Metso Corporation Stock Exchange Release February 7, 2007 at 12.00 p.m.
METSO CORPORATION'S FINANCIAL STATEMENTS RELEASE 2006
A RECORD YEAR FOR METSO; STRONG VOLUME GROWTH ESTIMATED TO
CONTINUE IN 2007
Highlights of 2006
- In 2006, new orders worth EUR 5,705 million were received (EUR
4,745 million in 2005).
- At years end, the order backlog was EUR 3,737 million (EUR
2,350 million at December 31, 2005). This includes EUR 727 million
order backlog of the Pulping and Power businesses acquired from
Aker Kvaerner. The acquired businesses were consolidated into
Metso's balance sheet on December 31, 2006.
- Net sales increased by 17 percent and totaled EUR 4,955 million
(EUR 4,221 million).
- Operating profit was EUR 457.2 million, i.e. 9.2 percent of net
sales (EUR 335.0 million and 7.9%).
- Nonrecurring deferred tax assets of EUR 87 million were
recognized through the income statement.
- Earnings per share from continuing operations were EUR 2.89 (EUR
1.57).
- Free cash flow was EUR 327 million (EUR 106 million).
- Return on capital employed (ROCE) was 22.2 percent (18.8%).
- The Board proposes a dividend of EUR 1.50 per share.
Highlights of the last quarter of 2006
- New orders worth EUR 1,557 million were received in October-
December (EUR 1,537 million in Q4/05).
- Net sales increased by 23 percent and totaled EUR 1,538 million
(EUR 1,254 million in Q4/05).
- Operating profit was EUR 125.0 million, i.e. 8.1 percent of net
sales (EUR 101.5 million and 8.1% in Q4/05).
- In the final quarter, a nonrecurring deferred tax asset of EUR
30 million was recognized in the income statement.
- Earnings per share from continuing operations were EUR 0.86 (EUR
0.47 in Q4/05).
Year 2006 was a year of consistent profitable growth for Metso.
The favorable market situation prompted brisk order intake
throughout our businesses. Our net sales clearly exceeded our over
10 percent growth target for a second year in a row, and our
operating profit improved substantially, says Jorma Eloranta,
President and CEO of Metso Corporation.
Also the outlook for 2007 is positive: We have started the year
with a very solid order backlog out of which over 80 percent is
scheduled to be delivered this year. Furthermore, we expect the
overall favorable demand for our products to continue, which give
us confidence that our net sales growth will remain strong,
Eloranta notes.
Of course, we still see opportunities to improve our performance.
Aftermarket development, continuous improvement of productivity
and further cutting of non-quality costs remain on our agenda as
means to further boost our profitability. In addition, we will be
investing in supply chain management and in securing our delivery
capability to respond to the growth especially in Metso Minerals
and Metso Automation. We continue to strengthen our presence in
the emerging markets to secure Metso's longer-term development.
According to Eloranta, the integration of Pulping and Power
businesses, acquired from Aker Kvaerner in the end of 2006, is
proceeding according to plans. The acquisition will significantly
improve our capabilities as a full-scope supplier to the pulp and
paper industries. Furthermore, we see very promising business
opportunities in the power industry and biomass technology.
Key figures
EUR million Q4/06 Q4/05 Change 2006 2005 Change
% %
Net sales 1,538 1,254 23 4,955 4,221 17
Operating profit 125.0 101.5 23 457.2 335.0 36
% of net sales 8.1 8.1 9.2 7.9
Earnings per share 0.86 0.47 83 2.89 1.57 84
from continuing
operations, basic, EUR
Earnings per share 0.86 0.47 83 2.89 1.69 71
from continuing and
discontinued
operations, basic, EUR
Orders received 1,557 1,537 1 5,705 4,745 20
Order backlog from 3,737 2,350 59
continuing operations,
Dec 31
Free cash flow 327 106 208
Return on capital 22.2 18.8
employed (ROCE),
annualized, %
Equity to assets 36.1 37.5
ratio, Dec 31, %
Gearing, Dec 31, % 30.8 22.4
Metso's last quarter 2006 review
Operating environment and demand for products in October-December
In the fourth quarter, the demand for Metsos products and
services continued much the same as in the first nine months. The
construction, mining and energy industry markets were good
overall, while the pulp and paper industry markets were
satisfactory. The overall demand for aftermarket services
continued to be good.
Metso Papers new paper and board machine orders originated mainly
from Asia. The demand for rebuilds was quiet in Europe and North
America. The demand for tissue machines remained good in all
markets. The demand for fiber lines was strongest in Southeast
Asia.
In construction, the demand for Metso Minerals aggregates
production-related equipment was good. The demand for mining
equipment continued to be excellent in all markets. The demand for
metal recycling equipment was excellent except in the USA.
The demand for Metso Automations valves and field device systems
remained excellent. The demand for automation systems was good in
the power, oil and gas industry, and satisfactory in the pulp and
paper industry.
Orders received in October-December
Metsos order intake in the last quarter of 2006 was overall on
the same level as in the comparison quarter last year. The orders
received by Metso Minerals grew by 23 percent on the comparison
quarter due to strong demand for mining equipment. The 8 percent
increase in Metso Automations order intake was mainly
attributable to the good demand for valves and field device
systems. Metso Papers order intake for the last quarter of 2006
was good, even though it was 14 percent down on the exceptionally
high comparison quarter of 2005. Metso Ventures orders decreased
due to Metso Panelboard.
The largest orders received in October-December included a
papermaking line to Japan, fiber lines to Southeast Asia and
India, and bulk materials handling and processing equipment to
Brazil.
Financial performance in October-December
Metsos net sales grew by 23 percent compared with October-
December 2005. The growth was strongest in Metso Paper, where the
increase of 33 percent was due to the timing of large project
deliveries for the final quarter. Metso Minerals deliveries
increased by 21 percent and Metso Automations deliveries by 18
percent. The delivery problems that hindered Metso Automation in
the third quarter have been solved for the most part, and the
delivery volumes of valves and field device systems in the last
quarter were record-high. The net sales of Metso Ventures
increased by 5 percent due to the larger delivery volumes of the
Foundries and Valmet Automotive.
Operating profit for the years last quarter totaled EUR 125.0
million, i.e. 8.1 percent of net sales. The biggest improvements
in operating profit were made by Metso Minerals and Metso
Automation, mainly due to increased delivery volumes.
Metso Paper's last-quarter operating profit margin was negatively
affected by the high share of project deliveries and low volume in
higher-margin aftermarket business. Metso Paper also recognized
some EUR 10 million in expenses related to business
reorganizations in Italy and the USA, and to the integration of
the Pulping and Power businesses. Metso Ventures operating profit
for the last quarter was weaker than in the comparison quarter due
to Metso Panelboards losses. The operating loss of Metso Ventures
includes expenses of EUR 9 million resulting from Metso
Panelboards restructuring costs and goodwill impairment and a
gain of EUR 10 million from the divestment of Metso Powdermet AB.
In the last quarter, Metso recognized a nonrecurring deferred tax
asset of EUR 30 million with respect to its U.S. operations. This
had a positive impact in the income statement.
Financial Statements Release 2006
Metso's operating environment and demand for products
The market situation for Metsos products and services was
favorable all year. The construction, mining and energy industry
markets were excellent on the whole and the pulp and paper markets
were good. The overall demand for aftermarket services was good.
With respect to Metso Papers products, the demand for new paper
and board machines was satisfactory. The demand continued to be
focused on Asia, particularly China, where many customers are
actively investing. The Japanese market picked up, leading to two
orders for new paper machines. The demand for paper and board
machine rebuilds leveled off as expected in Europe and North
America, partly due to business restructuring in paper companies.
The demand for new tissue machines, rebuilds and related services
was good in all markets. The demand for new fiber lines, rebuilds
and related aftermarket services was good overall. Demand for new
fiber lines was especially brisk in South America and Asia.
The demand for Metso Minerals crushing and screening equipment
and services related to construction was excellent due to road
network development projects and other infrastructure investments.
Despite volatility, metal prices remained high and the demand for
various kinds of crude ore continued to grow driven by emerging
markets. The demand for mining equipment and related aftermarket
services was excellent in all market areas and particularly in
South America and Australia, where the large mining companies
carried out major investments. Mining industry projects were
increasingly large in scope. The demand for metal recycling
equipment was also excellent thanks to increased recycling and
high metal prices.
The markets for Metso Automation's process automation systems in
the pulp and paper industry were satisfactory all year. The demand
for flow control systems was good in the pulp and paper industry
and excellent in the power, oil and gas industry. The markets for
process automation systems in the power industry were good.
Orders received and order backlog
Metsos orders received increased by 20 percent on the year 2005,
and their total value was EUR 5,705 million. Growth came from all
business areas. The growth in orders was proportionally strongest
at Metso Minerals and Metso Automation. At the end of 2006,
Metsos order backlog was EUR 3,737 million, which included a EUR
727 million order backlog from the Pulping and Power businesses
acquired in December.
The value of orders received from the BRIC countries (Brazil,
Russia, India and China) was more than 50 percent up on 2005. The
contribution of these countries to Metso's order intake rose to 23
percent, whereas it was 19 percent in the comparison year.
Orders received by business area
2006 2005
EUR % of EUR % of
million orders million orders
received received
Metso Paper 2,139 37 1,993 41
Metso Minerals 2,630 45 1,936 40
Metso Automation 717 12 580 12
Metso Ventures 332 6 324 7
Intra-Metso orders
received (113) - (88) -
Total 5,705 100 4,745 100
Orders received by market area
2006 2005
EUR % of EUR % of
million orders million orders
received received
Europe 1,993 35 2,110 44
North America 1,099 19 960 20
South and Central
America 757 13 562 12
Asia-Pacific
1,503 27 896 19
Rest of the world 353 6 217 5
Total 5,705 100 4,745 100
Net sales
Metsos net sales rose by 17 percent on the comparison year and
totaled EUR 4,955 million. The increase was due both to the
continuing good market situation and to strengthened
competitiveness, and was attributable to all business areas. The
exchange rate translation did not affect the growth of net sales.
