Metso Corporation                Company Release                
April 24, 2008 at 12.00 noon local time
 
First-quarter profitability improved. Full-year growth and
profitability guidance intact.
 
Highlights of the first quarter
 
-          New orders worth EUR 1,509 million were received in
January-March (EUR 1,664 million in Q1/07).
-          At the end of March, the order backlog was EUR 4,340
million (EUR 4,341 million at December 31, 2007).
-          Net sales totaled EUR 1,400 million (EUR 1,366 million in
Q1/07).
-          Earnings before interest, tax and amortization (EBITA)
were EUR 133.7 million, i.e. 9.6 percent of net sales (EUR 121.9
million and 8.9% in Q1/07).
-          Operating profit (EBIT) was EUR 119.6 million, i.e. 8.5
percent of net sales (EUR 108.4 million and 7.9% in Q1/07).
-          Earnings per share were EUR 0.55 (EUR 0.50 in Q1/07).
-          Free cash flow was EUR 99 million negative (EUR 106
million positive in Q1/07).
-          Return on capital employed (ROCE) was 20.9 percent (20.9%
in Q1/07).
 "Our first-quarter profitability improved across Metso despite
currency headwinds and cost increases," says Jorma Eloranta,
President and CEO of Metso Corporation. "Capacity constraints are
still a fact in some of our units, and we have focused on projects
and products with higher margins. We have also initiated several
projects to meet the growing demand, especially in the emerging
markets."
 "Overall our markets continue to be active. Delays in the
decision-making in some larger pulp and paper projects and timing
issues in some new mining projects under negotiations led to a
relative weak order intake in the first quarter. We expect a recovery
in the coming quarters based on our strong prospects list and letters
of intent," Eloranta says. He continues that he is not pleased with
the cash flow development during the past couple of quarters but he
is confident that the actions taken will turn the trend.
 
Eloranta also points out that at comparable exchange rates Metso's
order backlog was 14 percent stronger than a year before, providing a
solid basis for continued net sales growth. "The financial
development in January-March supports our guidance for the full year
2008. Our target is to achieve, at comparable exchange rates, net
sales growth of about 10 percent on the previous year, and to improve
our operating profit margin level to about 10 percent."
 
 
Metso's key figures
 

EUR million                                Q1/08 Q1/07 Change %  2007
Net sales                                  1,400 1,366        2 6,250
Earnings before interest, tax and                                    
amortization (EBITA)                       133.7 121.9       10 635.4
   % of net sales                            9.6   8.9           10.2
Operating profit                           119.6 108.4       10 579.8
   % of net sales                            8.5   7.9            9.3
Earnings per share, EUR                     0.55  0.50       10  2.69
Orders received                            1,509 1,664      (9) 6,965
Order backlog at end of period             4,340 3,999        9 4,341
Free cash flow                              (99)   106            198
Return on capital employed (ROCE),          20.9  20.9           26.1
annualized %
Equity to assets ratio at end of period, %  36.8  36.8           37.7
Gearing at end of period, %                 39.1  23.3           33.4

 
 
Metso's first quarter 2008 review
 
Operating environment and demand for products
The market situation for Metso's products and services continued to
be favorable in the mining, construction and energy customer segments
and satisfactory in the pulp and paper customer segment.
 
The demand for Metso Paper's new paper, board and tissue machines and
fiber lines was satisfactory on the whole. Market activity remained
at the previous year's level, but market uncertainty and factors
related to project financing and environmental permit issues have
delayed the decisions on some pulp and paper industry projects under
negotiation. China was still the most important country for new
equipment investments. In Europe and North America, demand focused
mainly on machine rebuilds and the services business. Demand for
power plants using renewable energy sources continued to be excellent
in Metso's main market areas in Europe and North America. The demand
for the services business was excellent in the power generation and
satisfactory in the pulp and paper industry.
 
Metso Minerals' favorable market situation continued in the first
quarter. The demand for mining products continued to be excellent,
while that for construction and metals recycling equipment was good.
The demand for services business was also excellent. The continuing
fast growth of emerging economies kept the demand for and prices of
minerals and metals at a high level, and mining industry investment
activity continued to be strong. In the construction industry, the
demand for Metso Minerals' aggregates production equipment continued
to be good, sustained by road network and other transportation
infrastructure development projects underway around the world.
 
The demand for Metso Automation's products was satisfactory in the
paper and pulp industry in the first quarter. In the power, oil and
gas industry the demand was good for process automation and excellent
for flow control systems. The increased consumption of energy and
high oil prices boosted investments in the energy industry.
 
Orders received and order backlog
The orders received by Metso in January-March totaled EUR 1,509
million. The value of orders was down by 9 percent from the
comparison period. The value was 5 percent down at comparable rates.
 
The regions generating the largest total value of orders are Europe
and the Asia-Pacific. Emerging markets accounted for 44 percent (36%)
of the orders received. At the end of March Metso's order backlog was
EUR 4,340 million, same level as at the end of 2007.
 
The value of orders received by Metso Paper decreased by 17 percent
from the comparison period and totaled EUR 541 million. The decrease
in orders received was attributable mainly to the delays of some pulp
and paper industry projects under negotiation. The biggest orders
received by Metso Paper in the first quarter included a coated board
line for Shandong Bohui in China and Metso Power's evaporation plant
for SCA Packaging's pulp and paper mill in Obbola, Sweden.
 
The orders received by Metso Minerals were down by 4 percent from the
corresponding quarter in 2007 and totaled EUR 740 million. With
comparable exchange rates, the value of orders received was at the
level of the comparison period. Due to timing reasons no large orders
were booked in the first quarter. Geographically, the growth of Metso
Minerals' new orders continued to be strong in the Asia-Pacific
region and South America. In the USA, the volume of orders remained
at the level of the comparison period measured in US dollars. Major
orders in the first quarter included a metals recycling plant for
European Metal Recycling in the USA, a coke calcination plant for
Seadrift in the USA and crushing and grinding equipment for Anglo
American in Chile.
 
The orders received by Metso Automation in January-March were at the
same strong level as in the comparison period for both process
automation and flow control systems. The largest orders in the first
quarter included valve deliveries for Qatar Petroleum and Shell GTL
(gas-to-liquids) project in Qatar and an extensive automation package
for Shandong Bohui's new board line in China.
 
Orders received by business area

                                  Q1/2008               Q1/2007
                          EUR million % of orders     EUR % of orders
                                         received million    received
Metso Paper                       541          35     653          39
Metso Minerals                    740          49     771          46
Metso Automation                  220          14     228          13
Valmet Automotive                  23           2      28           2
Intra-Metso and other                                                
orders received                  (15)                (16)
Total                           1,509         100   1,664         100

 
Orders received by market area

+-------------------------------------------------------------------+
|                      |        Q1/2008        |      Q1/2007       |
|----------------------+-----------------------+--------------------|
|                      |     EUR | % of orders |     EUR |     % of |
|                      | million |    received | million |   orders |
|                      |         |             |         | received |
|----------------------+---------+-------------+---------+----------|
| Europe               |     608 |          40 |     722 |       43 |
|----------------------+---------+-------------+---------+----------|
| North America        |     300 |          20 |     297 |       18 |
|----------------------+---------+-------------+---------+----------|
| South and Central    |     150 |          10 |     118 |        7 |
| America              |         |             |         |          |
|----------------------+---------+-------------+---------+----------|
| Asia-Pacific         |     319 |          21 |     406 |       25 |
|----------------------+---------+-------------+---------+----------|
| Rest of the world    |     132 |           9 |     121 |        7 |
|----------------------+---------+-------------+---------+----------|
| Total                |   1,509 |         100 |   1,664 |      100 |
+-------------------------------------------------------------------+

 
 
Net sales
Net sales remained at the level of the comparison period, i.e. at EUR
1,400 million. At comparable exchange rates, growth would have been
approximately 6 percent. In Metso Minerals and Metso Automation net
sales grew by well over 10 percent and were at the level of the
comparison period in Metso Paper, at comparable exchange rates. Net
sales of the services business grew by 7 percent (at comparable
exchange rates, the growth would have been about 12 percent),
accounting for 34 percent of Metso's net sales (33% in Q1/07). The
growth of the services business was strongest in Metso Minerals.
 
