Deliver Your News to the World

Metso’s Interim Review, January 1 – June 30, 2006: Metso’s strong performance continues


Highlights of the second quarter
- New orders worth EUR 1,390 million were received in April-June, i.e. 16 percent more than in the corresponding period last year (EUR 1,203 million in Q2/05).
- The order backlog grew by 33 percent from the end of June 2005 and was EUR 2,864 million at the end of June 2006 (EUR 2,157 million at June 30, 2005).
- Net sales increased by 14 percent and totaled EUR 1,170 million (EUR 1,028 million in Q2/05).
- Operating profit was EUR 116.4 million, i.e. 10.0 percent of net sales (EUR 83.3 million and 8.1% in Q2/05).
- Metso recognized a nonrecurring deferred tax asset of EUR 57 million in the income statement.
- Earnings per share were EUR 0.97 (EUR 0.49 in Q2/05).
- Net cash generated by operating activities was EUR 56 million (negative EUR 17 million in Q2/05).
- Return on capital employed (ROCE) was 21.7 percent (17.3% in Q2/05).

Metso’s market situation remained favorable during the second quarter, resulting in strong growth in orders received. “In the light of the continuing positive trend in all our business areas, we estimate that our organic growth alone will this year clearly exceed the set 10 percent growth target for net sales,” says Jorma Eloranta, President and CEO.

Eloranta is also very pleased with the solid profitability development. “Our strong focus on sales management together with the good market situation is bringing results. Furthermore, our cost structure has remained healthy thanks to our firm commitment to profit-enhancement and continuous productivity improvement throughout Metso.”

“Based on our strong order backlog and the favorable market outlook we expect that our good financial performance will continue also during the second half of the year, and our operating profit will clearly exceed the operating profit in 2005,” says Eloranta. “At the moment our main challenge is to ensure that our delivery capability, especially in Metso Minerals and Metso Automation, continues to meet the robust market demand.”

Short-term outlook

No change has occurred in Metso’s market outlook during the first half-year. The favorable market situation is expected to continue in the civil engineering, mining and energy industries in 2006. The overall pulp and paper industry demand is expected to remain at least as satisfactory as in 2005.

Of Metso Paper’s products, the market outlook for new paper and board machines is the strongest in Asia. In Europe and in North America, demand for rebuilds is expected to level out. 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’ 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. In mining and aggregates production 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 during the second half of the year, and the operating profit will clearly exceed the operating profit in 2005. Metso’s net sales are estimated to grow by clearly more than 10 percent in 2006.

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 Interim Review for January- September 2006 will be published on October 25, 2006.

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.


This news content was configured by WebWire editorial staff. Linking is permitted.

News Release Distribution and Press Release Distribution Services Provided by WebWire.