Aftermarket operations accounted for 36 percent (38% in 2005) of
Metso's net sales (excluding Metso Ventures). In terms of euros,
the aftermarket business volume increased by 10 percent and the
growth came from Metso Minerals.
The largest individual countries in terms of net sales in 2006
were the United States, Brazil, China, Finland and Germany.
Deliveries of mining equipment and fiber lines resulted in a large
net sales increase in Brazil.
Net sales by business area
2006 2005
EUR % of net EUR % of net
million sales million sales
Metso Paper 1,947 38 1,702 39
Metso Minerals 2,174 43 1,735 40
Metso Automation 613 12 584 14
Metso Ventures 332 7 284 7
Intra-Metso net sales
(111) - (84) -
Total 4,955 100 4,221 100
Net sales by market area
2006 2005
EUR % of net EUR % of net
million sales million sales
Europe 2,002 41 1,900 45
North America 1,012 20 889 21
South and Central
America 685 14 485 12
Asia-Pacific
991 20 735 17
Rest of the world 265 5 212 5
Total 4,955 100 4,221 100
Financial result
In 2006, Metsos operating profit was EUR 457.2 million, or 9.2
percent of net sales (EUR 335.0 million and 7.9% in 2005). The
improvement in profitability was mainly attributable to strong
volume growth, especially at Metso Minerals. Metso Paper and Metso
Automation also improved their operating profits. The operating
profit of Metso Ventures was affected by the losses of Metso
Panelboards operations.
Metsos net financial expenses decreased to EUR 36 million (EUR 43
million) as a result of continuing strong cash flow from operating
activities.
Metsos profit from continuing operations before taxes was EUR 421
million (EUR 292 million).
In 2006, Metso recognized nonrecurring deferred tax assets
totaling EUR 87 million with a positive impact in the income
statement with respect to its U.S. operations where Metso had
unrecognized tax losses and other temporary differences between
accounting and taxation. At the end of 2006, all the deferred tax
assets related to the U.S. operations had been recognized. The
recognition is based on the fact that Metso's U.S. operations have
turned clearly profitable. In 2006, Metsos tax rate, excluding
the deferred tax assets of EUR 87 million, was 23 percent. Metso's
tax rate for 2007 is estimated to be about 30 percent.
The profit attributable to shareholders was EUR 409 million,
corresponding to earnings per share of EUR 2.89. Excluding the
nonrecurring deferred tax assets of EUR 87 million, earnings per
share were EUR 2.28.
The return on capital employed (ROCE) was 22.2 percent (18.8%) and
the return on equity (ROE) was 30.3 percent (20.9%).
Cash flow and financing
Metso's net cash generated by operating activities was EUR 442
million (EUR 164 million). The increase in inventories and
receivables due to volume growth was compensated by increase in
accounts payable and advances received. Metso's free cash flow was
EUR 327 million (EUR 106 million).
The acquisition of the Pulping and Power businesses increased
Metsos net interest-bearing liabilities by EUR 261 million, and
they totaled EUR 454 million at the end of the year. Gearing (the
ratio of net interest-bearing liabilities to shareholders equity)
was 30.8 percent. The effect of the acquisition of the Pulping and
Power businesses on gearing was 18 percentage points. Metso's
equity to assets ratio was 36.1 percent. In April 2006, Metso paid
dividends for 2005 of EUR 198 million.
In December, Metso drew a EUR 100 million loan from the European
Investment Bank. The purpose of the loan, which was agreed in
2004, is to finance R&D activities carried out within Metso. The
loan has a floating interest rate, its tenure is 10 years and
repayment will begin in 2010. In addition, Metso signed a EUR 500
million revolving 5-year loan facility in December which is
primarily intended to support Metso's short-term funding. It
replaces an originally EUR 450 million facility agreed in 2003.
In September, Moody's Investor Service upgraded the long-term
credit ratings of Metso to Baa3 from Ba1 and considered the
outlook on ratings stable. In October, Standard & Poor's Ratings
Services upgraded the long-term credit rating of Metso to BBB-
from BB+ and the short-term rating to A-3 from B. The rating on
Metso's senior unsecured debt was upgraded to BB+ from BB.
Standard & Poor's considered the outlook on ratings stable.
Capital expenditure
Metsos gross capital expenditure was EUR 131 million excluding
acquisitions (EUR 107 million). Capital expenditure was mainly
related to information systems, as well as to expansions and
maintenance of production facilities. Production facilities are
being expanded at, for example, Metso Minerals units in Tampere,
Finland and in Columbia, South Carolina, USA, and Metso Paper's
unit in Wuxi, China. Additionally, Metso Papers pilot paper
machine in Jyväskylä, Finland was rebuilt and the service unit in
Zaragoza, Spain was expanded.
In 2007, Metso's capital expenditure excluding acquisitions is
expected to increase with some 15-20 percent compared to 2006.
This increase is due to the capacity investments necessitated by
strong volume growth, to information systems investments and to
the expansion of operations due to the acquisitions completed.
Acquisitions and divestments
In August, Metso Paper received the relevant regulatory approvals
from the Chinese authorities for the acquisition of Shanghai-
Chenming Paper Machinery Co. Ltd, agreed in February 2006. All the
shares of the company were transferred to Metso on August 31,
2006. The debt-free purchase price and the investments related to
the development of the unit total about EUR 35 million. The
company's new name is Metso Paper Technology (Shanghai) Co., Ltd.
In September, Metso agreed to acquire the business assets of
Svensk Gruvteknik AB and Svensk Pappersteknik AB in Sweden to
strengthen its aftermarket business. The business assets were
transferred to Metso on October 1, 2006. The debt-free purchase
price totaled approximately EUR 4 million.
In December, Metso Paper acquired all of Sumitomo Heavy
Industries' (SHI) shares of the Metso-SHI Co., Ltd. joint venture
that has represented Metso Paper and Metso Automation on the
Japanese markets. Previously Metso possessed 65 percent and SHI 35
percent of the joint venture.
Metso completed the acquisition of Aker Kvaerners Pulping and
Power businesses in December. The businesses were transferred to
Metso on December 29, 2006. The European Commission clearance for
the acquisition was received on December 12, 2006. In 2006, net
sales of the Pulping and Power businesses transferred to Metso
were approximately EUR 600 million and the number of employees was
approximately 2,100.
The estimated acquisition price is EUR 341 million including EUR 6
million costs related to acquisition and EUR 52 million acquired
net cash (for further information see "Acquistion of Pulping and
Power businesses of Aker Kvaerner"). The final transaction price
will be based on the balance sheet values at the time of the
closing and will be agreed during the first quarter of 2007.
According to Metsos estimates the annual cost-based synergies to
be derived from the acquisition amount to EUR 20-25 million. About
one third of this is estimated to be realized during 2007. The one-
time costs arising from the integration are estimated to be
approximately EUR 10 million and they are estimated to be realized
mainly during 2007.
The acquisition cost exceeded the book value of the acquired
business by EUR 384 million, of which EUR 154 million was
allocated to intangible assets, i.e. to the acquired technology,
customer relations and order backlog, in accordance with the IFRS
principles. The intangible assets will be annually amortized
during their economic useful life, thereby reducing the operating
result, but with no cash flow effect. The amortization of
intangible assets resulting from the transaction is estimated to
be EUR 37 million in 2007, EUR 20 million in 2008, and EUR 13
million thereafter. The rest of the transaction price exceeding
the book value will remain as goodwill not to be amortized.
The acquired Pulping and Power businesses were consolidated into
Metso's balance sheet at December 31, 2006, but they have no
effect to Metso's 2006 income statement. The transaction is
estimated to have a positive effect on Metso's operating profit
before the integration costs and on Metso's cash flow from
operating activities in 2007.
In December, Metso also completed the divestment to Canadian
Groupe Laperrière & Verreault Inc. (GL&V) of a so-called remedy
package related to the acquisition of Aker Kvaerners Pulping and
Power businesses. The remedy package comprised of the following
Metso's and Aker Kvaerner's overlapping areas: Kvaerner Pulpings
pulp washing, oxygen delignification and bleaching businesses as
well as Metsos batch cooking business and its licensing back to
Metso. The remedy package was transferred to GL&V on December 29,
2006. The clearance received from the European Commission on
December 12, 2006 was conditional on the divestment of the remedy
package. Even after the divestment, Metso has a comprehensive pulp
industry product offering.
Metso finalized in December the divestment of Metso Powdermet AB
in Sweden to Sandvik AB. Metso recorded a tax-free sales gain of
EUR 10 million from the divestment.
Changes in the corporate structure
Metso dismantled the Metso Ventures business area on January 1,
2007. Two of Metso Ventures three foundries were transferred
under Metso Paper and one under Metso Minerals. Metso Panelboard
became part of Metso Paper, Metso Powdermet Oy was transferred to
Metso Minerals and Metso Powdermet AB was divested. Valmet
Automotive will be reported as a separate financial holding unit
of Metso Corporation from the beginning of 2007.
Metso Automation changed its organization as of October 1, 2006.
The business lines within Metso Automation are Flow Control and
Process Automation Systems.
Metso Minerals' operations were organized according to the three
core customer segments as of January 1, 2007. The business lines
are Construction, Mining and Recycling.
Metso Paper's business lines after the acquisition of the Pulping
and Power businesses are: Fiber, Paper and Board, Finishing,
Tissue, Service, Power and Panelboard.
Research and development
Metsos research and development expenses totaled EUR 109 million
(EUR 96 million), representing 2.2 percent of net sales. Metso has
strengthened its competence in materials technology by
establishing a new Metso Materials Technology business unit, part
of Metso Minerals. The new unit provides product solutions and
research and development services related to materials technology,
and it develops materials technology solutions for components and
wear parts meeting the needs of different industries, such as wood
processing, power generation, minerals processing and chemicals
production. Resources for the new unit were transferred from Metso
Powdermet Oy.
