UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Metso Corporation

(Translation of registrant’s name into English)
Fabianinkatu 9 A,
P.O. Box 1220
FI-00101
Helsinki, Finland

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F þ      Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o       No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g-3-2(b): 82-

 

 

SIGNATURES

Date April 27, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.

Name:

Olli Vaartimo		Aleksanteri Lebedeff
Executive Vice President and CFO		Senior Vice President,
Metso Corporation		General Counsel
		Metso Corporation

METSO’S INTERIM REVIEW, JANUARY 1 – MARCH 31, 2007

(Helsinki, Finland, April 27, 2007) – Metso Corporation (NYSE: MX; OMXH: MEO1V)

PROFITABLE GROWTH CONTINUED

Highlights of the first quarter
- New orders worth EUR 1,664 million were received in January-March, i.e. 16 percent more than in the corresponding period last year (EUR 1,437 million in Q1/06).
- The order backlog grew by 7 percent from the end of 2006 and was EUR 3,999 million at the end of March (EUR 3,737 million on Dec. 31, 2006).
- Net sales increased by 27 percent and totaled EUR 1,366 million (EUR 1,078 million in Q1/06).
- Earnings before interest, tax and amortization (EBITA) were EUR 121.9 million, i.e. 8.9 percent of net sales (EUR 99.9 million and 9.3% in Q1/06).
- Operating profit (EBIT) was EUR 108.4 million, i.e. 7.9 percent of net sales (EUR 95.4 million
and 8.8% in Q1/06).
- Earnings per share were EUR 0.50 (EUR 0.47 in Q1/06).
- Free cash flow was EUR 97 million (EUR 152 million in Q1/06).
- Return on capital employed (ROCE) was 20.7 percent (20.2% in Q1/06).

“Metso’s January – March order intake was strong, and our order backlog has further strengthened from the record-high year-end figures. This, together with the continuing favorable market outlook, gives us confidence about the rest of the year and beyond,” says Jorma Eloranta, President and CEO, Metso Corporation.

Eloranta notes that Metso’s financial performance was solid despite seasonal factors that are typical for the first quarter. “Our net sales grew significantly over the same period in 2006. Much of the growth is due to our expanded business scope, i.e. the acquisition of the Pulping and Power businesses, but even organically we delivered some 10 percent growth. Also our operating profit improved on the first quarter of 2006.”

Eloranta says that Metso’s outlook for 2007 continues to be favorable. “The financial performance for the rest of the year is expected to be stronger than in the first quarter of 2007. Furthermore, we repeat our estimate that our net sales will grow by more than 20 percent on 2006 and that the operating profit will clearly improve.”

Metso Corporation’s key figures

EUR million			Q1/07				Q1/06			Change %					2006
Net sales			1,366				1,078				27				4,955
Earnings before interest, tax and amortization (EBITA)			121.9				99.9				22				481.1
% of net sales			8.9				9.3								9.7
Operating profit			108.4				95.4				14				457.2
% of net sales			7.9				8.8								9.2
Earnings per share, basic, EUR			0.50				0.47				6				2.89
Orders received			1,664				1,437				16				5,705
Order backlog at end of period			3,999				2,692				49				3,737
Free cash flow			97				152				(36	)			327
Return on capital employed (ROCE), annualized, %			20.7				20.2								22.2
Equity to assets ratio at end of period, %			37.5				38.9								36.1
Gearing at end of period, %			22.9				10.5								30.8

Operating environment and demand for products

The market situation for Metso continued to be favorable during the first quarter.

The demand for new paper and board machines remained good in China, but there were only a few active projects in other market areas. New fiber lines were under planning in South America and Southeast Asia, but the project implementation schedules have been partly open. The increase in the demand for new alternative energy sources kept the demand for new power plants at a good level. The demand for new tissue machines was satisfactory. The demand for aftermarket services in the pulp and paper industry was satisfactory during January-March.

The demand for mining and metal recycling equipment remained excellent. The demand for construction industry equipment continued to be excellent in Continental and Eastern Europe, and was good in other markets. Thanks to the high capacity utilization rates in customer industries, the demand for aftermarket services remained at an excellent level.

The demand for automation systems for the pulp and paper industry and power generation was good. The demand for flow control systems continued to be good in the pulp and paper industry and excellent in the power, oil and gas industry.

Orders received and order backlog

In January-March, the value of orders received by Metso grew by 16 percent on the comparison period and totaled EUR 1,664 million. Growth came from all business areas. Most of the increase in Metso Paper’s orders was attributable to the acquisition of the Pulping and Power businesses at the end of 2006. Metso’s order backlog increased by 7 percent on the end of 2006 and stood at EUR 3,999 million at the end of March.

Metso Paper’s largest orders in the first quarter included a paper machine to Oji Paper in Japan and a board machine to Shandong International Paper & Sun Coated Paperboard in China. Metso Minerals’ largest orders included a grinding system for Boliden’s Aitik mine in Sweden and grinding equipment to Osisko Exploration in Canada. Metso Automation received the biggest single valve order in its history from the Chiyoda-Technip Joint Venture (CTJV) to Qatar.