Measured by net sales, the largest countries in the first quarter
were the USA, China and Brazil, which together accounted for about 30
percent of total net sales.
 
Net sales by business area
 

                                  Q1/2008              Q1/2007
                            EUR million % of net EUR million % of net
                                           sales                sales
Metso Paper                         648       46         666       48
Metso Minerals                      583       41         540       39
Metso Automation                    158       11         146       11
Valmet Automotive                    23        2          28        2
Intra-Metso and other net                                            
sales                              (12)                 (14)
Total                             1,400      100       1,366      100

 
Net sales by market area
 

                              Q1/2008                 Q1/2007
                      EUR million    % of net EUR million    % of net
                                        sales                   sales
Europe                        569          40         544          40
North America                 213          15         259          19
South and Central             175          13         218          16
America
Asia-Pacific                  365          26         285          21
Rest of the world              78           6          60           4
Total                       1,400         100       1,366         100

 
 
Financial result
Metso's earnings before interest, tax and amortization (EBITA) for
January-March improved clearly and totaled EUR 133.7 million, or 9.6
percent of net sales (EUR 121.9 million and 8.9% in Q1/07).
Profitability improved in all business areas despite increasing raw
material costs and the rapid decline of the US dollar against the
other key currencies for Metso since the first quarter of 2007. Large
share of local production in Metso's cost structure partly offset the
negative impact of the weakening US dollar. Thanks to solid demand,
the rise in the prices of some raw materials, such as steel, could to
a large extent be passed on to end-product prices.
 
Metso's operating profit was EUR 119.6 million in the first quarter,
or 8.5 percent of net sales (EUR 108.4 million and 7.9% in Q1/07).
 
Metso's net financial expenses for January-March were EUR 9 million
(EUR 8 million).
 
Metso's profit before taxes was EUR 111 million (EUR 100 million).
Metso's tax rate is estimated to be at approximately 30 percent in
2008.
 
The profit attributable to shareholders for the first quarter was EUR
78 million (EUR 70 million), corresponding for earnings per share of
EUR 0.55 (EUR 0.50 per share).
 
Metso's return on capital employed (ROCE) was 20.9 percent (20.9%)
and return on equity (ROE) was 20.1 percent (20.3%).
 
 
Cash flow and financing
Metso's net cash generated by operating activities was EUR 69 million
negative (EUR 123 million positive). The increase in net working
capital of EUR 187 million was primarily due to inventories which
grew in preparation for increased delivery volumes in the following
quarters. Projects were commenced in Metso Minerals and Metso
Automation aiming at improving the efficiency of the supply chain and
inventory turnover. Metso's free cash flow was EUR 99 million
negative (EUR 106 million positive).
 
Net interest-bearing liabilities totaled EUR 645 million at the end
of March (EUR 353 million). Gearing was 39.1 percent and the
equity-to-assets ratio 36.8 percent. Following the Annual General
Meeting, Metso paid in April EUR 425 million in dividends, which
increased gearing by approximately 48 percentage points and reduced
the equity-to-assets ratio by approximately 7 percentage points
compared to the end of first quarter.
 
 
Capital expenditure
Metso's gross capital expenditure for January-March was EUR 42
million excluding acquisitions (EUR 32 million in Q1/07). Nearly
one-third of the capital expenditure comprised growth investments
aimed at increasing capacity and strengthening Metso's global
presence.
 
An investment decision was made in the first quarter to rebuild a
pilot machine at Metso's Paper Technology Center in Jyväskylä,
Finland, to strengthen our R&D capabilities.
 
Furthermore, Metso has several investment projects underway to expand
production and service capacity. In China, Guangzhou, the expansion
of a paper industry service unit is underway, and in Tianjin the
production of crushing units is being expanded. In the USA, Metso is
expanding its boiler service operations by establishing a new service
center at Lancaster, South Carolina and extending the existing
service center at Fairmont, West Virginia. In India, an assembly line
for crushing equipment is being expanded at Bawal and a project to
increase foundry capacity at Ahmedabad is nearing completion. In
Lapua, Finland, Metso is completing the extension of power boiler
rebuild and service capacity.
 
Investment projects are underway at Metso Minerals and Metso
Automation concerning  enterprise resource planning (ERP) systems to
enhance our global supply chain management. The systems are
introduced in stages during 2007-2010.
 
Metso estimates that in 2008 gross capital expenditure excluding
acquisitions will exceed EUR 200 million (EUR 159 million in 2007).
 
Metso's research and development expenses totaled EUR 29 million (EUR
29 million in Q1/07), representing 2.1 percent of Metso's net sales.
 
 
Acquisitions and divestments
Metso concluded the divestment of its Panelboard business in January.
The German panelboard press business was divested to Siempelkamp in
September 2007, and in January 2008 an agreement was concluded on the
divestment of the panelboard operations in Nastola, Finland and
Sundsvall, Sweden to Dieffenbacher GmbH & Co. KG of Germany. The
refiner-related operations in Sundsvall, Sweden, remained in Metso's
ownership. This unit with its 40 employees continues to supply fiber
preparation technology to the global Medium Density Fiberboard (MDF)
industry as part of Metso Paper. As a result of the two divestments,
some 160 Panelboard employees were transferred to the acquiring
companies. After the divestments, around EUR 20-30 million of the
former Panelboard's total annual net sales of EUR 100-150 million
remains with Metso. The Panelboard business line was discontinued as
a separate business line in January 2008.
 
In February, Metso agreed with Mitsubishi Heavy Industries (MHI) on
acquiring MHI's paper machine technology. MHI's installed equipment
base is just over 200 machines, mostly in Japan. The acquisition aims
at developing the services business for this equipment base and
comprises the related drawings, patents and intellectual property
rights. Metso estimates that the net sales of the acquired business
will be about EUR 10 million during the first year. The deal is
pending regulatory approval.
 
 
Personnel
At the end of March, Metso had 27,062 employees, which was 225 more
than at the end of 2007 (26,837 employees). The biggest increase was
in the Asia-Pacific region where the number of personnel increased by
544 employees. In the first quarter, Metso had an average of 26,950
employees.
 
Personnel by area
 

                              2008                2007               
                       March 31 % of total March 31 % of total Change
                                 personnel           personnel      %
Finland                   9,387         35    9,275         36      1
Other Nordic countries    3,477         13    3,555         14    (2)
Other Europe              3,251         12    2,993         12      9
North America             3,864         14    3,708         15      4
South and Central         2,785         10    2,410          9     16
America
Asia-Pacific              2,885         11    2,341          9     23
Rest of the world         1,413          5    1,334          5      6
Total                    27,062        100   25,616        100      6

 
 
Share ownership plan
Metso has a share ownership plan for 2006-2008. The maximum number of
shares to be allocated in the incentive plan is 360,000 Metso
Corporation shares.
 
The 2007 share ownership plan comprised 90 Metso executives,
including the entire Executive Team. At the end of March 2008, 70,949
shares were distributed as rewards, corresponding to approximately
0.05 percent of all Metso shares. Members of the Executive Team
received 14,966 shares.
 