During the year, Metso Paper rebuilt its PM2 pilot paper machine
at Jyväskylä, Finland. A new press section was installed in the
pilot paper machine, the dryer section was rebuilt and several
other improvements covering the whole process line were made.
Metso Paper launched a number of paper making related products
improving efficiency and end product quality. For example, the Val
product family was supplemented with a new ValFlo headbox,
ValFormer forming section and ValZone calender based on new
technology. In the fiber business, research and development was
focused on washing presses and more environmentally sound
bleaching processes.
In 2006, Metso Minerals launched a wireless sensor which can be
used to monitor the movements of blocks of ore in the mine from
blasting to pre-crushing and piling, and on to the grinding
process. Also the new generation HP4 cone crusher was launched.
Due to its heavy-duty structure and increased power the crusher
can produce fine-grade aggregates in a process that would normally
call for two separate third and fourth stage crushers.
In 2006, Metso Automation's new products included a Neles
SwitchGuard, an intelligent controller for pneumatic on/off
valves. Other product launches included a microwave technology-
based solid content transmitter, the kajaaniTS, designed for total
solids measurements in municipal wastewater treatment plants and
for their sludge treatment processes. Metso Automation also
launched the new-generation metsoDNA CR solution and IQMoisture,
which is a fast on-line measurement method developed to control
the machine- and cross-direction moisture profiles of paper and
board machines. Additionally, Metso Automation launched new
products supplementing its PaperIQ quality control system and
PaperIQ profilers product range.
Environment
The environmental impact of Metso's own production is minor and
relates mainly to the consumption of raw materials and energy,
emissions to air, water consumption and waste. Metso seeks to
reduce environmental hazards through continuous development and by
decreasing the use of power, raw materials and hazardous
substances. Metso's R&D develops products and solutions that
reduce environmental impacts in Metso's customer industries.
Metso's product range includes several products for the recycling
of raw materials both in rock, metal and mineral processing and in
the pulp and paper industry.
Risks and business uncertainties
Metso's operations are affected by various strategic, operational,
hazard and financial risks. Metso takes measures to manage and
limit the potential adverse effects of these risks. However, if
such risks materialized, they could have material adverse effects
on Metso's business, financial condition and operating result or
on the value of shares and other securities.
Metsos risk assessments take into consideration the probability
and effects of the risks on net sales and financial results. The
risk level is estimated to be currently acceptable in proportion
to the quality and scope of the Corporations operations. This
section features a brief description of Metsos most significant
strategic and operational risks.
Business cycles in the global economy and customer industries
affect the demand for Metso's products and the company's financial
situation. The geographical diversity of operations and the range
of customer industries served reduce the effect of business cycles
over the long term. New equipment orders tend to be more affected
by business cycles than the demand for rebuilds, process
improvements and aftermarket operations, the latter of which Metso
is actively aiming to increase.
The long-term development of Metso's business can be affected by
development risks related to new markets and business
opportunities, and these can also be reflected in Metso's values
and brand. Business development risks also include the risks
related to acquisitions.
Changes in customer industry demand affect Metso's operations.
Such changes may be related, for instance, to strategy changes in
customer companies, product development, product requirements, or
environmental aspects. Metso also has a number of competitors,
varying by business area and product. Metso protects its products
and business-related intellectual property rights through patents
and trademarks.
Metso's technology risks are related to technological competence,
research and product development. The use of new technology may
temporarily increase quality-related costs.
The risks associated with raw materials and the subcontractor and
supplier network are significant for Metso's operations. The
direct risks associated with raw materials procurement have
decreased in recent years, because Metso's operations have
increasingly focused on manufacturing and assembling core
components. On the other hand, outsourcing has increased the
importance of and risks related to suppliers and subcontractors.
Supply problems of raw material suppliers may increase the costs
of the raw materials used in Metsos products and lengthen
delivery lead times. For example, steel and scrap iron are among
the most important raw materials. Changes in the prices of
electricity, oil and metals may indirectly and adversely affect
Metso's operations, if the price fluctuations decrease the
investment willingness of customer industries.
Due to the geographically widespread operations of Metso and its
customers, global political developments, political unrest,
terrorism and armed conflicts constitute risks to Metso and its
customers. Operations are also affected by cultural and religious
factors and by legislation, particularly the environmental
legislation of different countries. Metso monitors these
international trends and laws that are under preparation and
anticipates their effects.
By assessing human resources and organizational structures, Metso
aims to ensure organizational efficiency and competence and to
avoid risks such as unsuitable recruiting, imbalance in the age
structure and excessive personnel turnover.
Metso's Corporate Treasury is responsible for managing liquidity,
interest rate and currency risks and other financial risks and
securing the availability of equity and debt capital on
competitive terms.
Subpoena from U.S. Department of Justice requiring Metso to
produce documents
In November, 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 co-operating fully with the Department of Justice.
Personnel
At the end of the year Metso employed 25,678 people which is 3,500
more than at the end of 2005. In 2006, Metso employed an average
of 23,364 people. Due to the rapidly growing importance of the
BRIC countries (Brazil, Russia, India and China), Metso's
personnel in these countries increased by 44 percent on 2005.
These countries accounted for 13 percent of Metso total personnel
compared with 10 percent in 2005.
The acquisitions of the Pulping and Power businesses, Svensk
Pappersteknik AB and Shanghai-Chenming Paper Machinery, all of
which were carried out in 2006, increased Metso Paper's personnel
by about 2,600. Metso Minerals personnel increased by 649 due to
the growth of business and the acquisition of Svensk Gruvteknik AB
in October. Metso Automation's number of personnel increased by
183 persons mainly due to the efforts to bolster sales and
customer service resources.
The salaries and wages of Metso employees are determined on the
basis of local collective and individual agreements, employee
performance and job evaluations. Basic salaries and wages are
complemented by performance-based compensation systems. In 2006,
the total amount of salaries and wages paid was EUR 909 million.
Personnel by business area
2006 2005
Dec 31 % of Dec 31 % of
total total
personnel personnel
Metso Paper 10,867 42 8,201 37
Metso Minerals 9,170 36 8,521 39
Metso Automation 3,352 13 3,169 14
Metso Ventures 1,967 8 1,993 9
Corporate Office
and shared services 322 1 294 1
Total 25,678 100 22,178 100
Personnel by area
Dec 31, Dec 31, Change %
2006 2005
Finland 9,281 8,340 11
Other Nordic countries 3,580 2,491 44
Other Europe 3,067 2,959 4
North America 3,715 3,526 5
South and Central America 2,439 2,070 18
Asia-Pacific 2,262 1,498 51
Rest of the world 1,334 1,294 3
Total personnel in continuing 25,678 22,178 16
operations
Changes in the Metso Executive Team
Metsos Executive Team and its members areas of responsibility
were changed at the beginning of August. Risto Hautamäki is
responsible for Metso Paper until March 31, 2007. Bertel
Langenskiöld is responsible for the Fiber Business Line and the
integration of the Pulping and Power units, and the whole Metso
Paper as of April 1, 2007. Matti Kähkönen is responsible for Metso
Minerals and Pasi Laine for Metso Automation. Vesa Kainu continues
as an Executive Team member until February 28, 2007 when he will
retire. The Chairman of the Executive Team is Jorma Eloranta,
President and CEO, and the Vice Chairman is Olli Vaartimo,
Executive Vice President and CFO.
Financial targets and dividend policy
In October, Metso updated its financial targets and upgraded its
dividend policy. The average annual net sales growth target is
more than 10 percent. Growth will be attained both organically and
through value-enhancing complementary acquisitions. Major
acquisitions with a significant impact on Metso will come on top
of this 10 percent growth target. The operating profit margin
target (EBIT-%) is more than 10 percent. Furthermore, Metsos
target is that its key financial indicators, capital structure and
cash flow metrics will support solid investment grade credit
ratings.
Metso also upgraded its dividend policy to distribute at least 50
percent (earlier 40 percent) of annual earnings per share as
dividends or in other forms of repatriation of capital.
Decisions of the Annual General Meeting
On April 4, 2006 the Annual General Meeting of Metso Corporation
approved the accounts for 2005 and discharged the members of the
Board of Directors and the President and CEO from liability for
the 2005 financial year. The Annual General Meeting approved the
proposals of the Board of Directors concerning authorizations to
resolve to repurchase and dispose of the Corporation's own shares.
The Annual General Meeting also authorized the Board to make
decisions on increasing the share capital by issuing new shares,
convertible bonds and/or stock options.
The Annual General Meeting decided to establish a Nomination
Committee of the Annual General Meeting to prepare proposals for
the following Annual General Meeting in respect of the composition
of the Board of Directors and the remuneration of directors. The
Nomination Committee consists of representatives appointed by the
four biggest shareholders along with the Chairman of the Board of
Directors as an expert member.
Matti Kavetvuo was re-elected as Chairman of the Board and Jaakko
Rauramo was re-elected as Vice Chairman. Christer Gardell and Yrjö
Neuvo were elected as new members of the Board. The Board members
re-elected were Svante Adde, Maija-Liisa Friman and Satu Huber.
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 remuneration of
Board members be EUR 80,000 for the Chairman, EUR 50,000 for the
Vice Chairman and the Chairman of the Audit Committee and EUR
40,000 for the members, and that the meeting fee, including
committee meetings, be EUR 500 per meeting.
PricewaterhouseCoopers Oy, a firm of Authorized Public
Accountants, was re-elected to act as the Auditor of the
Corporation until the end of the next Annual General Meeting.
The Annual General Meeting decided to pay a dividend of EUR 1.40
per share for the financial year which ended on December 31, 2005.
The dividend was paid on April 20, 2006.
Nomination Committee's proposal of Metso Board members
The Nomination Committee established by Metso's Annual General
Meeting on April 4, 2006, proposes to the next Annual General
Meeting, scheduled to be held on April 3, 2007, that the number of
board members will remain at seven.
