthening of the aftermarket businesses Metso has to streamline its cost structure in all business areas.
"The measures taken so far to improve the operational efficiency are not sufficient in the continued difficult market and competitive situation. With the efficiency improvement program, due to be finalized by the end of August, we aim to accelerate profitability improvement and provide greater flexibility throughout the company", says Tor Bergman, President and CEO of Metso Corporation. The target is an annual result improvement of approximately EUR 100 million. "These measures will strengthen Metso's position as a key supplier for our customer industries in the long run."
The uncertainty in Metso's market environment is expected to continue. The operational result for the second half-year is expected to improve clearly on the first based on income from projects currently in the order backlog being booked later this year, the continuing relative stability in aftermarket and maintenance services and the strict cost discipline. The Corporation's full year income before extraordinary items and taxes is, however, estimated to be negative due to the first half-year result being weaker than expected and the booking of approximately EUR 80 million nonrecurring expenses relating to the efficiency improvement program.
The full report including tables can be downloaded from the enclosed link