Metso's Board of Directors decided in February on the number of
shares to be allocated for 2008 plan and the criteria for earning
them. The potential reward from the plan will be based on the
operating profit of Metso and its business areas in 2008. In 2008,
the share ownership plan will cover a maximum of 130,000 Metso
shares, corresponding to 0.09 percent of all Metso shares. Metso's
entire Executive Team is covered by the 2008 plan, and a maximum of
26,000 shares has been allocated to Executive Team members. The
maximum reward from the plan is limited to each person's annual
salary. The payment of rewards will be decided during the first
quarter of 2009.
 
 
Shares, options and share capital
At the end of March, Metso's share capital was EUR 240,982,843.80 and
the number of shares was 141,754,614. The number of shares includes
60,841 Metso shares held by the parent company and 69,141 Metso
shares held by a limited partnership consolidated in Metso's
consolidated financial statements (the limited partnership sold
70,949 Metso shares during March). Together these represent 0.09
percent of all the shares and votes. The average number of shares
outstanding in the first quarter of 2008, excluding Metso shares held
by the company, was 141,506,461.
 
After cancellations and exercised options there remains a total of
100,000 year 2003A options under Metso's stock options program, all
of which are held by Metso's subsidiary, Metso Capital Ltd.
 
Metso's market capitalization, excluding Metso shares held by the
company, was EUR 4,844 million on March 31, 2008.
 
 
BUSINESSES
 
Metso Paper
 

+-------------------------------------------------------------------+
| EUR million                 |  Q1/08 |  Q1/07 | Change % |   2007 |
|-----------------------------+--------+--------+----------+--------|
| Net sales                   |    648 |    666 |      (3) |  2,925 |
|-----------------------------+--------+--------+----------+--------|
| Earnings before interest,   |        |        |          |        |
| tax and amortization        |   39.0 |   37.1 |        5 |  184.5 |
| (EBITA)                     |        |        |          |        |
|-----------------------------+--------+--------+----------+--------|
|    % of net sales           |    6.0 |    5.6 |          |    6.3 |
|-----------------------------+--------+--------+----------+--------|
| Operating profit            |   27.2 |   25.4 |        7 |  136.9 |
|-----------------------------+--------+--------+----------+--------|
|    % of net sales           |    4.2 |    3.8 |          |    4.7 |
|-----------------------------+--------+--------+----------+--------|
| Orders received             |    541 |    653 |     (17) |  3,109 |
|-----------------------------+--------+--------+----------+--------|
| Order backlog at end of     |  2,241 |  2,190 |        2 |  2,363 |
| period                      |        |        |          |        |
|-----------------------------+--------+--------+----------+--------|
| Personnel at end of period  | 11,522 | 11,469 |        0 | 11,694 |
+-------------------------------------------------------------------+

 
Metso Paper's net sales in January-March were at the level of the
comparison period, totaling EUR 648 million. Compared with the first
quarter of 2007, net sales increased in the Power business line,
stayed at the same level in the Paper and Board business line and
somewhat decreased in the other business lines. Metso Paper's
services business was at the level of the comparison period (at
comparable exchange rates growth was 5%). Services business accounted
for 27 percent of net sales (26% in Q1/07). 
 
Metso Paper's EBITA for January-March was EUR 39.0 million, i.e. 6.0
percent of net sales (EUR 37.1 million and 5.6%).
 
Metso Paper's operating profit was EUR 27.2 million, i.e. 4.2 percent
of net sales (EUR 25.4 million and 3.8%). The operating profit
includes approximately EUR 8 million in amortization of intangible
assets related to the acquisition of the Pulping and Power
businesses. The amortization of intangible assets will decrease in
the following quarters, after the acquired order backlog is amortized
in full, and is estimated to be approximately EUR 19 million in 2008
(EUR 36 million in 2007).
 
The integration of the Pulping and Power businesses is estimated to
create additional synergy benefits of about EUR 6-10 million this
year, in addition to the synergy benefits of EUR 14 million already
realized in 2007. The non-recurring integration expenses carried over
to 2008 are expected to be EUR 1-2 million. As a result of the
restructuring measures decided during 2007, the number of Metso
Paper's employees will decrease by the end of the second quarter by
approximately 700 persons. The positive impact on earnings related to
the synergy benefits and decided cost streamlining measures will be
realized primarily in the latter half of 2008.
 
The value of orders received by Metso Paper decreased by 17 percent
from the comparison period and was EUR 541 million. Orders received
by the Power and Tissue business lines increased on the comparison
period. Orders received by the Paper and Board and Fiber business
lines decreased due to delays of some large projects. The order
backlog at the end of March, EUR 2,241 million, was 5 percent lower
than the order backlog at the end of 2007.
 
 
Metso Minerals
 

EUR million                               Q1/08 Q1/07 Change %   2007
Net sales                                   583   540        8  2,607
Earnings before interest, tax and                                    
amortization (EBITA)                       84.4  68.7       23  367.1
   % of net sales                          14.5  12.7            14.1
Operating profit                           83.1  67.8       23  362.6
   % of net sales                          14.3  12.6            13.9
Orders received                             740   771      (4)  3,075
Order backlog at end of period            1,758 1,497       17  1,690
Personnel at end of period               10,762 9,545       13 10,446

 
Metso Minerals' net sales for the first quarter grew by 8 percent on
the comparison period and were EUR 583 million (at comparable
exchange rates 13%). Net sales increased across all business lines,
with the most substantial growth in the Construction business line.
Metso Minerals' services business grew by 12 percent (at comparable
exchange rates 18%), and it accounted for 46 percent of net sales
(44% in Q1/07).
 
The operating profit of Metso Minerals increased to EUR 83.1 million,
which was 14.3 percent of net sales (EUR 67.8 million and 12.6%). The
operating profit increased due to the relatively higher share of
services business. Profitability was also positively affected by the
fact that scarce capacity was allocated on the projects and products
with higher margins, especially in the Mining business line. The
operating profit of the Construction business line also developed
favorably, despite the substantial weakening of the US dollar.
 
The value of orders received by Metso Minerals was down by 4 percent
from the comparison period, totaling EUR 740 million. With comparable
exchange rates, the value of orders received was at the level of the
comparison period. The volume of new orders received increased in the
Construction business line. Orders received declined in the Mining
and Recycling business lines in the first quarter mainly due to
timing reasons. Based on the current prospect pipeline, order volumes
are estimated to be at a materially higher level in the second
quarter. The volume of orders received from emerging countries grew
by 18 percent and their contribution to Metso Minerals' new orders
rose to 49 percent (40%).
 
Geographically, growth was strongest in Asia-Pacific and South
America. The order backlog was up by 4 percent on the end of 2007 and
totaled EUR 1,758 million at the end of March.
 
 
Metso Automation
 

+-------------------------------------------------------------------+
| EUR million                    | Q1/08 | Q1/07 | Change % |  2007 |
|--------------------------------+-------+-------+----------+-------|
| Net sales                      |   158 |   146 |        8 |   698 |
|--------------------------------+-------+-------+----------+-------|
| Earnings before interest, tax  |       |       |          |       |
| and amortization (EBITA)       |  17.8 |  15.9 |       12 | 100.4 |
|--------------------------------+-------+-------+----------+-------|
|    % of net sales              |  11.3 |  10.9 |          |  14.4 |
|--------------------------------+-------+-------+----------+-------|
| Operating profit               |  17.4 |  15.5 |       12 |  98.8 |
|--------------------------------+-------+-------+----------+-------|
|    % of net sales              |  11.0 |  10.6 |          |  14.2 |
|--------------------------------+-------+-------+----------+-------|
| Orders received                |   220 |   228 |      (4) |   763 |
|--------------------------------+-------+-------+----------+-------|
| Order backlog at end of period |   387 |   356 |        9 |   332 |
|--------------------------------+-------+-------+----------+-------|
| Personnel at end of period     | 3,628 | 3,379 |        7 | 3,564 |
+-------------------------------------------------------------------+

 
Metso Automation's net sales for January-March increased by 8 percent
on the comparison period (at comparable exchange rates 15%) and were
EUR 158 million. The growth stemmed mostly from deliveries of flow
control systems for the energy industry. Deliveries of automation
systems remained at the level of the comparison period. The services
business grew by 6 percent, accounting for 21 percent of net sales
(22% in Q1/07). Without the impact of exchange rate changes, the
growth of the services business would have been around 10 percent.
 