The Nomination Committee proposes that, of the current Board
members, Svante Adde, Maija-Liisa Friman, Christer Gardell, Matti
Kavetvuo, Yrjö Neuvo and Jaakko Rauramo will be re-elected. It is
proposed that Matti Kavetvuo will continue as Chairman of the
Board and Jaakko Rauramo as Vice Chairman. It is also proposed
that Eva Liljeblom, Professor at the Swedish School of Economics
and Business Administration, Helsinki, Finland, will be elected as
a new member of the Metso Board.
The Nomination Committee proposes that the annual fees paid to
Board members will remain unchanged.
The Nomination Committee notes that a personnel representative
will participate as an external expert in the Metso Board meetings
also in the next Board term within the limitations imposed by
Finnish law. The new Board will invite the personnel
representative as its external expert in April 2007.
The members of the Nomination Committee were Markku Tapio
(Chairman of the Nomination Committee), Director General, State
Shareholdings unit (State of Finland), Harri Sailas, CEO
(Ilmarinen Mutual Pension Insurance Company), Mikko Koivusalo,
Director, Investments (Varma Mutual Pension Insurance Company) and
Henry Wiklund, Managing Director (Svenska litteratursällskapet i
Finland r.f.). Matti Kavetvuo, Chairman of Metso's Board of
Directors, served as the Committee's expert member. The fourth
biggest shareholder, Odin Norden, did not nominate its
representative for the Nomination Committee. Thus the right to
nominate was transferred to the next largest shareholder, Svenska
litteratursällskapet i Finland r.f.
Share capital and market capitalization
A total of 65,000 shares were subscribed with 2003A stock options
on December 7-11, 2006. As a result of the registration of share
subscriptions made with the 2003A stock options, Metso's share
capital increased to EUR 240,923,343.80 on December 21, 2006. At
the end of 2006, the number of shares was 141,719,614, including
60,841 own shares held by the Parent Company, and 300,000 shares
held by a separate partnership company included in Metso's
consolidated financial statements. These 360,841 shares together
represent 0.25 percent of the total shares and votes.
The shares held by the Parent Company were purchased in 1999 at a
total purchase price of EUR 654,813. The partnership acquired its
shareholding in 2006 at a total purchase price of EUR 10,989,900.
The number of outstanding shares at the end of the year was
141,358,773, and their average number in 2006 was 141,580,759.
Metsos market capitalization increased from the end of 2005 by
EUR 2,132 million and was EUR 5,406 million at the end of 2006,
excluding the own shares.
Share ownership plan
Metso has a share ownership plan for the strategy period 2006-
2008.
The 2006 share ownership plan was originally directed to 55 Metso
managers, and it covered a maximum total of 94,985 shares. After
the financial year was closed, the plan was extended to cover an
additional six Metso managers. Based on the 2006 earnings period,
by the end of March 2007 a maximum total of 100,601 shares will be
distributed. The entire Metso Executive Team is included in the
sphere of the incentive plan, and they can be rewarded with a
maximum of 25,955 shares. The reward from the plan is based on the
achieved operating profit of Metso Corporation and its business
areas in 2006.
If the value of Metsos share, determined as the average price of
the share during the first two full weeks of March 2007, exceeds
EUR 38, the number of grantable shares will be decreased by a
corresponding ratio.
Repurchase of own shares
Metso Corporation's Annual General Meeting on April 4, 2006
authorized Metso Corporation's Board of Directors to resolve to
repurchase the Corporation's own shares with its distributable
funds provided that the combined nominal value of the shares thus
acquired corresponds to no more than 5 percent of the
Corporation's total share capital at the moment of acquisition.
The authorization entitled the Board to repurchase the
Corporation's own shares among other things for use in the above
mentioned share ownership plan. According to the authorization,
the shares were to be acquired through public securities trading
on the Helsinki Stock Exchange, at the share price prevailing on
the day of acquisition.
Metso Corporation's Board of Directors decided to outsource the
administration of the share ownership plan to a partnership (MEO1V
Incentive Ky) included in Metso's consolidated financial
statements, which purchased the 300,000 Metso shares required to
implement the share ownership plan. These shares were purchased on
the Helsinki Stock Exchange during the period December 8-13, 2006
at an average price of EUR 36.63 per share.
Metso Paper
EUR million Q4/06 Q4/05 Change 2006 2005 Change
% %
Net sales 678 510 33 1,947 1,702 14
Operating profit 29.9 27.7 8 110.2 90.9 21
% of net sales 4.4 5.4 5.7 5.3
Capital employed, 617 329 88
Dec 31
Gross capital 48 34 41
expenditure
Research and 60 51 18
development
expenses
Orders received 644 753 (14) 2,139 1,993 7
Order backlog, 2,165 1,267 71
Dec 31
Personnel, 10,867 8,201 33
Dec 31
Metso Papers net sales grew by 14 percent on the comparison year
and totaled EUR 1,947 million. Growth was achieved in all business
lines. Aftermarket operations accounted for 31 percent of net
sales (35% in 2005). The increase in project and equipment
deliveries reduced the proportional share of aftermarket
operations. Measured in euros, the volume of aftermarket
operations increased by 2 percent.
Metso Papers operating profit was EUR 110.2 million, or 5.7
percent of net sales. The improvement in operating profit derived
mainly from the Tissue Business Line. The operating profit was
weakened by expenses of EUR 10 million recognized in the last
quarter, related to business reorganizations in Italy and the USA,
and to the integration of the Pulping and Power businesses.
The value of orders received by Metso Paper increased by 7 percent
on the comparison period and totaled EUR 2,139 million. The orders
of tissue machines grew relatively the most. In 2006, Metso Paper
received a total of seven new paper and board machine orders, six
tissue machine orders and ten fiber process orders. At the end of
year the order backlog was EUR 2,165 million. The order backlog
includes the EUR 727 million order backlog of the Pulping and
Power businesses acquired in December. Metso Papers order backlog
increased by 13 percent, excluding the effect of the acquired
Pulping and Power businesses.
The acquisitions made in 2006 increased Metso Papers personnel by
about 2,600 people.
Metso Minerals
EUR million Q4/06 Q4/05 Change 2006 2005 Change
% %
Net sales 623 517 21 2,174 1,735 25
Operating profit 79.4 52.6 51 286.0 177.6 61
% of net sales 12.7 10.2 13.2 10.2
Capital employed, 949 895 6
Dec 31
Gross capital 66 55 20
expenditure
Research and 13 11 18
development
expenses
Orders received 697 568 23 2,630 1,936 36
Order backlog, 1,254 852 47
Dec 31
Personnel, 9,170 8,521 8
Dec 31
Metso Minerals' net sales rose by 25 percent on the comparison
year and totaled EUR 2,174 million. The deliveries of the Crushing
and Screening Business Line and the Minerals Processing Business
Line grew strongly. The growth was relatively strongest in the
Recycling Business Line. Metso Minerals aftermarket operations
accounted for 43 percent of net sales (46% in 2005). The growth of
project and equipment deliveries reduced the relative proportion
of aftermarket operations. Measured in euros, the volume of
aftermarket operations increased by 17 percent.
The operating profit of Metso Minerals increased to EUR 286.0
million, which was 13.2 percent of net sales. Profitability
improved the most in the Crushing and Screening Business Line, the
Minerals Processing Business Line and the Recycling Business Line,
due to strong volume growth, improved price levels and a more
efficient supply chain.
The value of orders received by Metso Minerals increased by 36
percent and totaled EUR 2,630 million. Growth was the strongest in
the Minerals Processing and the Crushing and Screening Business
Lines, primarily due to the excellent demand from the mining
industry. The largest orders in 2006 included a grate kiln system
for LKAB in Sweden, a bulk materials handling system and process
equipment for Brazil, and grinding mills and mining crushers for
Boddington Gold Mine (BGM) in Australia. The order backlog
increased by 47 percent on the end of 2005 and was EUR 1,254
million at the end of 2006.
Metso Automation
EUR million Q4/06 Q4/05 Change 2006 2005 Change
% %
Net sales 193 163 18 613 584 5
Operating profit 31.8 23.4 36 86.7 80.7 7
% of net sales 16.5 14.4 14.1 13.8
Capital employed, 149 125 19
Dec 31
Gross capital 9 11 (18)
expenditure
Research and 29 29 0
development
expenses
Orders received 162 150 8 717 580 24
Order backlog, 276 179 54
Dec 31
Personnel, 3,352 3,169 6
Dec 31
Metso Automations net sales increased by 5 percent on the
comparison year and totaled EUR 613 million. The last quarters
delivery volumes of valves and field device systems increased to a
record high. For the entire year, the net sales growth mainly
originated from North America. Aftermarket operations accounted
for 23 percent of net sales (24% in 2005). Measured in euros, the
volume of aftermarket operations remained at the previous year's
level.
Metso Automations operating profit was EUR 86.7 million, or 14.1
percent of net sales. The operating profit improvement on the
previous year originated from North America. The high operating
profit margin of the final quarter was due to the strong volume
leverage.
The value of Metso Automations orders increased by 24 percent on
the comparison period and totaled EUR 717 million. In particular,
the orders of valves and field device systems grew. The largest
orders in 2006 included valve deliveries for a Saudi Arabian oil
company, an automation system for the Lagisza power plant in
Poland, an automated control and shut-off valve delivery for
Botnia S.A.s pulp mill in Uruguay, and an automation package for
Guangzhou Paper's paper making line in China. The order backlog
rose by 54 percent on the end of 2005 and was EUR 276 million at
the end of 2006.
Metso Ventures
EUR million Q4/06 Q4/05 Change 2006 2005 Change
% %
Net sales 92 88 5 332 284 17
Operating profit (5.6) 4.7 - 1.7 10.8 (84)
(loss)
% of net sales (6.1) 5.3 0.5 3.8
Capital employed, 55 78 (29)
Dec 31
Gross capital 7 15 (53)
expenditure
Research and 6 5 20
development
expenses
Orders received 83 100 (17) 332 324 2
Number of cars 8,236 7,307 13 32,393 21,233 53
produced
Order backlog, 96 104 (8)
Dec 31
Personnel, 1,967 1,993 (1)
Dec 31
Metso Ventures' net sales rose by 17 percent on the comparison
year and totaled EUR 332 million. The increase in net sales
originated mainly from Valmet Automotive, whose production output
was one and a half times greater than in 2005.
