Stock Exchange release January 19, 2009 10:00:00 AM CET

Metso adjusts its Finnish operations in response to the weakened demand in the pulp and paper industry

A press conference (in Finnish) for media will be held today, Monday, January 19, 2009, 1:00 p.m. at Metso's Corporate Head Office, Fabianinkatu 9 A, Helsinki. A conference call (in English) for analysts will be held at 2:00 p.m. Instructions for participating in the conference call are included at the end of this press release.
 
Metso Corporation's company release, January 19, 2009, 11:00 a.m. local time

Metso will start personnel negotiations regarding employee reductions in Finnish units serving the paper industry. The employee reduction is estimated to affect a total of 900-1,200 employees. Approximately 4,700 employees work in the units subject to the personnel negotiations. The possible reduction in the number of units and the consolidation of operations into bigger units will be examined as part of the negotiations.
 
The preliminarily planned employee reductions are due to the need to adjust production capacity to correspond with the permanently decreased machine and equipment demand in the pulp and paper industry. The situation has been further weakened due to the global economic crisis. The goal of the planned measures is to secure the competitiveness of the business by streamlining the operating and cost structure of the operations in Finland.
 
The personnel negotiations regarding the employee reductions will start in the Paper business line and in the Automation business line's Process Automation Systems unit. They affect all personnel groups at all locations of these businesses in Finland.
 
"It is very unfortunate that we have to start measures of this magnitude in Finland. However, we want to ensure the competitiveness of the solutions we offer to the pulp and paper industry also in the future; our intention is to remain the market and technology leader. It is our understanding that the new machine market will not return to the level of the recent years, so we will adjust our cost structure," says Metso's President and CEO Jorma Eloranta. "Through the negotiations being initiated, we will seek solutions to this situation together with the personnel."
 
In the Paper business line, the reduction need is estimated to be a total of 800-1,100 people in the Roll Finishing Systems unit in Hollola, the Technology center in Inkeroinen, the Jyväskylä units, the Järvenpää units, the Service center in Oulu, the Tampere roll factory, the Paper business line's Turku units, the Valkeakoski units and the Varkaus Service center. These units employ a total of approximately 3,800 people.
 
Last autumn, personnel negotiations regarding temporary lay-offs were held in the Paper business line's units in Finland. The measures have already been initiated to some extent, but unfortunately they are not enough in the prevailing market situation.
 
In the personnel negotiations, the possible reduction in the number of units and the consolidation of the operations into bigger units will be examined. At the same time, also the division of responsibilities between units in Finland and China will be defined.
 
The Automation business line's Process Automation Systems unit's employee reduction need is estimated to be 90-130 employees. It will be also studied whether some of the reductions can be replaced by temporary lay-offs of a larger number of employees. Process Automation Systems unit's 18 Finnish sites employ a total of just over 830 people. The biggest sites are in Tampere and Kajaani.
 
More than half of the orders received by the Process Automation Systems unit are from the pulp and paper industry customers. Another significant customer group is the energy and process industry. During the negotiations, the possibility of production consolidations, the reorganization, divesture and closure of certain businesses will be examined and site arrangements will be considered.
 
The personnel negotiations will start immediately in the Paper business line and the Process Automation Systems unit, and the aim is to conclude them by mid-March. The employee reductions are expected to take place during April-September of this year. In the adjustment negotiations, also the possibility of part-time employment, internal transfers and retirement arrangements will be examined. The number of permanent terminations will be settled in the personnel negotiations.
 
As a result of the arrangements, the annual expenses of the businesses in question are estimated to decrease by 40-50 million euros. The cost reductions are estimated to be realized in full starting in 2010. The non-recurring expenses caused by the arrangements and recorded in 2009 are estimated to be EUR 10-20 million. "The need, nature and scope of potential support packages will be clarified during the negotiations process. Therefore their cost effect cannot yet be estimated in detail."
 
Operational focus on services business
 
The pulp and paper industry's new investments in the upcoming years are estimated to decrease by about one third, and most likely even more this year, compared to 2004-2008, and they will be more clearly focused on Asia and South America. The closures of customer mills in the Nordic countries and elsewhere in Europe and North America and the decreasing markets for new machines globally have reduced the demand for Metso's paper technology and process automation products.
 