Metso Automation's profitability remained at the level of the
comparison period. The operating profit was EUR 17.4 million, or 11.0
percent of net sales (EUR 15.5 million and 10.6%). The growth in
delivery volumes and the fact that Metso Automation has been able to
transfer the cost increases from 2007 to the end-product prices
contributed positively to the profitability.
 
The value of orders received by Metso Automation was at the level of
the comparison period, totaling EUR 220 million. The volume of orders
received from the power, oil and gas industry increased, and their
contribution to Metso Automation's new orders rose to 60 percent
(55%). Metso Automation's order backlog was 17 percent stronger than
at the end of 2007 and totaled EUR 387 million.
 
 
Valmet Automotive and Corporate Office
Valmet Automotive's net sales in January-March totaled EUR 23
million. The operating profit was EUR 1.0 million, or 4.3 percent of
net sales. During the first quarter, Valmet Automotive manufactured
an average of 113 vehicles per day. At the end of March, the number
of Valmet Automotive's personnel was 789.
 Corporate Office's operating loss during January-March was EUR 9.1
million, including EUR 2 million nonrecurring expenses related to an
insurance provision and an impairment of an available-for-sale equity
investment.
 
 
Events after the review period
 
Metso to extend Valmet-Xi'an joint venture and increase ownership to
75%
In April, Metso announced that it will increase its ownership in the
Chinese joint venture company Valmet-Xi'an Paper Machinery Co. Ltd.
from 48.3 percent to 75 percent. The agreement is subject to
regulatory approvals and is expected to be concluded by year-end. The
number of employees in Valmet-Xi'an was about 1,000 at the end of
March.
 
 
Metso to establish Metso Park in India
In April, Metso announced it was planning to invest approximately EUR
30 million to establish "Metso Park", a multi-functional industrial
facility, in India. The new facility will host both Metso's own new
operations and selected key suppliers. Metso Park will serve all
Metso businesses, but in the initial stage it will mainly cater to
the rapidly growing demand for Metso Minerals' products and services
in India. With the investment, Metso aims to enhance its logistics,
inventory control, operational quality and productivity as well as
supplier relationships. The implementation of the Metso Park concept
is subject to final regulatory approvals.
 
Operations at Metso Park are expected to commence in the second half
of 2009, and the number of employees at the facility is expected to
rise to 700 by 2012. 
 
 
Decisions of the Annual General Meeting
The Annual General Meeting of Metso Corporation on April 2, 2008
approved the accounts for 2007 as presented by the Board of Directors
and decided to discharge the members of the Board of Directors and
the President and CEO of Metso Corporation from liability for the
financial year 2007. In addition, the Annual General Meeting approved
the proposals of the Board of Directors to authorize the Board to
decide upon repurchasing the Corporation's own shares, arranging a
share issue, granting special rights and decreasing the share premium
reserve and the legal reserve.
 
The Annual General Meeting decided to establish a Nomination
Committee of the Annual General Meeting to prepare proposals for the
next Annual General Meeting in respect of the composition of the
Board of Directors and director remuneration. The Nomination
Committee consists of the representatives appointed by the four
biggest shareholders and the Chairman of Metso's Board as an expert
member.
 
Matti Kavetvuo was re-elected as the Chairman of the Board and Jaakko
Rauramo was re-elected as the Vice Chairman. Jukka Viinanen and Arto
Honkaniemi were elected as new members of the Board. Board members
re-elected were Maija-Liisa Friman, Christer Gardell and Yrjö Neuvo.
The term of office of Board members lasts until the end of the next
Annual General Meeting.
 
The Annual General Meeting decided that the annual remunerations for
Board members be EUR 92,000 for the Chairman, EUR 56,000 for the Vice
Chairman and EUR 45,000 for the members and that the meeting fee
including committee meetings be EUR 600 per meeting.
 
The auditing company PricewaterhouseCoopers Oy, Authorized Public
Accountants, was re-elected as the Corporation's Auditor until the
end of the next Annual General Meeting.
 
The Annual General Meeting decided that a dividend of EUR 3.00 per
share be paid for the financial year which ended on December 31,
2007. The dividend comprises an ordinary dividend of EUR 1.65 per
share and an extra dividend of EUR 1.35 per share. The dividend was
paid on April 15, 2008.
 
 
Members of Metso's Board Committees
Metso Corporation's Board of Directors elected from its midst the
members of the Audit Committee and Compensation Committee at its
assembly meeting. The Board's Audit Committee consists of Maija-Liisa
Friman (Chairman), Arto Honkaniemi and Jukka Viinanen. The Board's
Compensation Committee consists of Matti Kavetvuo (Chairman),
Christer Gardell, Yrjö Neuvo and Jaakko Rauramo.
 
 
Credit ratings
In April, Standard & Poor's affirmed the BBB long-term credit ratings
for Metso and changed the outlook from stable to positive. At the
same time, the senior unsecured debt ratings were raised from BBB- to
BBB. The short-term A-2 ratings were affirmed.
 
In October 2007, Moody's Investor Service maintained its long-term
rating for Metso at Baa2 and estimated the rating outlook to be
stable.
 
 
Metso to supply fine paper machine to Fujian Nanping Paper in China
Metso Paper will supply a fine paper machine to Fujian Nanping Paper
Co., Ltd. in China. The start-up of the production is scheduled for
the second half of 2009. The value of the order is around EUR 50
million. The order is included in the second quarter 2008 orders
received.
 
 
Disclosures of changes in holdings
UBS AG announced that on April 18, 2008 the group holding in Metso
shares fell below the 5 percent threshold. The holding amounted to
7,072,425 shares, which corresponds to 4.99 percent of the paid up
share capital and votes in Metso Corporation.
 
On April 15, 2008 UBS AG announced that the funds they managed held
7,274,140 Metso shares corresponding to 5.13 percent of the paid up
share capital and votes in Metso Corporation.
 
Short-term risks of business operations
Increased uncertainty about the global economy and the weakening of
the financial markets may have an impact on the demand for Metso's
products and services. In particular, uncertainty can affect the
timing and implementation of larger customer projects.
 
China is the primary market for new paper and board machines and thus
any substantial changes in demand on the Chinese market may have a
material adverse effect on Metso Paper's profitability. Metso seeks
to mitigate these risks by developing its global services business
and increasing the flexibility of its delivery chain.
 
The delivery times for Metso's products have been lengthened because
of strong growth in order intake and backlog. Therefore, there is a
risk that material and other costs may rise significantly during the
delivery time and have a greater impact on Metso's profitability than
currently anticipated. In the current favorable demand situation, the
scarcity of certain components and subcontractor resources,
particularly at Metso Minerals and Metso Automation, may also
lengthen delivery times. Long lead times may also impact Metso's
capability to win orders.
 
Metso strives to manage and limit the potential adverse effects of
these and other risks. However, if the risks materialize, they could
have a significant adverse effect on Metso's business, financial
position and results, or on the price of the Metso share.
 
 
Short-term outlook
The market situation for Metso's products and services is expected to
continue favorable in the mining, construction and energy customer
segments and satisfactory in the pulp and paper segment. However,
uncertainty about the development of the global economy may have an
impact on decision schedules of certain new customer projects and on
the demand in certain geographical areas.
 