Metso Ventures operating profit decreased on the comparison year
and was EUR 1.7 million, or 0.5 percent of net sales. Valmet
Automotive's profitability improved clearly. Metso Panelboard
generated a loss, as a result of which restructuring of its
operations was started. EUR 9 million in nonrecurring expenses
related to Metso Panelboard were recognized for the last quarter
of 2006, of which EUR 2 million were related to redundancies and
EUR 7 million to goodwill impairment. In December, Metso completed
the divestment of Metso Powdermet AB to Sandvik of Sweden. Related
to the transaction, Metso Ventures recognized a sales gain of EUR
10 million for the fourth quarter.
The value of orders received by Metso Ventures was EUR 332 million
and the order backlog totaled EUR 96 million at the end of 2006.
Metso dismantled the Metso Ventures business area on January 1,
2007, and transferred Metso Ventures businesses to Metso Paper
and Metso Minerals excluding Valmet Automotive, which will be
reported as a separate financial holding unit under Metso
Corporation.
As a result of the weakened car market, the daily car output of
Valmet Automotive will decrease in stages to 102 cars per day by
early April 2007. In December, Valmet Automotive announced a
reduction of 222 employees. After the reductions to be implemented
in the spring 2007, the personnel of the car plant will number a
little over 800.
Short-term outlook
The overall market situation for Metso is expected to remain
favorable in 2007.
The overall market outlook for Metso Paper is expected to be
satisfactory in 2007. The demand for new fiber and tissue lines as
well as related rebuilds and aftermarket services is expected to
slightly soften from the good level in 2006, except for South
America and Asia where the markets for new fiber lines are
expected to remain good. The demand for new paper and board
machines, as well as rebuilds and aftermarket services is expected
to remain satisfactory also in 2007. The strong demand is expected
to continue in Asia. The demand for power production solutions,
especially related to biomass utilization, is expected to remain
excellent.
Metso Minerals markets for both new equipment and aftermarket
services are expected to remain excellent in mining and metal
recycling. In the mining industry, the trend is towards large
equipment and projects. The demand for Metso Minerals new
equipment for the construction industry is expected to soften from
excellent to good in 2007. This is mainly due to the leveling-off
of North American aggregates demand. On the other hand, the demand
for aftermarket services within construction segment is expected
to continue excellent thanks to the active spare and wear part
markets for the installed base.
The demand for Metso Automation's process automation systems for
the pulp and paper industry is estimated to get slightly stronger.
The demand for flow control systems is expected to continue good
in the pulp and paper industry and excellent in the power, oil and
gas industry. The markets for process automation systems in the
power industry are expected to continue to be good.
Thanks to the strong order backlog, continuing favorable market
situation and the expanded business scope, Metsos net sales in
2007 are estimated to grow by more than 20 percent on 2006, and
the operating profit is estimated to clearly improve. At present,
it is estimated that the operating profit margin in 2007 will be
slightly below Metso's over 10 percent target. This is primarily
due to the high first-year amortization of intangible assets,
integration costs and only partially materializing synergy
benefits related to the acquisition of the Pulping and Power
businesses.
The estimates concerning Metso's net sales and operating profit do
not include changes resulting from any future acquisitions or
divestitures.
Board of Directors' proposal for the distribution of profit
The Parent Company's distributable funds totaled EUR
406,751,418.41
on December 31, 2006, of which the net profit from the year 2006
is EUR 141,164,124.02.
The Board proposes to the Annual General Meeting that a dividend
of EUR 1.50 per share be distributed for the year ended on
December 31, 2006, and that the remaining distributable funds
will be placed in the retained earnings.
The dividend record date for the proposed dividend is April 10,
2007 and the dividend will be paid on April 17, 2007. All the
shares existing on the dividend record date are entitled to
dividend
for the year 2006, except for the own shares held by the
Parent Company.
Annual General Meeting 2007
The Annual General Meeting of Metso Corporation will be held at 2
p.m. on Tuesday, April 3, 2007 at The Helsinki Fair Centre
(Messukeskus) in Helsinki, Finland.
Helsinki, February 7, 2007
Metso Corporations Board of Directors
The financial statements review is unaudited
CONSOLIDATED STATEMENTS OF INCOME
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Net sales 1,538 1,254 4,955 4,221
Cost of goods sold (1,179) (939) (3,659) (3,110)
Gross profit 359 315 1,296 1,111
Selling, general and (235) (218) (846) (794)
administrative expenses
Other operating income 0 2 6 12
and expenses, net
Share in profits of 1 0 1 1
associated companies
Reversal of Finnish - 3 - 5
pension liability
Operating profit 125 102 457 335
% of net sales 8,1% 8,1% 9,2% 7,9%
Financial income and (8) (10) (36) (43)
expenses, net
Profit on continuing 117 92 421 292
operations before tax
Income taxes on continuing 5 (24) (11) (72)
operations
Profit on continuing 122 68 410 220
operations
Profit (loss) on - - - 17
discontinued operations
Profit (loss) 122 68 410 237
Profit (loss) attributable 0 0 1 1
to minority interests
Profit (loss) attributable 122 68 409 236
to equity shareholders
Profit (loss) 122 68 410 237
Earnings per share from
continuing operations, EUR
Basic 0.86 0.47 2.89 1.57
Diluted 0.86 0.47 2.89 1.57
Earnings per share from discontinued
operations, EUR
Basic - - - 0.12
Diluted - - - 0.12
Earnings per share from continuing and
discontinued operations, EUR
Basic 0.86 0.47 2.89 1.69
Diluted 0.86 0.47 2.89 1.69
CONSOLIDATED BALANCE SHEETS
ASSETS
Dec 31, Dec 31,
2006 2005
(Millions) EUR EUR
Non-current assets
Intangible assets
Goodwill 768 498
Other intangible assets 274 99
1,042 597
Property, plant and equipment
Land and water areas 57 58
Buildings and structures 221 220
Machinery and equipment 318 286
Assets under construction 19 17
615 581
Financial and other assets
Investments in associated companies 19 20
Available-for-sale equity investments 15 12
Loan and other interest bearing 6 5
receivables
Available-for-sale financial assets 5 34
Deferred tax asset 228 163
Other non-current assets 33 39
306 273
Total non-current assets 1,963 1,451
Current assets
Inventories 1,112 888
Receivables
Trade and other receivables 1,218 918
Cost and earnings of projects under 284 173
construction in excess of advance
billings
Loan and other interest bearing 2 2
receivables
Available-for-sale financial assets 10 135
Tax receivables 16 14
1,530 1,242
Cash and cash equivalents 353 323
Total current assets 2,995 2,453
Assets held for sale - -
TOTAL ASSETS 4,958 3,904
SHAREHOLDERS' EQUITY AND LIABILITIES
Dec 31, Dec 31,
2006 2005
(Millions) EUR EUR
Equity
Share capital 241 241
Share premium reserve 77 76
Cumulative translation differences (45) (9)
Fair value and other reserves 432 424
Retained earnings 763 553
Equity attributable to shareholders 1,468 1,285
Minority interests 6 7
Total equity 1,474 1,292
Liabilities
Non-current liabilities
Long-term debt 605 593
Post employment benefit obligations 157 157
Deferred tax liability 57 20
Provisions 53 33
Other long-term liabilities 2 7
Total non-current liabilities 874 810
Current liabilities
Current portion of long-term debt 93 160
Short-term debt 132 35
Trade and other payables 1,238 925
Provisions 213 191
Advances received 655 312
Billings in excess of cost and 222 146
earnings of projects under
construction
Tax liabilities 57 33
Total current liabilities 2,610 1,802
Liabilities held for sale - -
Total liabilities 3,484 2,612
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 4,958 3,904
NET INTEREST BEARING LIABILITIES
Long-term interest bearing debt 605 593
Short-term interest bearing debt 225 195
Cash and cash equivalents (353) (323)
Other interest bearing assets (23) (176)
Total 454 289
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Cash flows from operating
activities:
Profit (loss) 122 68 410 237
Adjustments to reconcile
profit (loss)
to net cash provided by
operating activities
Depreciation 27 26 105 102
Provisions / Efficiency (3) (2) (7) (12)
improvement programs
Interests and dividend 4 6 26 39
income
Income taxes (5) 24 11 72
Other 1 3 7 (14)
Change in net working capital (34) (52) (18) (170)
Cash flows from operations 112 73 534 254
Interest paid and (21) (15) (24) (40)
dividends received
Income taxes paid (17) (15) (68) (50)
Net cash provided by (used 74 43 442 164
in) operating activities
Cash flows from investing
activities:
Capital expenditures on (41) (32) (129) (104)
fixed assets
Proceeds from sale of 3 7 14 46
fixed assets
Business acquisitions, (268) (1) (277) (14)
net of cash acquired
Proceeds from sale of 13 - 13 95
businesses, net of
cash sold
(Investments in) proceeds 41 (46) 154 (111)
from sale of financial
assets
Other (1) (1) (2) (2)
Net cash provided by (used (253) (73) (227) (90)
in) investing activities
Cash flows from financing
activities:
Share options exercised 1 - 1 72
Redemption of own shares (11) - (11) -
Dividends paid - - (198) (48)
Net funding 49 12 35 (158)
Other - - (6) (2)
Net cash provided by (used 39 12 (179) (136)
in) financing activities
Net increase (decrease) in (140) (18) 36 (62)
cash and cash equivalents
Effect from changes in - 1 (6) 13
exchange rates
Cash and cash equivalents at 493 340 323 372
beginning of period
Cash and cash equivalents at 353 323 353 323
end of period
Free cash flow
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Net cash provided by 74 43 442 164
operating activities
Capital expenditures on fixed (41) (32) (129) (104)
assets
Proceeds from sale of fixed 3 7 14 46
assets
Free cash flow 36 18 327 106
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Share Cumu- Fair Re- Equi- Mino- To-
ca- pre- lati- value tain- ty rity tal
pi- mium ve and ed attri- inte- equi-
tal re- trans- other ear- bu- rest ty
serve la- re- nings table
tion ser- to
ad- ves share-
just- hol-
ments ders
(Millions) EUR EUR EUR EUR EUR EUR EUR EUR
Balance at 232 14 (48) 435 364 997 5 1,002
Jan 1, 2005
Dividends - - - - (48) (48) - (48)
Share options 9 62 - - - 71 - 71
exercised
Translation - - 60 - - 60 - 60
differences
Net investment - - (21) - - (21) - (21)
hedge gains
(losses)
Cash flow - - - (11) - (11) - (11)
hedges, net of
tax
Available-for- - - - 0 - 0 - 0
sale equity
investments,
net of tax
Other - - - 0 1 1 1 2
Net profit for - - - - 236 236 1 237
the period
Balance at 241 76 (9) 424 553 1,285 7 1,292
Dec 31, 2005
Dividends - - - - (198) (198) - (198)
Share options 0 1 - - - 1 - 1
exercised
Translation - - (59) - - (59) - (59)
differences
Net investment - - 22 - - 22 - 22
hedge gains
(losses)
Cash flow - - - 16 - 16 - 16
hedges, net of
tax
Available-for- - - - 1 - 1 - 1
sale equity
investments,
net of tax
Redemption of - - - (11) - (11) - (11)
own shares
Other - - 1 2 (1) 2 (2) 0
Net profit for - - - - 409 409 1 410
the period
Balance at 241 77 (45) 432 763 1,468 6 1,474
Dec 31, 2006
Acquisition of Pulping and Power businesses of Aker Kvaerner
On December 29, 2006 Metso completed the acquisition of the
Pulping and Power businesses of Aker Kvaerner, after clearance
was received from the European Commission. The acquired businesses
were consolidated into Metso Paper's balance sheet from the date
of the acquisition.
