Stock Exchange release April 28, 2006 11:01:02 AM CET
Metso Corporation's Interim Review, January 1 - March 31, 2006:Strong order backlog and profit performance continued in first quarter
Highlights of the first quarter
- New orders worth EUR 1,437 million were received in January-March, i.e. 32 percent more than in the corresponding period last year (EUR 1,089 million in Q1/05).
- The order backlog from continuing operations grew by 15 percent from the end of 2005 and was EUR 2,692 million at the end of March (EUR 2,350 million at Dec. 31, 2005).
- Net sales increased by 21 percent and totaled EUR 1,078 million (EUR 894 million in Q1/05).
- Operating profit was EUR 95.4 million, i.e. 8.8 percent of net sales (EUR 54.7 million and 6.1% in Q1/05).
- Net cash generated by operating activities was EUR 169 million (EUR 123 million in Q1/05).
- Return on capital employed (ROCE) was 20.2 percent (12.4% in Q1/05).
- Earnings per share were EUR 0.47 (EUR 0.26 in Q1/05)
Metso's first-quarter profit before taxes almost doubled to EUR 88 million from the corresponding period last year. All business areas - but most of all Metso Minerals - improved their results.
The growth in orders received continued to be brisk; nearly a third more orders were received in the first quarter than in the corresponding period last year. Growth came evenly from Metso Paper, Metso Minerals and Metso Automation. Metso's order backlog at the end of March was 15 percent higher than at the end of 2005 and 40 percent higher than at the end of March 2005.
"We have had a strong start for 2006 in Metso. Our growth and profitability in the first quarter clearly exceeded the performance in January-March last year - and year 2005 was, so far, the best in Metso's history," Jorma Eloranta, President and CEO of Metso Corporation notes.
According to Eloranta, the good performance was based on the strong order backlog at the end of 2005 and the continuing favorable market situation. Additionally, the efficiency improvement measures and development programs carried out in Metso have a positive effect on the profitability.
"One of the goals for this strategy period is to increase our net sales by 10 percent annually. To achieve this goal we have taken actions to strengthen our sales and service network and to make our sales processes more efficient. In January-March our net sales increased by 21 percent over the comparison period," Eloranta says.
"We estimate that both in terms of net sales and profitability, we will in 2006 clearly exceed last year's performance," Eloranta says.
The favorable market situation is expected to continue in the civil engineering, mining and energy industries in 2006. Pulp and paper industry demand is expected to remain at least as satisfactory as in 2005.
Of Metso Paper's products, the market prospects for new paper and board machines are the strongest in Asia. In Europe, demand will be focused on rebuilds of small and medium-size machines. In North America, while some rebuild projects are pending, the uncertainty prevailing in the sector is postponing decision-making. The markets for both new tissue machines and tissue machine rebuilds are good. The markets for new fiber lines are expected to remain active in South America and good in Asia.
The demand for Metso Minerals' equipment related to aggregates production is expected to remain good in the construction and civil engineering sector, due 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.
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.
It is estimated that in 2006 Metso Corporation's net sales will grow by over 10 percent and operating profit will clearly surpass the operating profit in 2005.
The estimates concerning Metso's net sales and operating profit do not include any changes resulting from acquisitions or divestitures, and they are based on the current order backlog and market outlook.
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.
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.