Metso Corporation’s Interim Review January 1 – September 30, 2012

Highlights of the third quarter of 2012

• New orders worth EUR 1,511 million were received in July-September (EUR 1,918 million). Orders declined, mainly in the Pulp, Paper and Power segment. Orders received by the services business across all segments increased strongly to EUR 830 million and represented 57 percent of all orders received (EUR 717 million and 39%).
• Net sales increased 12 percent compared to the same period last year and were EUR 1,754 million (EUR 1,561 million). Services business net sales were up 11 percent and totaled EUR 788 million, accounting for 46 percent of total net sales (EUR 711 million and 48%).
• Earnings before interest, tax, and amortization (EBITA), before non-recurring items, increased 5 percent and were EUR 171 million, i.e. 9.7 percent of net sales (EUR 163 million and 10.4%).
• Earnings per share were EUR 0.74 (EUR 0.63).
• Free cash flow was EUR 118 million (EUR 213 million).

Our guidance for financial performance during 2012 remains unchanged

We estimate that our net sales for 2012 will grow compared to 2011 and that our profit (EBITA before non-recurring items) will improve.

The estimates for our financial performance in 2012 are based on Metso’s current market outlook, strong order backlog for 2012, and current business scope, as well as on foreign exchange rates remaining similar to those in September 2012.

Metso’s President and CEO Matti Kähkönen comments on the third quarter:

Demand was very much in line with our expectations. We experienced some softening in mining projects towards the end of the quarter, although demand remained at a historically good level. Quarterly orders were satisfactory, considering that we did not receive any large project orders. I am pleased with the growth of our services orders, in particular, and this will support good net sales development in services going forward. Group net sales and EBITA both increased and were on a healthy level.

In September, we took the decision to restructure our paper machine business in Finland as a result of the permanent changes that have been experienced in the industry. By implementing these necessary changes, we can ensure that we will be able to maintain our competitiveness and leading position in a rapidly changing business environment.

Short-term outlook

Market development

Demand has been healthy in most of our customer industries during the year, with some variation between different customer industries and geographical areas. Increased uncertainty was experienced in the global economy, mainly due to a slowdown in India and China. However, we anticipate that the operating environment in emerging markets will remain good in most of our customer industries. We anticipate that most of our customer industries will continue to utilize their capacity at a good or satisfactory level, thereby supporting our services business.

We expect underlying demand in the mining market to remain on a historically good level. It is possible, however, that demand for capital equipment might be slightly lower during the next couple of quarters. Due to the high utilization rates expected at mines, our large installed equipment base, and our stronger services presence, we expect demand for our mining services to remain excellent. Demand for construction equipment is projected to stay flat and to be satisfactory in the Asia-Pacific region and Brazil. We anticipate that demand for equipment used in aggregates processing by the construction industry in Europe and North America will stay at current relatively low levels going forward. Demand for our construction industry services is expected to remain satisfactory.

Demand for process automation systems and flow control products and services is also expected to remain good. The strength of the oil and gas industry is expected to offset the anticipated slowdown in pulp and paper industry.

The market for pulp mills is expected to remain satisfactory, with good demand for rebuilds and services. Demand for papermaking lines is expected to remain weak. Capacity utilization rates in the paper and board industry might decline somewhat, although the outlook for services is good. Demand for power plants that use renewable energy sources, together with that for power plant services, is expected to remain satisfactory.