"Because of the development described above, we will adjust the existing new paper and board machine production capacity in northern Europe and our cost structure to correspond to the permanently decreased demand. At the same time, we will direct our know-how globally to the services business," emphasizes Bertel Langenskiöld, President of Metso's Paper and Fiber Technology segment.
 
Metso aims to invest more strongly in developing the services business for the pulp and paper industry. The wide installed base of machinery and equipment offers good opportunities for developing rebuild, repair, maintenance, and spare and wear parts services. Consequently, Metso has strengthened its services resources close to its customers in emerging markets.
 
Locations of the personnel negotiations
 
Metso has a total of about 9,300 employees in Finland, 3,800 of them work in the Paper business line and about 800 in the Automation business line's Process Automation Systems unit.
 
 

Locations under employee negotiations
Personnel
Jyväskylä
Paper and Board Machines, Foundry, Jyväskylä Service Center
Process Automation Systems
1,894
Järvenpää
Coaters and Calenders, Winders, Järvenpää Service Center
Process Automation Systems
981
Tampere
Tampere Roll Factory
Process Automation Systems
617
Turku
Air and Chemical Systems, Turku Service Center, Metso Paper Turku Works Oy
Process Automation Systems
381 
Valkeakoski (incl. Jämsänkoski)
Stock Preparation and Recycled Fiber, Metso Paper Valkeakoski Oy
352
Kajaani
Process Automation Systems
123
Hollola
Roll Finishing Systems
Process Automation Systems
98
Oulu *
Oulu Service Center
Process Automation Systems
* Metso's composites manufacturing business in Oulu was sold to xperion Oy as of December 31, 2008, and is therefore not included in these figures
66
Inkeroinen (previously Anjalankoski)
Inkeroinen Technology Center
Process Automation Systems
69
Varkaus
Varkaus Service Center
Process Automation Systems
34
Kemi
Process Automation Systems
19
Helsinki
Process Automation Systems
21
Imatra
Process Automation Systems
14
Ylöjärvi
Process Automation Systems
11
Kuopio, Pietarsaari, Rauma, Äänekoski, Pori
Process Automation Systems
16
 
 
Total
4,696
 
 
Metso is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries. We have over 29,000 employees in more than 50 countries. www.metso.com
 
Additional information for the press, please contact:
Bertel Langenskiöld, President, Paper and Fiber Technology, tel. +358 20 484 3200
Hannu Mälkiä, President, Paper business line, tel. +358 400 460 587
Pasi Laine, President, Automation business line, tel. +358 20 484 3262
Sakari Ruotsalainen, President, Process Automation Systems unit, tel. +358 20 483 8933
 
Additional information for investors, please contact:
Johanna Sintonen, Vice President, Investor Relations, Metso Corporation, tel. +358 20 484 3253
 
Press conference (in Finnish) 1:00 p.m. at Metso's Corporate Office, Fabianinkatu 9 A, Helsinki.
The press conference will be attended by Metso's President and CEO Jorma Eloranta, Bertel Langenskiöld, President, Paper and Fiber Technology segment, and Hannu Mälkiä, President, Paper business line.
President and CEO Jorma Eloranta is available for press interviews on Monday from 2 p.m. - 4 p.m. Interview requests through Communications Manager Jaana M. Lappalainen, tel. +358 20 484 3005
 
Conference call for analysts
 
Metso's conference call for analysts and investors will be held today. Olli Vaartimo Executive Vice President and CFO and Johanna Sintonen, VP, Investor Relations, will give a short presentation and answer questions.
 
The conference call will be held in English today from
                      - 12:00-1:00 p.m. GMT (London)
            - 1:00-2:00 p.m. CET (Paris)
            - 2:00-3:00 p.m. EET (Helsinki)
 
To participate in the conference call, please dial a few minutes prior to the start of the teleconference in
            - US: +1 334 323 6201
            - Other countries: +44 20 7162 0025
 
A replay of the conference call will be available for 7 days from January 19, 2009 until midnight on January 26, 2009
            - US: +1-954-334-0342
            - Other countries: +44 (0)20 7031 4064
            - Access code: 309340
 
Presentation material for the press conference and the phone conference is available in Finnish and in English on Metso's web site: www.metso.com