No significant changes are expected in Metso Paper's market situation
in 2008. The demand for new paper, board and fiber lines is expected
to remain at the current level, even though the timing of projects
may, in some cases, be affected by factors relating to our customers'
financing and permit issues. For tissue lines the demand is estimated
to be good. Paper, board and tissue consumption growth in China is
expected to continue driving investments in new production capacity.
In Europe and North America, the demand is expected to focus mainly
on machine rebuilds and the services business. The demand for power
plants utilizing renewable energy sources is expected to continue at
an excellent level in Metso's main market areas, Europe and North
America. Metso Paper aims to substantially grow its services
business, and the demand for services is expected to remain
satisfactory.
 
Metso Minerals' favorable market situation is expected to continue in
2008. As a result of the continuing rapid growth of emerging
economies, it is estimated that the demand and prices for metals and
minerals will remain high and that the investment activity of Metso's
mining customers will remain excellent. In construction, the demand
for Metso Minerals' equipment relating to aggregates production is
expected to continue to be good. Construction demand is sustained by
road network and other transportation infrastructure development
projects underway around the world. The demand for metals recycling
equipment is expected to be at a good level. Demand for the services
business is estimated to remain excellent.
 
The demand for Metso Automation's products is expected to be
satisfactory in the pulp and paper industry in 2008. In the power,
oil and gas industry, the demand for process automation systems is
expected to be good and the demand for flow control systems
excellent. The increasing consumption of energy and high oil prices
will boost energy industry investments.
 
In 2008 Metso targets to achieve, at comparable exchange rates, net
sales growth of about 10 percent compared to 2007, and to reach an
operating profit margin level of about 10 percent.
 
The profit performance estimates are based on Metso's current market
outlook, order backlog and business scope.
 
 
Metso's financial reporting in 2008
Interim review for January-June will be published on July 24, 2008
and Interim review for January-September will be published on October
28, 2008.
 
Helsinki, April 24, 2008
 
Metso Corporation's Board of Directors
 
CONSOLIDATED STATEMENT OF INCOME                     The Interim
Review is unaudited
 

EUR million                               1-3/2008 1-3/2007 1-12/2007
Net sales                                    1,400    1,366     6,250
Cost of goods sold                         (1,038)  (1,026)   (4,702)
Gross profit                                   362      340     1,548
Selling, general and administrative
expenses                                     (249)    (238)     (972)
Other operating income and expenses,
net                                              6        6         1
Share in profits of associated
companies                                        1        0         3
Operating profit                               120      108       580
% of net sales                                8.6%     7.9%      9.3%
Financial income and expenses, net             (9)      (8)      (33)
Profit before taxes                            111      100       547
Income taxes                                  (33)     (30)     (163)
Profit                                          78       70       384
Profit attributable to minority
interests                                        0        0         3
Profit attributable to equity
shareholders                                    78       70       381
Profit                                          78       70       384
Earnings per share, EUR
Basic                                         0.55     0.50      2.69
Diluted                                       0.55     0.50      2.69

 

CONSOLIDATED STATEMENT OF RECOGNIZED
INCOME AND EXPENSE
EUR million                               1-3/2008 1-3/2007 1-12/2007
Cash flow hedges, net of tax                     4      (2)       (2)
Available-for-sale equity investments,
net of tax                                       -        -        22
Currency translation on subsidiary net
investments                                   (65)        8      (29)
Net investment hedge gains (losses),
net of tax                                      13      (8)       (2)
Defined benefit plan actuarial gains
(losses), net of tax                             -        -       (1)
Other                                            0        0         2
Net income (expense) recognized
directly in equity                            (48)      (2)      (10)
Profit                                          78       70       384
Total recognized income (expense) for
the period                                      30       68       374
Total recognized income (expense)
attributable to minority interests               0        0         3
Total recognized income (expense)
attributable to equity shareholders             30       68       371
Total recognized income (expense) for
the period                                      30       68       374

 
CONSOLIDATED BALANCE SHEET

 ASSETS
                                              Mar 31, Mar 31, Dec 31,
 EUR million                                     2008    2007    2007
 Non-current assets
 Intangible assets
 Goodwill                                         764     772     772
 Other intangible assets                          241     265     251
                                                1,005   1,037   1,023
 Property, plant and equipment
 Land and water areas                              54      54      54
 Buildings and structures                         211     217     216
 Machinery and equipment                          309     312     315
 Assets under construction                         62      29      49
                                                  636     612     634
 Financial and other assets
 Investments in associated companies               19      19      19
 Available-for-sale equity investments             44      15      45
 Loan and other interest bearing receivables       11       6       5
 Available-for-sale financial investments           5       5       5
 Deferred tax asset                               126     228     144
 Other non-current assets                          15      29      22
                                                  220     302     240
 Total non-current assets                       1,861   1,951   1,897
 Current assets
 Inventories                                    1,510   1,276   1,410
 Receivables
 Trade and other receivables                    1,394   1,074   1,274
 Cost and earnings of projects under
 construction
 in excess of advance billings                    357     302     374
 Loan and other interest bearing receivables        2       2       2
 Available-for-sale financial assets                -      10       0
 Tax receivables                                   23      20      30
                                                1,776   1,408   1,680
 Cash and cash equivalents                        389     371     267
 Total current assets                           3,675   3,055   3,357
 Assets held for sale                               -       -       -
 TOTAL ASSETS                                   5,536   5,006   5,254

 
 

SHAREHOLDERS' EQUITY AND
LIABILITIES
EUR million                    Mar 31, 2008 Mar 31, 2007 Dec 31, 2007
Equity
Share capital                           241          241          241
Share premium reserve                    77           77           77
Cumulative translation
differences                           (128)         (45)         (76)
Fair value and other reserves           465          436          456
Retained earnings                       989          803          910
Equity attributable to
shareholders                          1,644        1,512        1,608
Minority interests                        7            6            7
                                                                     
Total equity                          1,651        1,518        1,615
Liabilities
Non-current liabilities
Long-term debt                          860          590          700
Post employment benefit
obligations                             168          193          177
Deferred tax liability                   37           54           41
Provisions                               32           50           37
Other long-term liabilities               2            2            2
Total non-current liabilities         1,099          889          957
Current liabilities
Current portion of long-term
debt                                      9          107           22
Short-term debt                         183           50           97
Trade and other payables              1,265        1,302        1,307
Provisions                              224          203          222
Advances received                       653          653          637
Billings in excess of cost and
earnings of projects
       construction                     401          230          331
Tax liabilities                          51           54           66
Total current liabilities             2,786        2,599        2,682
                                                                     
Liabilities held for sale                 -            -            -
                                                                     
Total liabilities                     3,885        3,488        3,639
                                                                     
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES                           5,536        5,006        5,254
NET INTEREST BEARING
LIABILITIES
Long-term interest bearing
debt                                    860          590          700
Short-term interest bearing
debt                                    192          157          119
Cash and cash equivalents             (389)        (371)        (267)
Other interest bearing assets          (18)         (23)         (12)
Total                                   645          353          540

 

