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Metso
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Helsinki, Finland, 26 July 2007 -- Highlights of the second quarter
New orders worth EUR 2090 million were received in April-June, i.e. 50% more than in the corresponding period of last year (EUR 1390 million in Q2/06).

The order backlog grew by 22% from the end of December 2006 and was EUR 4574 million at the end of June 2007 (EUR 3737 million on 31 December 2006).
Net sales increased by 31% and totaled EUR 1536 million (EUR 1170 million in Q2/06).

Earnings before interest, tax and amortization (EBITA) were EUR 162.3 million, i.e. 10.6% of net sales (EUR 120.7 million and 10.3% in Q2/06).

Operating profit (EBIT) was EUR 148.3 million, i.e. 9.7% of net sales (EUR 116.4 million and 10.0% in Q2/06).

Earnings per share were EUR 0.68 (EUR 0.97 in Q2/06).

Free cash flow was EUR 67 million negative (EUR 26 million in Q2/06).

"The second quarter was another strong quarter for Metso. We saw brisk order intake in all our main businesses and our order backlog strengthened to an all-time-high level. This, together with the continuing favorable market outlook gives us exceptionally good visibility not only for the current year but also for 2008," says Jorma Eloranta, president and CEO, Metso Corporation.

Eloranta says that Metso's second-quarter financial performance was a substantial improvement on the seasonally low first quarter. "The growth in net sales was healthy both in Metso Minerals and Metso Automation, which delivered strong organic growth of more than 20%. I am also pleased with our second-quarter operating profit driven by strong volumes, which set a new quarterly record for Metso. Our free cash flow during the second quarter was negative mainly because of volume driven increase in receivables at the end of June. I consider this to be primarily a timing issue related to project deliveries," explains Eloranta.

Eloranta says that Metso's main operational priority is to ensure that the delivery capability continues to meet robust demand and healthy growth rates and competitiveness are sustained. "We are implementing various expansion programs to enhance our delivery capability and have increased our capital expenditure plans for 2007 to this end. We are also continuing our concerted efforts to develop our aftermarket operations, strengthen our global presence, and evaluate complementary acquisition candidates to accelerate Metso's growth even further," concludes Eloranta.

Short-term outlook

The favorable market outlook for Metso's products and services is expected to continue for the rest of 2007. Metso's record-high order backlog also provides exceptionally good visibility for 2008, which is estimated to be another solid growth year for Metso.

Metso Paper's market situation is estimated to continue much the same as in the year's first half. The demand for new paper and board machines is expected to be good in Asia and satisfactory elsewhere. The demand for new fiber lines is expected to be good in South America and satisfactory elsewhere. The demand for tissue machines is estimated to be satisfactory. The demand for power plants is estimated to be excellent. The demand for Metso Paper's aftermarket services is expected to remain satisfactory.

Metso Minerals' favorable market outlook is expected to continue. Demand is anticipated to remain excellent in the mining and metals recycling industries, and at a good level in the construction industry. The demand for aftermarket services is expected to remain excellent.

Metso Automation's market outlook in the pulp and paper industry is estimated to be good. In the power, oil and gas industries, demand is expected to be good in process automation systems and excellent in flow control systems.

Thanks to the strong order backlog, continuing favorable market situation and expanded business scope, it is estimated that Metso's net sales for 2007 will grow by more than 20% on 2006 and that the operating profit will clearly improve. It is estimated that the operating profit margin in 2007 will be slightly below Metso's target of over 10%. This is primarily due to factors related to the acquisition of the Pulping and Power businesses, namely the high first-year amortization of intangible assets, the costs of integration, and the fact that synergy benefits will not fully materialize in the first year.

The estimates concerning financial performance are based on Metso's current business scope, order backlog, and market outlook.

Metso is a global engineering and technology corporation with 2006 net sales of approximately EUR 5 billion. Its 26,000 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's Interim Review for January–September will be published on 25 October 2007.

www.metso.com


 

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