Part of the excess purchase price, EUR 154 million, was allocated to
intangible assets, representing the calculated fair values of acquired
customer base, new technology and order backlog. The remaining goodwill
arising from the acquisition, EUR 271 million, is based on significant
synergy benefits and widened business portfolio offering Metso
potential
to expand its operations into new markets and customer segments.
Had the acquisition occurred on January 1, 2006, Metso's net sales
would have increased by EUR 600 million. The calculation of pro
forma net income of the acquired businesses would be impracticable
considering the effects of the acquisition cost.
Preliminary details of the acquired net assets and goodwill are as
follows:
Carrying Fair value Fair value
amount allocations
(Millions) EUR EUR EUR
Intangible assets 6 154 160
Property, plant and equipment 25 - 25
Inventories 52 - 52
Trade and other receivables 186 - 186
Other assets 26 - 26
Minority interests (1) - (1)
Advances received (216) - (216)
Deferred tax liabilities (4) (41) (45)
Other liabilities assumed (169) - (169)
Non-interest bearing net assets (95) 113 18
Cash and cash equivalents 247 - 247
Debt assumed (195) - (195)
Purchase price (335) - (335)
Costs related to acquisition (6) - (6)
Goodwill 384 (113) 271
Purchase price settled in cash (307)
Settlement of acquired debt (195)
Costs related to acquisition (6)
Cash and cash equivalents 247
acquired
Cash outflow on acquisition for (261)
2006
Estimated purchase price payable (28)
Total cash outflow on acquisition (289)
Other acquisitions
At the end of August, 2006 Metso completed the acquisition of a
Chinese paper machine manufacturer Shanghai-Chenming Paper Machinery
Co. Ltd. at a cash price of EUR 12 million and debt assumed EUR 19
million. The company is consolidated into Metso Paper from September
1, 2006.
Metso acquired in September 2006 the business operations of two
Swedish companies Svensk Gruvteknik AB and Svensk Pappersteknik AB at
a total price of EUR 4 million. The acquired businesses were
transferred into Metso on October 1, 2006 and they are included in
the figures of Metso Minerals and Metso Paper from that date.
In December Metso acquired the remaining 35% minority interest of
Metso-SHI Co., Ltd. in Japan from Sumitomo Heavy Industries. The
price of the transaction was EUR 2 million.
For the year ended December 31, 2006, the net sales of acquired
businesses described above, which have been included in Metso's
consolidated financial statements, amounted to EUR 6 million and
their net loss was EUR 2 million. Had the acquisitions occurred on
January 1, 2006, Metso's net sales would have increased by EUR 15
million and net income would have decreased by EUR 8 million.
In August 2005, Metso acquired Texas Shredder, Inc., a U.S. supplier
of metal shredder products located in San Antonio, Texas. The total
acquisition price was EUR 14 million. Texas Shredder is included in
Metso Minerals' figures from the beginning of September, 2005.
In 2005, Metso also made some minor acquisitions in Spain to
strengthen its aftermarket and maintenance services within pulp and
paper industry. The acquired businesses are included in Metso Paper's
figures from the date of their acquisition.
For the year ended December 31, 2005, the net sales of the businesses
acquired in 2005, which have been included in Metso's consolidated
financial statements, amounted to EUR 23 million and their net
income was EUR 1 million. Had the acquisitions occurred on January 1,
2005, Metso's net sales for 2005 would have increased by EUR
38 million and there would have been no effect on Metso's net
income for 2005.
Information on other acquisitions for the years ended December 31,
2005 and 2006 is as follows:
2006 2005
(Millions) EUR EUR
Intangible assets 4 8
Property, plant and equipment 24 2
Inventories 5 6
Trade and other receivables 0 8
Other assets 1 3
Minority interests 2 (1)
Advances received (6) 0
Deferred tax liabilities 0 (3)
Other liabilities assumed (8) (12)
Non-interest bearing net assets 22 11
Cash and cash equivalents acquired 2 2
Debt assumed (19) 0
Purchase price (18) (16)
Costs related to acquisitions 0 0
Goodwill 13 3
Purchase price settled in cash (18) (16)
Costs related to acquisitions 0 0
Cash and cash equivalents acquired 2 2
Cash outflow on acquisitions (16) (14)
ASSETS PLEDGED AND CONTINGENT LIABILITIES
Dec 31, 2006 Dec 31, 2005
(Millions) EUR EUR
Mortgages on corporate debt 14 3
Other pledges and
contingencies
Mortgages 2 2
Pledged assets 0 0
Guarantees on behalf of - -
associated company obligations
Other guarantees 6 5
Repurchase and other 10 12
commitments
Lease commitments 166 125
NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS
Dec 31, 2006 Dec 31, 2005
(Millions) EUR EUR
Forward exchange rate 1,357 1,159
contracts
Interest rate and currency 1 2
swaps
Currency swaps 1 1
Interest rate swaps 143 183
Interest rate futures - 20
contracts
Option agreements
Bought 7 29
Sold 6 55
The notional amount of electricity forwards was 475 GWh as of December
31, 2006 and 354 GWh as of December 31, 2005. The notional amounts
indicate the volumes in the use of derivatives, but do not indicate
the exposure to risk.