 CONDENSED CONSOLIDATED CASH FLOW
 STATEMENT
 EUR million                              1-3/2008 1-3/2007 1-12/2007
 Cash flows from operating activities:
 Profit                                         78       70       384
 Adjustments to reconcile profit
 to net cash provided by operating
 activities
 Depreciation                                   37       36       148
 Interests and dividend income                   9        6        32
 Income taxes                                   33       30       163
 Other                                           0        4       (4)
 Change in net working capital               (187)        1     (286)
 Cash flows from operations                   (30)      147       437
 Interest paid and dividends received          (4)        0      (29)
 Income taxes paid                            (35)     (24)     (114)
 Net cash provided by (used in)
 operating activities                         (69)      123       294
 Cash flows from investing activities:
 Capital expenditures on fixed assets         (42)     (32)     (159)
 Proceeds from sale of fixed assets              1        6        16
 Business acquisitions, net of cash
 acquired                                        -        -      (55)
 Proceeds from sale of businesses, net
 of cash sold                                    2        2         9
 (Investments in) proceeds from sale of
 financial assets                                7        3        13
 Other                                         (6)        0         -
 Net cash provided by (used in)
 investing activities                         (38)     (21)     (176)
 Cash flows from financing activities:                       
 Share options exercised                         -        0         -
 Dividends paid                                  -        -     (212)
 Net funding                                   240     (85)       (5)
 Other                                           2        -        15
 Net cash provided by (used in)
 financing activities                          242     (85)     (202)
 Net increase (decrease) in cash and
 cash equivalents                              135       17      (84)
 Effect from changes in exchange rates        (13)        1       (2)
 Cash and cash equivalents at beginning
 of period                                     267      353       353
 Cash and cash equivalents at end of
 period                                        389      371       267
 Free cash flow
 EUR million                              1-3/2008 1-3/2007 1-12/2007
 Net cash provided by operating
 activities                                   (69)      123       294
 Capital expenditures on maintenance
 investments                                  (31)     (23)     (112)
 Proceeds from sale of fixed assets              1        6        16
 Free cash flow                               (99)      106       198

 
 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'                         
EQUITY
                                                                           
                                   Cumu-   Fair         Equity
                           Share  lative  value         attri-
                            pre-  trans-    and    Re- butable    Mi-
                            mium  lation  other tained      to nority Total
                     Share   re- adjust-    re-  earn-  share- inter-    e-
EUR million        capital serve   ments serves   ings holders   ests quity
Balance at Jan 1,
2007                   241    77    (45)    432    739   1,444      6 1,450
Cash flow hedges,
net of tax               -     -       -    (2)      -     (2)      -   (2)
Available-for-sale
equity
investments, net
of tax                   -     -       -      -      -       -      -     -
Currency
translation on
subsidiary net
investments              -     -       8      -      -       8      -     8
Net investment
hedge gains
(losses), net of
tax                      -     -     (8)      -      -     (8)      -   (8)
Defined benefit
plan actuarial
gains (losses),
net of tax               -     -       -      -      -       -      -     -
Other                    -     -       -      -      -       -      -     -
Net income
(expense)
recognized
directly in equity       -     -       -    (2)      -     (2)      -   (2)
                                                                           
Net profit for the
period                   -     -       -      -     70      70      0    70
Total recognized
income (expense)
for the period           -     -       -    (2)     70      68      0    68
                                                                           
Dividends                -     -       -      -      -       -      -     -
Share options
exercised                0     0       -      -      -       -      -     -
Redemption of own
shares                   -     -       -      -      -       -      -     -
Share-based
payments, net of
tax                      -     -       -      0      -       0      -     0
Other                    -     -       -      6    (6)       -      -     -
Balance at Mar 31,
2007                   241    77    (45)    436    803   1,512      6 1,518
                                                                           
Balance at Jan 1,
2008                   241    77    (76)    456    910   1,608      7 1,615
Cash flow hedges,
net of tax               -     -       -      4      -       4      -     4
Available-for-sale
equity
investments, net
of tax                   -     -       -      0      -       0      -     0
Currency
translation on
subsidiary net
investments              -     -    (65)      -      -    (65)      -  (65)
Net investment
hedge gains
(losses), net of
tax                      -     -      13      -      -      13      -    13
Defined benefit
plan actuarial
gains (losses),
net of tax               -     -       -      -      -       -      -     -
Other                   -     -       -       -      -       -      -     -
Net income
(expense)
recognized
directly in equity       -     -    (52)      4      -    (48)      -  (48)
                                                                           
Net profit for the
period                   -     -       -      -     78      78      -    78
Total recognized
income (expense)
for the period           -     -    (52)      4     78      30      -    30
                                                                           
Dividends                -     -       -      -      -       -      -     -
Share options
exercised                -     -       -      -      -       -      -     -
Redemption of own
shares                   -     -       -      -      -       -      -     -
Share-based
payments, net of
tax                      -     -       -      3      -       3      -     3
Other                    -     -       -      2      1       3      -     3
Balance at Mar 31,
2008                   241    77   (128)    465    989   1,644      7 1,651

 

ASSETS PLEDGED AND CONTINGENT
LIABILITIES
                                                      Mar 31, Dec 31,
EUR million                             Mar 31, 2008     2007    2007
Mortgages on corporate debt                        9       14       9
Other pledges and contingencies
Mortgages                                          1        2       2
Pledged assets                                     0        0       0
Guarantees on behalf of
associated company obligations                     -        -       -
Other guarantees                                   4        9      11
Repurchase and other
commitments                                        6        9       8
Lease commitments                                131      155     142
NOTIONAL AMOUNTS OF DERIVATIVE
FINANCIAL INSTRUMENTS
                                                      Mar 31, Dec 31,
EUR million                             Mar 31, 2008     2007    2007
Forward exchange rate contracts                1,600    1,459   1,387
Interest rate and currency
swaps                                              0        1       0
Currency swaps                                     -        1       -
Interest rate swaps                              143      143     143
Option agreements
Bought                                            17       11       -
Sold                                              17       12       -
The notional amount of electricity forwards was 434 GWh as of
Mar 31, 2008 and 463 GWh as of Mar 31, 2007.
The notional amount of nickel forwards to hedge stainless steel
prices was 390 tons as of Mar 31, 2008. In the comparison period
Metso had not entered into nickel forwards.
The notional amounts indicate the volumes in the use of
derivatives, but do not indicate the exposure to risk.

 

 KEY RATIOS
                                          1-3/2008 1-3/2007 1-12/2007
 Earnings per share, EUR                      0.55     0.50      2.69
 Equity/share at end of period, EUR          11.61    10.69     11.36
 Return on equity (ROE), % (annualized)       20.1     20.3      25.4
 Return on capital employed (ROCE), %
 (annualized)                                 20.9     20.9      26.1
 Equity to assets ratio at end of period,
 %                                            36.8     36.8      37.7
 Gearing at end of period, %                  39.1     23.3      33.4
 Free cash flow                               (99)      106       198
 Free cash flow/share                       (0.70)     0.75      1.40
 Gross capital expenditure (excl.
 business acquisitions)                         42       32       159
 Business acquisitions, net of cash
 acquired                                        -        -        55
 Depreciation and amortization                  37       36       148
 Number of outstanding shares at end of
 period (thousands)                        141,625  141,494   141,487
 Average number of shares (thousands)      141,506  141,364   141,460
 Average number of diluted shares
 (thousands)                               141,506  141,364   141,460

 

EXCHANGE RATES
USED                                                                 
                                                                     
                                                                     
                                              Mar 31, Mar 31, Dec 31,
                  1-3/2008 1-3/2007 1-12/2007    2008    2007    2007
USD (US dollar)     1.5283   1.3161    1.3797  1.5812  1.3318  1.4721
    (Swedish
SEK krona)          9.4214   9.2248    9.2647  9.3970  9.3462  9.4415
    (Pound
GBP sterling)       0.7696   0.6722    0.6873  0.7958  0.6798  0.7334
    (Canadian
CAD dollar)         1.5322   1.5370    1.4663  1.6226  1.5366  1.4449
    (Brazilian
BRL real)           2.6310   2.7699    2.6623  2.7554  2.7195  2.5949

 

