Metso Corporation has decided on a goodwill impairment of approximately EUR 200 million before taxes in Metso Minerals. The impairment is taken due to the continued demanding market situation in rock and minerals processing and the unfavourable exchange rate development affecting Metso Minerals.
The market situation in the rock and minerals processing business started to weaken after the acquisition of Svedala. Despite of the efficiency improvement actions taken and the restructuring of overlapping activities accomplished, Metso has considered it necessary to re-evaluate the timeframe in which Metso Minerals will reach the Corporation's financial targets. Having taken a cautious approach, Metso has decided on a goodwill impairment.
The approximately EUR 200 million impairment is a non-cash item. Metso's annual goodwill amortization will decrease by approximately EUR 10 million The impairment will be booked as an extraordinary expense in Metso's third-quarter income statement for 2003. As a result, it will not have an impact on Metso's earnings per share.
The goodwill impairment will increase Metso's gearing with approximately 17 percentage points. In the end of June 2003, gearing was 92.5 percent. The effect on Metso's equity to assets ratio will be a decrease of approximately 3.5 percentage points. Metso's equity per share will decrease by approximately 1.5 euros. In the end of June 2003, the equity to assets ratio was 32.4 percent and equity per share amounted to 9.40 euros.
The estimated nonrecurring expenses of EUR 80 million, related to Metso's efficiency improvement program, will be booked in total in the third quarter of 2003.
Metso Corporation is a global supplier of process industry machinery and systems, as well as know-how and aftermarket services. The corporation's core businesses are fiber and paper technology (Metso Paper), rock and mineral processing (Metso Minerals) and automation and control technology (Metso Automation). In 2002, the net sales of Metso Corporation were EUR 4.7 billion and the personnel totaled approximately 28,500. Metso Corporation is listed on the Helsinki and New York Stock Exchanges.