KEY RATIOS
1-12/2006 1-12/2005
Earnings per share from continuing 2.89 1.57
operations,
EUR
Earnings per share from discontinued - 0.12
operations,
EUR
Earnings per share from continuing and 2.89 1.69
discontinued
operations, EUR
Equity/share at end of period, EUR 10.38 9.08
Return on equity (ROE), % (annualized) 30.3 20.9
Return on capital employed (ROCE), 22.2 18.8
% (annualized)
Equity to assets ratio at end of period, 36.1 37.5
%
Gearing at end of period, % 30.8 22.4
Free cash flow 327 106
Free cash flow/share 2.31 0.76
Gross capital expenditure of continuing 131 107
operations (excl. business acquisitions)
Business acquisitions, net of cash 277 14
acquired
Depreciation and amortization of 105 102
continuing operations
Number of outstanding shares at end of 141,359 141,594
period (thousands)
Average number of shares (thousands) 141,581 139,639
Average number of diluted shares 141,600 139,665
(thousands)
EXCHANGE RATES USED
1-12/ 1-12/ Dec 31, Dec 31,
2006 2005 2006 2005
USD (US dollar) 1.2630 1.2448 1.3170 1.1797
SEK (Swedish krona) 9.2533 9.2801 9.0404 9.3885
GBP (Pound sterling) 0.6819 0.6839 0.6715 0.6853
CAD (Canadian dollar) 1.4267 1.5097 1.5281 1.3725
BRL (Brazilian real) 2.7375 3.0459 2.8105 2.7446
BUSINESS AREA INFORMATION
NET SALES
10-12/ 10-12/ 1-12/ 1-12/ Change,
2006 2005 2006 2005 %
(Millions) EUR EUR EUR EUR
Metso Paper 678 510 1,947 1,702 14.4
Metso Minerals 623 517 2,174 1,735 25.3
Metso Automation 193 163 613 584 5.0
Metso Ventures 92 88 332 284 16.9
Intra Metso net (48) (24) (111) (84)
sales
Metso total 1,538 1,254 4,955 4,221 17.4
OTHER OPERATING INCOME (+) AND EXPENSES (-), NET
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Metso Paper (0.5) (2.1) (1.2) (4.6)
Metso Minerals 0.6 2.4 5.9 6.7
Metso Automation 0.4 (0.5) 0.3 (0.9)
Metso Ventures 0.2 (0.2) 0.4 3.4
Corporate office and (1.1) 2.4 0.4 7.4
other
Metso total (0.4) 2.0 5.8 12.0
SHARE IN PROFITS OF ASSOCIATED COMPANIES
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Metso Paper 0.7 0.3 1.6 2.3
Metso Minerals 0.0 0.2 0.1 0.2
Metso Automation 0.2 0.1 0.8 0.5
Metso Ventures (0.4) (0.2) (1.6) (1.7)
Corporate office and - - - -
other
Metso total 0.5 0.4 0.9 1.3
REVERSAL OF FINNISH PENSION LIABILITY TEL
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Metso Paper - 2.0 - 3.2
Metso Minerals - 0.2 - 0.4
Metso Automation - 0.4 - 0.8
Metso Ventures - 0.4 - 0.6
Corporate office and - 0.1 - 0.1
other
Metso total - 3.1 - 5.1
OPERATING PROFIT (LOSS)
10-12/ 10-12/ 1-12/ 1-12/ Change,
2006 2005 2006 2005 %
(Millions) EUR EUR EUR EUR
Metso Paper 29.9 27.7 110.2 90.9 21.2
Metso Minerals 79.4 52.6 286.0 177.6 61.0
Metso Automation 31.8 23.4 86.7 80.7 7.4
Metso Ventures (5.6) 4.7 1.7 10.8 (84.3)
Corporate office (10.5) (6.9) (27.4) (25.0) 9.6
and other
Metso total 125.0 101.5 457.2 335.0 36.5
OPERATING PROFIT (LOSS), % OF NET SALES
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
% % % %
Metso Paper 4.4 5.4 5.7 5.3
Metso Minerals 12.7 10.2 13.2 10.2
Metso Automation 16.5 14.4 14.1 13.8
Metso Ventures (6.1) 5.3 0.5 3.8
Metso total 8.1 8.1 9.2 7.9
ORDERS RECEIVED
10-12/ 10-12/ 1-12/ 1-12/ Change,
2006 2005 2006 2005 %
(Millions) EUR EUR EUR EUR
Metso Paper 644 753 2,139 1,993 7.3
Metso Minerals 697 568 2,630 1,936 35.8
Metso Automation 162 150 717 580 23.6
Metso Ventures 83 100 332 324 2.5
Intra Metso orders (29) (34) (113) (88)
received
Metso total 1,557 1,537 5,705 4,745 20.2
QUARTERLY INFORMATION
NET SALES
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 510 390 433 446 678
Metso Minerals 517 498 534 519 623
Metso Automation 163 134 140 146 193
Metso Ventures 88 78 84 78 92
Intra Metso net (24) (22) (21) (20) (48)
sales
Metso total 1,254 1,078 1,170 1,169 1,538
OTHER OPERATING INCOME (+) AND EXPENSES (-), NET
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper (2.1) 0.4 1.7 (2.8) (0.5)
Metso Minerals 2.4 2.2 3.1 0.0 0.6
Metso Automation (0.5) 0.2 0.1 (0.4) 0.4
Metso Ventures (0.2) 0.6 0.1 (0.5) 0.2
Corporate office 2.4 (1.8) 2.9 0.4 (1.1)
and other
Metso total 2.0 1.6 7.9 (3.3) (0.4)
OPERATING PROFIT (LOSS)
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 27.7 20.9 27.2 32.2 29.9
Metso Minerals 52.6 59.9 70.8 75.9 79.4
Metso Automation 23.4 15.3 19.6 20.0 31.8
Metso Ventures 4.7 5.7 2.5 (0.9) (5.6)
Corporate office (6.9) (6.4) (3.7) (6.8) (10.5)
and other
Metso total 101.5 95.4 116.4 120.4 125.0
CAPITAL EMPLOYED
Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 329 239 273 255 617
Metso Minerals 895 921 924 940 949
Metso Automation 125 123 132 130 149
Metso Ventures 78 75 71 85 55
Corporate office 653 780 655 743 534
and other
Metso total 2,080 2,138 2,055 2,153 2,304
ORDERS RECEIVED
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 753 496 527 472 644
Metso Minerals 568 681 620 632 697
Metso Automation 150 191 181 183 162
Metso Ventures 100 103 84 62 83
Intra Metso orders (34) (34) (22) (28) (29)
received
Metso total 1,537 1,437 1,390 1,321 1,557
ORDER BACKLOG
Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 1,267 1,372 1,453 1,482 2,165
Metso Minerals 852 1,021 1,078 1,189 1,254
Metso Automation 179 234 272 309 276
Metso Ventures 104 129 128 115 96
Intra Metso order (52) (64) (67) (73) (54)
backlog
Metso total 2,350 2,692 2,864 3,022 3,737
PERSONNEL
Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2005 2006 2006 2006 2006
Metso Paper 8,201 8,233 8,640 8,766 10,867
Metso Minerals 8,521 8,650 8,847 8,892 9,170
Metso Automation 3,169 3,170 3,341 3,315 3,352
Metso Ventures 1,993 2,031 2,054 2,040 1,967
Corporate office 294 319 339 329 322
and Shared services
Metso total 22,178 22,403 23,221 23,342 25,678
Key figures, Metso Ventures
Metso Panelboard 1-12/2006 1-12/2005
(Millions) EUR EUR
Net sales 115 112
Operating loss (23.3) (2.7)
Capital employed at end of period (6) 16
Order backlog at end of period 42 50
Personnel at end of period 282 281
Metso Foundries 1-12/2006 1-12/2005
(Millions) EUR EUR
Net sales 95 82
Operating profit 4.9 5.3
Capital employed at end of period 35 30
Order backlog at end of period 51 45
Personnel at end of period 657 618
Valmet Automotive 1-12/2006 1-12/2005
(Millions) EUR EUR
Net sales 109 78
Operating profit 11.7 5.9
Capital employed at end of period 23 30
Amount of vehicles produced 32,393 21,233
Personnel at end of period 1,013 1,068
BUSINESS AREA INFORMATION BY NEW ORGANIZATION STRUCTURE
(1.1.2007)
In September 2006, Metso announced that it would dismantle the Metso
Ventures business area as of January 1, 2007. Two of Metso Ventures
three foundries were transferred under Metso Paper and one under
Metso Minerals. Metso Panelboard became part of Metso Paper.
Metso Powdermet Oy became part of Metso Minerals and Metso Powdermet AB
that was disposed of as of Dec 29, 2006, is reported as part of
Corporate Office and other. Valmet Automotive is reported as part of
the Corporate office and others group. Segment information
in accordance with the new organization structure is presented
in the tables below.
NET SALES
10-12/ 10-12/ 1-12/ 1-12/ Change,
2006 2005 2006 2005 %
(Millions) EUR EUR EUR EUR
Metso Paper 717 554 2,092 1,842 13.6
Metso Minerals 630 523 2,199 1,756 25.2
Metso Automation 193 163 613 584 5.0
Valmet Automotive 28 25 109 77 41.6
Corporate office 3 3 10 9 11.1
and other
Corporate office 31 28 119 86 38.4
and others total
Intra Metso net (33) (14) (68) (47)
sales
Metso total 1,538 1,254 4,955 4,221 17.4
OTHER OPERATING INCOME (+) AND EXPENSES (-), NET
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Metso Paper (10.4) (2.3) (11.0) (4.9)
Metso Minerals 10.7 2.4 16.1 6.8
Metso Automation 0.4 (0.5) 0.3 (0.9)
Valmet Automotive 0.0 0.0 0.0 0.0
Corporate office (1.1) 2.4 0.4 11.0
and other
Corporate office and (1.1) 2.4 0.4 11.0
others total
Metso total (0.4) 2.0 5.8 12.0
SHARE IN PROFITS OF ASSOCIATED COMPANIES
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Metso Paper 0.7 0.3 1.7 2.3
Metso Minerals 0.0 0.2 0.1 0.2
Metso Automation 0.2 0.1 0.8 0.5
Valmet Automotive - - - -
Corporate office (0.4) (0.2) (1.7) (1.7)
and other
Corporate office and (0.4) (0.2) (1.7) (1.7)
others total
Metso total 0.5 0.4 0.9 1.3
REVERSAL OF FINNISH PENSION LIABILITY (TEL)
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
(Millions) EUR EUR EUR EUR
Metso Paper - 2.2 - 3.4
Metso Minerals - 0.2 - 0.4
Metso Automation - 0.4 - 0.8
Valmet Automotive - 0.2 - 0.4
Corporate office - 0.1 - 0.1
and other
Corporate office and - 0.3 - 0.5
others total
Metso total - 3.1 - 5.1
OPERATING PROFIT (LOSS)
10-12/ 10-12/ 1-12/ 1-12/ Change,
2006 2005 2006 2005 %
(Millions) EUR EUR EUR EUR
Metso Paper 13.2 26.9 89.8 91.5 (1.9)
Metso Minerals 90.0 52.9 297.7 179.4 65.9
Metso Automation 31.8 23.4 86.7 80.7 7.4
Valmet Automotive 1.0 5.8 11.7 6.0 95.0
Corporate office (11.0) (7.5) (28.7) (22.6) 27.0
and other
Corporate office (10.0) (1.7) (17.0) (16.6) 2.4
and others total
Metso total 125.0 101.5 457.2 335.0 36.5
OPERATING PROFIT (LOSS), % OF NET SALES
10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
% % % %
Metso Paper 1.8 4.9 4.3 5.0
Metso Minerals 14.3 10.1 13.5 10.2
Metso Automation 16.5 14.4 14.1 13.8
Valmet Automotive 3.6 23.2 10.7 7.8
Corporate office N/A N/A N/A N/A
and other
Corporate office and N/A N/A N/A N/A
others total
Metso total 8.1 8.1 9.2 7.9
ORDERS RECEIVED
10-12/ 10-12/ 1-12/ 1-12/ Change,
2006 2005 2006 2005 %
(Millions) EUR EUR EUR EUR
Metso Paper 677 807 2,276 2,164 5.2
Metso Minerals 705 573 2,655 1,963 35.3
Metso Automation 162 150 717 580 23.6
Valmet Automotive 28 26 109 78 39.7
Corporate office 4 4 15 12 25.0
and other
Corporate office 32 30 124 90 37.8
and others total
Intra Metso orders (19) (23) (67) (52)
received
