Stock Exchange release October 25, 2006 11:00:49 AM CET
Metso's Interim Review, January 1 - September 30, 2006
A news conference will be held today on October 25, 2006 at 1:30 p.m. in Finnish and at 3:00 p.m. in English at Metso's Corporate Office, Fabianinkatu 9 A, Helsinki, Finland.
The English-language news conference can be followed on the Internet at www.metso.com.
Metso's Interim Review, January 1 - September 30, 2006
Strong order intake and profitability improvement continue; Confident outlook for 2007
Highlights of the third quarter
New orders worth EUR 1,321 million were received in July-September, i.e. 44 percent more than in the comparison period last year (EUR 916 million in Q3/05).
The order backlog grew by 47 percent from the end of September 2005 and was EUR 3,022 million at the end of September 2006 (EUR 2,059 million at September 30, 2005).
Net sales increased by 12 percent and totaled EUR 1,169 million (EUR 1,045 million in Q3/05).
Operating profit was EUR 120.4 million, i.e. 10.3 percent of net sales (EUR 95.5 million and 9.1% in Q3/05).
Earnings per share were EUR 0.59 (EUR 0.47 in Q3/05).
Net cash generated by operating activities was EUR 143 million (EUR 15 million in Q3/05).
Return on capital employed (ROCE) was 22.1 percent (18.3% in Q3/05).
"Metso's operating environment remained favorable in the third quarter, resulting in brisk order intake. Consequently, we have now a very strong order backlog, some two-thirds of which will be delivered in 2007 or later," says Jorma Eloranta, President and CEO of Metso Corporation. "To make the most of this situation, we are now further strengthening our delivery capabilities and global supplier network. We are also steadily developing our aftermarket operations."
Eloranta points out that Metso's development has been very consistent - and very strong. "On a rolling 12-months basis Metso's orders received exceeded EUR 5.6 billion, which illustrates that we have moved into a totally new size category. At the same time, our cost structure has remained healthy despite the strong growth, and our cash flow is also strong."
"We estimate our good performance to continue also during the last quarter, and consequently it is obvious that 2006 will be the best year ever for Metso. Furthermore, the continued favorable market outlook, strong order backlog and the ongoing internal development projects give us confidence that 2007 will be another good year for Metso," Eloranta sums up.
No significant changes have occurred in Metso's market outlook. The favorable market situation is expected to continue in the construction, mining and energy industries also in the final quarter of the year. The overall pulp and paper industry demand is expected to remain satisfactory.
Of Metso Paper's products, the market outlook for new paper and board machines is the strongest in Asia, where several customers are actively considering new investments. In Europe and in North America, the demand for rebuilds and aftermarket services is expected to remain at the current level. The markets for both new tissue machines and tissue machine rebuilds are expected to be good. The markets for new fiber lines are expected to remain brisk in South America and good in Asia.
The demand for Metso Minerals' construction equipment and related services is expected to remain good thanks to road network development projects and other infrastructure investments. The demand for mining industry and metal recycling equipment is expected to remain strong. The large mining companies are continuing to plan and implement extensive investments. In the mining industry the trend is towards larger equipment and projects.
Metso Automation's market situation is expected to remain good in the energy, oil and gas industry and satisfactory in the pulp and paper industry.
Based on the strong order backlog and the favorable market outlook, it is estimated that Metso's good financial performance will continue also for the rest of the year. Metso's net sales are estimated to grow by clearly more than 10 percent in 2006. Continued favorable market situation, strong order backlog and ongoing internal development projects give a positive outlook for Metso's financial performance in 2007.
The estimates concerning Metso's net sales and operating profit do not include any changes resulting from acquisitions or divestitures.
Metso is a global engineering and technology corporation with 2005 net sales of approximately EUR 4.2 billion. Its 22,000 employees in more than 50 countries serve customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries.
Metso Corporation's Financial Statements 2006 will be published on February 7, 2007.
For further information, please contact:
Jorma Eloranta, President and CEO, Metso Corporation, tel. +358 204 84 3000
Olli Vaartimo, Executive Vice President and CFO, Metso Corporation, tel. +358 204 84 3010
Johanna Sintonen, Vice President, Investor Relations, Metso Corporation, tel. +358 204 84 3253
It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by "expects", "estimates", "forecasts" or similar expressions, are forward-looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company.
Such factors include, but are not limited to:
(1) general economic conditions, including fluctuations in exchange rates and interest levels which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins
(2) the competitive situation, especially significant technological solutions developed by competitors
(3) the company's own operating conditions, such as the success of production, product development and project management and their continuous development and improvement
(4) the success of pending and future acquisitions and restructuring.