 BUSINESS AREA
 INFORMATION
 NET SALES
 EUR million                1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                     648      666         2,907     2,925
 Metso Minerals                  583      540         2,650     2,607
 Metso Automation                158      146           710       698
 Valmet Automotive                23       28            80        85
 Corporate office and
 other                             -        -             -         -
 Corporate office and
 others total                     23       28            80        85
 Intra Metso net sales          (12)     (14)          (63)      (65)
 Metso total                   1,400    1,366         6,284     6,250
 OTHER OPERATING INCOME
 (+)  AND EXPENSES (-),
 NET
 EUR million                1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                   (0.7)      1.9        (14.1)    (11.5)
 Metso Minerals                  6.1      1.2          12.6       7.7
 Metso Automation                0.8      0.5           2.7       2.4
 Valmet Automotive               0.0      0.0           0.0       0.0
 Corporate office and
 other                         (0.7)      2.2         (0.4)       2.5
 Corporate office and
 others total                  (0.7)      2.2         (0.4)       2.5
 Metso total                     5.5      5.8           0.8       1.1
 SHARE IN PROFITS OF
 ASSOCIATED COMPANIES
 EUR million                1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                     0.4      0.4           1.1       1.1
 Metso Minerals                  0.0      0.0           0.3       0.3
 Metso Automation                0.2      0.0           1.6       1.4
 Valmet Automotive                 -        -             -         -
 Corporate office and
 other                             -        -             -         -
 Corporate office and
 others total                      -        -             -         -
 Metso total                     0.6      0.4           3.0       2.8
 OPERATING PROFIT
 (LOSS)
 EUR million                1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                    27.2     25.4         138.7     136.9
 Metso Minerals                 83.1     67.8         377.9     362.6
 Metso Automation               17.4     15.5         100.7      98.8
 Valmet Automotive               1.0      4.4           4.6       8.0
 Corporate office and
 other                         (9.1)    (4.7)        (30.9)    (26.5)
 Corporate office and
 others total                  (8.1)    (0.3)        (26.3)    (18.5)
 Metso total                   119.6    108.4         591.0     579.8
 OPERATING PROFIT
 (LOSS), % OF NET
 SALES
 %                          1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                     4.2      3.8           4.8       4.7
 Metso Minerals                 14.3     12.6          14.3      13.9
 Metso Automation               11.0     10.6          14.2      14.2
 Valmet Automotive               4.3     15.7           5.8       9.4
 Corporate office and
 other                           n/a      n/a           n/a       n/a
 Corporate office and
 others total                    n/a      n/a           n/a       n/a
 Metso total                     8.5      7.9           9.4       9.3
 EBITA
 EUR million                1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                    39.0     37.1         186.4     184.5
 Metso Minerals                 84.4     68.7         382.8     367.1
 Metso Automation               17.8     15.9         102.3     100.4
 Valmet Automotive               1.0      4.4           4.7       8.1
 Corporate office and
 other                         (8.5)    (4.2)        (29.0)    (24.7)
 Corporate office and
 others total                  (7.5)      0.2        (24.3)    (16.6)
 Metso total                   133.7    121.9         647.2     635.4
 EBITA, % OF NET SALES
 %                          1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                     6.0      5.6           6.4       6.3
 Metso Minerals                 14.5     12.7          14.4      14.1
 Metso Automation               11.3     10.9          14.4      14.4
 Valmet Automotive               4.3     15.7           5.9       9.5
 Corporate office and
 other                           n/a      n/a           n/a       n/a
 Corporate office and
 others total                    n/a      n/a           n/a       n/a
 Metso total                     9.6      8.9          10.3      10.2
 ORDERS RECEIVED
 EUR million                1-3/2008 1-3/2007 4/2007-3/2008 1-12/2007
 Metso Paper                     541      653         2,997     3,109
 Metso Minerals                  740      771         3,044     3,075
 Metso Automation                220      228           755       763
 Valmet Automotive                23       28            80        85
 Corporate office and
 other                             -        -             -         -
 Corporate office and
 others total                     23       28            80        85
 Intra Metso orders
 received                       (15)     (16)          (66)      (67)
 Metso total                   1,509    1,664         6,810     6,965

 
 

 QUARTERLY INFORMATION
 NET SALES
 EUR million           1-3/2007 4-6/2007 7-9/2007 10-12/2007 1-3/2008
 Metso Paper                666      708      642        909      648
 Metso Minerals             540      648      649        770      583
 Metso Automation           146      174      165        213      158
   Valmet Automotive         28       19       17         21       23
   Corporate office
 and other                    -        -        -          -        -
 Corporate office and
 others total                28       19       17         21       23
 Intra Metso net sales     (14)     (13)     (21)       (17)     (12)
 Metso total              1,366    1,536    1,452      1,896    1,400
 OTHER OPERATING
 INCOME (+)  AND
 EXPENSES (-), NET
 EUR million           1-3/2007 4-6/2007 7-9/2007 10-12/2007 1-3/2008
 Metso Paper                1.9    (3.3)      4.2     (14.3)    (0.7)
 Metso Minerals             1.2      0.2      2.0        4.3      6.1
 Metso Automation           0.5    (0.4)      0.2        2.1      0.8
   Valmet Automotive        0.0      0.0      0.0        0.0      0.0
   Corporate office
 and other                  2.2      0.4    (0.1)        0.0    (0.7)
 Corporate office and
 others total               2.2      0.4    (0.1)        0.0    (0.7)
 Metso total                5.8    (3.1)      6.3      (7.9)      5.5
 OPERATING PROFIT
 (LOSS)
 EUR million           1-3/2007 4-6/2007 7-9/2007 10-12/2007 1-3/2008
 Metso Paper               25.4     35.7     36.2       39.6     27.2
 Metso Minerals            67.8     95.7     85.2      113.9     83.1
 Metso Automation          15.5     23.3     25.8       34.2     17.4
   Valmet Automotive        4.4      1.0      1.7        0.9      1.0
   Corporate office
 and other                (4.7)    (7.4)    (5.5)      (8.9)    (9.1)
 Corporate office and
 others total             (0.3)    (6.4)    (3.8)      (8.0)    (8.1)
 Metso total              108.4    148.3    143.4      179.7    119.6
 EBITA
 EUR million           1-3/2007 4-6/2007 7-9/2007 10-12/2007 1-3/2008
 Metso Paper               37.1     47.7     48.2       51.5     39.0
 Metso Minerals            68.7     96.9     86.3      115.2     84.4
 Metso Automation          15.9     23.6     26.2       34.7     17.8
   Valmet Automotive        4.4      1.0      1.7        1.0      1.0
   Corporate office
 and other                (4.2)    (6.9)    (5.1)      (8.5)    (8.5)
 Corporate office and
 others total               0.2    (5.9)    (3.4)      (7.5)    (7.5)
 Metso total              121.9    162.3    157.3      193.9    133.7
 CAPITAL EMPLOYED
                        Mar 31, June 30,  Sep 30,    Dec 31,  Mar 31,
 EUR million               2007     2007     2007       2007     2008
 Metso Paper                558      637      593        674      772
 Metso Minerals             965    1,030    1,045      1,106    1,166
 Metso Automation           155      189      201        214      210
   Valmet Automotive         23       23       29         21       22
   Corporate office
 and other                  564      419      444        419      533
 Corporate office and
 others total               587      442      473        440      555
 Metso total              2,265    2,298    2,312      2,434    2,703
 ORDERS RECEIVED
 EUR million           1-3/2007 4-6/2007 7-9/2007 10-12/2007 1-3/2008
 Metso Paper                653    1,103      515        838      541
 Metso Minerals             771      798      745        761      740
 Metso Automation           228      185      185        165      220
   Valmet Automotive         28       19       17         21       23
   Corporate office
 and other                    -        -        -          -        -
 Corporate office and
 others total                28       19       17         21       23
 Intra Metso orders
 received                  (16)     (15)     (22)       (14)     (15)
 Metso total              1,664    2,090    1,440      1,771    1,509
 ORDER BACKLOG
                        Mar 31, June 30,  Sep 30,    Dec 31,  Mar 31,
 EUR million               2007     2007     2007       2007     2008
 Metso Paper              2,190    2,584    2,455      2,363    2,241
 Metso Minerals           1,497    1,673    1,728      1,690    1,758
 Metso Automation           356      365      382        332      387
   Valmet Automotive          -        -        -          -        -
   Corporate office
 and other                    -        -        -          -        -
 Corporate office and
 others total                 -        -        -          -        -
 Intra Metso order
 backlog                   (44)     (48)     (46)       (44)     (46)
 Metso total              3,999    4,574    4,519      4,341    4,340