Metso total 1,557 1,537 5,705 4,745 20.2
QUARTERLY INFORMATION BY NEW ORGANIZATION STRUCTURE (1.1.2007)
NET SALES
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 554 417 469 489 717
Metso Minerals 523 503 541 525 630
Metso Automation 163 134 140 146 193
Valmet Automotive 25 31 28 22 28
Corporate office 3 3 2 2 3
and other
Corporate office 28 34 30 24 31
and others total
Intra Metso net (14) (10) (10) (15) (33)
sales
Metso total 1,254 1,078 1,170 1,169 1,538
OTHER OPERATING INCOME (+) AND EXPENSES (-), NET
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper (2.3) 0.9 1.7 (3.2) (10.4)
Metso Minerals 2.4 2.3 3.2 (0.1) 10.7
Metso Automation (0.5) 0.2 0.1 (0.4) 0.4
Valmet Automotive 0.0 0.0 0.0 0.0 0.0
Corporate office 2.4 (1.8) 2.9 0.4 (1.1)
and other
Corporate office 2.4 (1.8) 2.9 0.4 (1.1)
and others total
Metso total 2.0 1.6 7.9 (3.3) (0.4)
OPERATING PROFIT (LOSS)
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 26.9 21.5 25.1 30.0 13.2
Metso Minerals 52.9 60.2 71.6 75.9 90.0
Metso Automation 23.4 15.3 19.6 20.0 31.8
Valmet Automotive 5.8 5.0 4.0 1.7 1.0
Corporate office (7.5) (6.6) (3.9) (7.2) (11.0)
and other
Corporate office (1.7) (1.6) 0.1 (5.5) (10.0)
and others total
Metso total 101.5 95.4 116.4 120.4 125.0
CAPITAL EMPLOYED
Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 363 266 300 292 631
Metso Minerals 907 934 939 955 967
Metso Automation 125 123 132 130 149
Valmet Automotive 30 32 28 31 23
Corporate office 655 783 656 745 534
and other
Corporate office 685 815 684 776 557
and others total
Metso total 2,080 2,138 2,055 2,153 2,304
ORDERS RECEIVED
10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 807 544 564 491 677
Metso Minerals 573 686 628 636 705
Metso Automation 150 191 181 183 162
Valmet Automotive 26 31 28 22 28
Corporate office 4 2 3 6 4
and other
Corporate office 30 33 31 28 32
and others total
Intra Metso orders (23) (17) (14) (17) (19)
received
Metso total 1,537 1,437 1,390 1,321 1,557
ORDER BACKLOG
Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2005 2006 2006 2006 2006
(Millions) EUR EUR EUR EUR EUR
Metso Paper 1,335 1,459 1,540 1,547 2,225
Metso Minerals 874 1,043 1,101 1,213 1,277
Metso Automation 179 234 272 309 276
Valmet Automotive - - - - -
Corporate office 4 3 3 7 0
and other
Corporate office 4 3 3 7 0
and others total
Intra Metso order (42) (47) (52) (54) (41)
backlog
Metso total 2,350 2,692 2,864 3,022 3,737
PERSONNEL
Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2005 2006 2006 2006 2006
Metso Paper 8,852 8,902 9,328 9,445 11,558
Metso Minerals 8,785 8,914 9,124 9,158 9,433
Metso Automation 3,169 3,170 3,341 3,315 3,352
Valmet Automotive 1,068 1,088 1,077 1,082 1,013
Corporate office 304 329 351 342 322
and other
Corporate office 1,372 1,417 1,428 1,424 1,335
and others total
Metso total 22,178 22,403 23,221 23,342 25,678
Notes to the Financial Statements Release
This Financial Statements Release has been prepared in accordance
with IAS 34 Interim Financial Reporting.
In August 2005, IASB issued IFRS 7 Financial Instruments:
Disclosures which requires the company to disclose information
enabling users of its financial statements to evaluate the
significance of financial instruments on its financial position
and performance. Metso does not expect the new disclosure
requirements to have a material impact on its financial
statements. Metso will begin to apply IFRS 7 and the related
amendments to IAS 1 Presentation of Financial Statements from
January 1, 2007.
In November 2006, IASB issued IFRS 8 Operating Segments. Metso
does not expect the new disclosure requirements to have an impact
to its financial statements. Metso will apply the standard for the
financial year beginning on January 1, 2007 provided that it will
receive the endorsement from EU.
Tax losses carried forward and related deferred tax assets as at
December 31 stated by the most significant countries are as
follows:
Tax losses Deferred tax Not Deferred tax
carried asset recorded asset in
forward balance sheet
(Millions) EUR EUR EUR EUR
2005
Finland 257 67 0 67
USA 154 59 59 0
Germany 63 23 0 23
Other 81 23 18 5
Total 555 172 77 95
Tax losses Deferred tax Not Deferred tax
carried asset recorded asset in
forward balance sheet
(Millions) EUR EUR EUR EUR
2006
Finland 164 43 0 43
USA 77 32 0 32
Germany 51 19 0 19
Other 92 27 10 17
Total 384 121 10 111
Shares traded on the Helsinki and New York Stock Exchanges
The Helsinki Stock Exchange traded 267 million Metso Corporation
shares in 2006, equivalent to a turnover of EUR 8,123 million. The
share price on December 31, 2006 was EUR 38.24. The highest
quotation was EUR 38.65 and the lowest EUR 23.21.
The New York Stock Exchange traded 5 million Metso ADRs (American
Depository Receipts), equivalent to a turnover of USD 175 million.
The price of an ADR on December 31, 2006 was USD 50.50. The
highest quotation was USD 50.82 and the lowest USD 27.84.
DISCLOSURES OF CHANGES IN HOLDINGS
The following is a brief account of shareholders disclosures,
received by Metso, of changes in holdings in the company during
2006.
J.P. Morgan Chase & Co. announced that the funds they managed held
7,197,701 Metso shares/ADRs on January 9, 2006, corresponding to
5.08 percent of the paid up share capital of Metso Corporation.
Deutsche Bank AG announced that, together with its subsidiary
companies, it was in possession of 4.96 percent of the share
capital and 4.48 percent of the voting rights of Metso Corporation
on January 9, 2006.
Deutsche Bank AG announced that, together with its subsidiary
companies, it was in possession of 5.02 percent of the share
capital and 4.48 percent of the voting rights of Metso Corporation
on January 10, 2006.
Deutsche Bank AG announced that, together with its subsidiary
companies, it was in possession of 4.96 percent of the share
capital and 4.42 percent of the voting rights of Metso Corporation
on January 11, 2006.
J.P. Morgan Chase & Co. announced that the funds they managed held
7,055,242 Metso shares/ADRs on January 19, 2006, corresponding to
4.98 percent of the paid up share capital of Metso Corporation.
Deutsche Bank AG announced that, together with its subsidiary
companies, it was in possession of 5.15 percent of the share
capital and 4.40 percent of the voting rights of Metso Corporation
on February 7, 2006.
Deutsche Bank AG announced that, together with its subsidiary
companies, it was in possession of 4.79 percent of the share
capital and 4.06 percent of the voting rights of Metso Corporation
on February 21, 2006.
Fidelity International Limited announced that, together with its
subsidiary companies, it owned 4.98 percent of the share capital
and voting rights of Metso Corporation on March 16, 2006.
Fidelity International Limited announced that, together with its
subsidiary companies, it owned 5.11 percent of the share capital
and voting rights of Metso Corporation on March 20, 2006.
Fidelity International Limited announced that, together with its
subsidiary companies, it owned 3.98 percent of the share capital
and voting rights of Metso Corporation on March 29, 2006.
Fidelity International Limited announced that, together with its
subsidiary companies, it owned 5.12 percent of the share capital
and voting rights of Metso Corporation on April 21, 2006.
Fidelity International Limited announced that, together with its
subsidiary companies, it owned 4.84 percent of the share capital
and voting rights of Metso Corporation on May 26, 2006.
J.P. Morgan Chase & Co. announced that the funds they managed
owned 5.03 percent of the share capital of Metso Corporation on
July 31, 2006.
Marathon Asset Management LLP announced that they had 7,032,235
Metso shares on August 25, 2006, which corresponds to 4.96 percent
of the share capital of Metso Corporation. Out of this holding,
Marathon Asset Management LLP was in possession of 4,885,862
shares to which they had voting rights. This voting authority
represents 3.45 percent of the total voting rights in Metso.
Fidelity Management Research Corporation announced that it
together with its subsidiaries owned 4.95 percent of the share
capital and voting rights of Metso Corporation on October 2, 2006.
J.P. Morgan Chase & Co. announced that the funds they managed held
7,070,989 Metso shares on October 30, 2006 corresponding to 4.99
percent of the paid up share capital of Metso Corporation.
J.P. Morgan Chase & Co. announced that the funds they managed held
7,348,896 Metso shares on November 29, 2006 corresponding to 5.19
percent of the paid up share capital of Metso Corporation.
Metso's Interim Reviews in 2007
Metso's Interim Review for JanuaryMarch will be published on
April 27, 2007, Interim Review for JanuaryJune on July 26, 2007,
and Interim Review for JanuarySeptember on October 25, 2007. The
printed Annual Report for 2006 will be published during the week
starting on March 12, 2007.
Metso is a global engineering and technology corporation with 2006
net sales of approximately EUR 5 billion. Its 25,500 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.
www.metso.com
For further information, please contact:
Jorma Eloranta, President and CEO, Metso Corporation, tel. +358
204 84 3000
Olli Vaartimo, Executive Vice President and CFO, Metso
Corporation, tel. +358 204 84 3010
Johanna Sintonen, Vice President, Investor Relations, Metso
Corporation, tel. +358 204 84 3253
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 companys 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 Corporation
Olli Vaartimo Kati Renvall
Executive Vice President and CFO Vice President,
Corporate Communications
Distribution:
Helsinki Stock Exchange
New York Stock Exchange
The media
www.metso.com