Stock Exchange release April 28, 2004 12:02:46 PM CET
Metso Corporation's Interim Review, January-March 2004: ORDERS INCREASED, BUT RESULT STILL A LOSS
- In January-March, Metso Corporation's net sales totaled EUR 928 million (1-3/2003: EUR 983 million).
- Despite profitability improvements in Metso Minerals and Metso Automation, Metso's operating profit before nonrecurring items and amortization of goodwill was EUR 0.5 million (EUR 11.7 million). The operating profit was weakened mainly by cost provisions made in Metso Paper for certain previously delivered projects.
- After nonrecurring items and amortization of goodwill, the operating loss was EUR 12.1 million (positive EUR 5.3 million).
- Earnings per share were negative EUR 0.18 (negative EUR 0.09).
- New orders worth EUR 1,127 million (EUR 1,425 million) were received. The Corporation's order backlog totaled EUR 1,666 million at the end of March (EUR 1,505 million at the end of 2003).
- Gearing was 101.7 percent at the end of March (107.7% at the end of 2003).
Demand for Metso's products in January-March remained mostly at the previous year's level, but the demand for Metso Minerals' products improved from the previous year in the North American construction equipment market and globally in the mining industry. Metso received clearly more orders in January-March than in the previous year's final quarter, but less than in January-March of that year. The order backlog increased by 11 percent from the turn of the year. Aftermarket operations accounted for 39 percent of net sales, up from 37 percent at the end of 2003.
The Corporation's operating result before nonrecurring items and amortization of goodwill in January-March was slightly positive, but after nonrecurring items and amortization of goodwill the operating result was negative. Jorma Eloranta, President and CEO of Metso Corporation, acknowledges that the result is unsatisfactory and that Metso, as the global market leader, should be able to do better.
"We shouldn't try to find reasons for the weak profitability in strategies, the portfolio or business cycles. Instead, to improve the situation, the management clearly should focus on implementing the strategic and operational measures. Metso's balance sheet will strengthen substantially, which provides us better opportunities to focus on improving the operational profitability. The increase in the order backlog supports our efforts to improve the result," says Eloranta.
Metso Paper made an operating loss in January-March due to additional project provisions. "Our challenges in Metso Paper are to react faster to the market situation and customer needs and to streamline the cost structure. The business area needs to find new and more competitive ways to operate," says Eloranta.
Metso Minerals' markets are recovering and its profitability developed favorably in the first quarter. However, the result was weakened by the nonrecurring expenses from the divestiture of Dynapac, the road construction machinery manufacturer. "In Metso Minerals it is important to complete the ongoing efficiency improvement measures, in order to maintain our position as the market leader in the recovering markets."
"Metso Automation has substantially improved its result. Thanks to the efficiency improvement measures that were implemented firmly, we can gradually proceed into a phase of continous improvement in this business area," says Jorma Eloranta.
The operating result of the Metso Ventures business area was slightly negative. Metso Drives, supported by the favorable market situation, improved its profitability. The substantial underutilization of Valmet Automotive's production capacity weakened the business area's result.
Metso Paper's net sales and operating profit before nonrecurring items for 2004 are expected to fall short of the level of the previous year. The favorable development of the beginning of the year in Metso Minerals and Metso Automation is expected to continue. Overall, Metso Corporation's operating profit before nonrecurring items for 2004 is expected to be on the previous year's level. Income before taxes is expected to be significantly better than in the previous year.