 

                             Mar 31, June 30, Sep 30, Dec 31, Mar 31,
 PERSONNEL                      2007     2007    2007    2007    2008
 Metso Paper                  11,469   11,954  11,774  11,694  11,522
 Metso Minerals                9,545    9,967  10,194  10,446  10,762
 Metso Automation              3,379    3,564   3,523   3,564   3,628
   Valmet Automotive             899      782     777     789     789
   Corporate office and
 other                           324      342     335     344     361
 Corporate office and others
 total                         1,223    1,124   1,112   1,133   1,150
 Metso total                  25,616   26,609  26,603  26,837  27,062

 
 
 
Notes to the Interim Review
 
This Interim Review has been prepared in accordance with IAS 34
'Interim Financial Reporting'. The same accounting policies have been
applied as in the annual financial statements.
 
 
New accounting standards
 
IFRS 8
In November 2006, IASB issued IFRS 8 'Operating Segments', which
requires the company to adopt the 'management approach' to reporting
on the financial performance of its operating segments. Thus, the
information to be reported would be what management uses internally
for evaluating segment performance. Metso is currently evaluating the
effects on its financial statements. However, it does not expect the
standard to affect its current segment structure.
 
IFRS 8 is effective for annual financial statements for periods
beginning on or after January 1, 2009. Earlier adoption is permitted.
 
Metso will apply the standard for the financial year beginning on
January 1, 2009.
 
IAS 1 (Revised)
IASB has published IAS 1 (Revised) 'Presentation of Financial
Statements'. The revised standard is aimed at improving users'
ability to analyze and compare the information given in financial
statements by separating changes in the equity of an entity arising
from transactions with owners from other changes in equity.
 
IAS 1 (Revised) is effective for annual financial statements for
periods beginning on or after January 1, 2009. The standard is still
subject to endorsement by the European Union.
 
Provided the standard is endorsed by the European Union before the
end of 2008, Metso will apply the standard for the financial year
beginning on January 1, 2009.
 
IFRS 3 (Revised)
IASB has published IFRS 3 (Revised), 'Business combinations'. The
revised standard continues to apply the acquisition method to
business combinations, with some significant changes such as
expensing of transaction costs. In addition, all payments to purchase
a business are to be recorded at fair value at the acquisition date,
with some contingent payments subsequently remeasured at fair value
through income. Goodwill may be calculated based on the parent's
share of net assets or it may include goodwill related to the
minority interest. Metso is currently evaluating the effects on its
financial statements.
 
IFRS 3 (Revised) is effective for annual financial statements for
periods beginning on or after July 1, 2009. The standard is still
subject to endorsement by the European Union.
 
Provided the revision receives endorsement by the European Union,
Metso will apply the standard for the financial year beginning on
January 1, 2010.
 
IAS 23 (Amended)
IASB has published Amendment to IAS 23 'Borrowing Costs', which
requires an entity to capitalize borrowing costs directly
attributable to the acquisition, construction or production of a
qualifying asset as part of the cost of that asset. A qualifying
asset can be intended for its own use (self-constructed asset) or for
sale. The option of immediately expensing these borrowing costs will
be removed. The amendment does not change the accounting policy
applied by the group to self-constructed assets and, therefore,
should not have any material impact on the group's financial
statements. However, the implementation of the amendment to
qualifying assets for sale is under review and its effects are being
evaluated by Metso.
 
The amendment is effective for annual periods beginning on or after
January 1, 2009. The standard is still subject to endorsement by the
European Union.
 
Provided the amendment receives endorsement by the European Union,
Metso will apply the standard for the financial year beginning on
January 1, 2009.
 
IAS 27 (Revised)
IASB has published IAS 27 (Revised), 'Consolidated and separate
financial statements'. The revised standard requires the effects of
all transactions with non-controlling interests to be recorded in
equity if there is no change in control. They will no longer result
in goodwill or gains and losses. The standard also specifies the
accounting when control is lost. Any remaining interest in the entity
is remeasured to fair value and a gain or loss is expensed. Metso is
currently evaluating the effects on its financial statements.
 
IAS 27 (Revised) is effective for annual financial statements for
periods beginning on or after July 1, 2009. The standard is still
subject to endorsement by the European Union.
 
Provided the revision receives endorsement by the European Union,
Metso will apply the standard for the financial year beginning on
January 1, 2010.
 
IFRS 2 (Amended)
IASB published in January 2008 an amendment to IFRS 2 'Share-based
payments' clarifying the accounting of vesting conditions and
cancellations. Vesting conditions are limited to service and
performance conditions, other features are not vesting conditions and
only impact the grant date fair value. Cancellations, whether by the
Company or by other parties, receive similar accounting treatment.
Metso is currently evaluating the effects of the amendment to its
financial statements.
 
The amendment is effective for annual financial statements for
periods beginning on or after January 1, 2009. The standard is still
subject to endorsement by the European Union.
 
Pending on the endorsement by the European Union, Metso will apply
the standard for the financial year beginning on January 1, 2009.
 
 
Subpoena from the United States Department of Justice requiring Metso
to produce documents
In November 2006, Metso Minerals Industries, Inc., which is Metso
Minerals' U.S. subsidiary, received a subpoena from the Antitrust
Division of the United States Department of Justice calling for Metso
Minerals Industries, Inc. to produce certain documents. The subpoena
relates to an investigation of potential antitrust violations in the
rock crushing and screening equipment industry. Metso is cooperating
fully with the Department of Justice.
 
Shares traded on the OMX Nordic Exchange in Helsinki
The number of Metso Corporation shares traded on the OMX Nordic
Exchange Helsinki in January-March was 78,057,966 shares, equivalent
to a turnover of EUR 2,571 million. The share price on March 31, 2008
was EUR 34.20, and the average trading price for the year was EUR
32.94. The highest quotation during the review period was EUR 38.56
and the lowest EUR 25.45. 
 
The trading of Metso ADSs (American Depositary Shares) on the New
York Stock Exchange was terminated on September 14, 2007, but the
ADSs can still be traded on the OTC markets. On March 31, 2008, the
closing price of an ADS was USD 54.45. Each ADS represents one share.
 
 
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.
 
Metso is a global engineering and technology corporation with 2007
net sales of over EUR 6 billion. Its almost 27,000 employees in
approximately 50 countries serve customers in the pulp and paper
industry, rock and minerals processing, the energy industry and
selected other industries.
www.metso.com
 
For further information, please contact:
 
Jorma Eloranta, President and CEO, Metso Corporation, tel. +358
(0)204 84 3000
Olli Vaartimo, Executive Vice President and CFO, Metso Corporation,
tel. +358 (0)204 84 3010
Johanna Sintonen, Vice President, Investor Relations, Metso
Corporation, tel. +358 (0)204 84 3253
 
Metso Corporation
 
 
 
Olli Vaartimo                                         
Executive Vice President and CFO
 
 
 
Kati Renvall
Vice President, Corporate Communications
 
 
 
distribution:
OMX Nordic Exchange in Helsinki
Media
www.metso.com