Orders received by business area

		Q1/07								Q1/06
						% of								% of
		EUR				orders				EUR				orders
		million				received				million				received
Metso Paper			653				39				544				38
Metso Minerals			771				46				686				47
Metso Automation			228				13				191				13
Valmet Automotive			28				2				31				2
Intra-Metso orders received and other			(16	)							(15	)
Total			1,664				100				1,437				100

Orders received by market area

		Q1/07								Q1/06
						% of								% of
		EUR				orders				EUR				orders
		million				received				million				received
Europe			722				43				608				42
North America			297				18				308				21
South and Central America			118				7				182				13
Asia-Pacific			406				25				241				17
Rest of the world			121				7				98				7
Total			1,664				100				1,437				100

Net sales

Metso’s net sales for the first quarter grew by 27 percent on the comparison period and totaled EUR 1,366 million. Excluding the Pulping and Power businesses acquired at the end of 2006, the net sales growth was about 10 percent. All business areas increased their net sales. Excluding the effect of exchange rate translation, the increase would have been 4 percentage points higher. Aftermarket operations accounted for 33 percent (38% in Q1/06) of Metso’s net sales. Decrease in the share of aftermarket operations was mainly due to the acquired Pulping and Power businesses where the share of aftermarket business is low. Measured in euros, the volume of the aftermarket operations increased by 11 percent.

Net sales by business area

		Q1/07								Q1/06
						% of								% of
		EUR				net				EUR				net
		million				sales				million				sales
Metso Paper			666				48				417				39
Metso Minerals			540				39				503				46
Metso Automation			146				11				134				12
Valmet Automotive			28				2				31				3
Intra-Metso net sales and other			(14	)							(7	)
Total			1,366				100				1,078				100

Net sales by market area

		Q1/07								Q1/06
						% of								% of
						net				EUR				net
		EUR million				sales				million				sales
Europe			544				40				456				42
North America			259				19				248				23
South and Central America			218				16				135				13
Asia-Pacific			285				21				185				17
Rest of the world			60				4				54				5
Total			1,366				100				1,078				100

Financial result

Metso’s operating profit in the first quarter was EUR 108.4 million, or 7.9 percent of net sales (EUR 95.4 million or 8.8% in Q1/06). Metso Paper’s operating

profit was affected by a EUR 9 million amortization of intangible assets related to the acquisition of the Pulping and Power businesses and by a EUR 3 million provision for a credit loss related to a customer project. Metso Paper’s and Metso Automation’s operating profit was negatively affected by a steep increase in the price of stainless steel, a key raw material for components.

Earnings before interest, tax and amortization (EBITA) were EUR 121.9 million or 8.9 percent of net sales in the first quarter (EUR 99.9 million or 9.3% in Q1/06).

Metso’s net financial expenses were EUR 8 million (EUR 7 million) in January-March.

Metso’s profit before taxes was EUR 100 million (EUR 88 million). The Corporation’s tax rate is estimated to be about 30 percent in 2007.

The profit attributable to shareholders was EUR 70 million, corresponding to earnings per share of EUR 0.50 (EUR 0.47).

The return on capital employed (ROCE) was 20.7 percent (20.2%) and the return on equity (ROE) was 20.0 percent (22.1%).

Cash flow and financing

Metso’s net cash generated by operating activities was EUR 123 million (EUR 169 million). Net working capital remained at year-end level. Metso’s free cash flow was EUR 97 million (EUR 152 million).

Net interest-bearing liabilities totaled EUR 353 million at the end of March. Gearing (i.e. the ratio of net interest-bearing liabilities to shareholder’s equity) was 22.9 percent, while the equity to asset ratio was 37.5 percent. After the first quarter, following the Annual General Meeting, Metso paid out EUR 212 million in dividends in April, which raised the gearing ratio by approximately 20 percentage points and decreased the equity to assets ratio by approximately 3 percentage points.

Capital expenditure

Metso’s gross capital expenditure was EUR 32 million excluding acquisitions (EUR 26 million). About one third of the expenditure was related to capacity increasing investments.

Metso Paper continued the expansion of the Wuxi service center in China. Metso Minerals had an ongoing capital expenditure project to build a crusher pilot plant and test laboratory at the Tampere unit, Finland. In the first quarter, Metso Automation made a decision to increase the valve production capacity at its Shanghai unit in China.

Metso’s gross capital expenditure for 2007 excluding acquisitions is estimated to increase by some 20 percent on 2006.

Metso’s research and development expenditure totaled EUR 29 million (EUR 25 million) during January-March, i.e. 2.1 percent of Metso’s net sales.

Acquisitions and divestments

On March 30, 2007, Metso Minerals acquired the North American metal recycling technology provider, Bulk Equipment Systems and Technologies Inc. (B.E.S.T. Inc), located in Cleveland, Ohio. The acquisition price, approximately EUR 9 million, was paid in April. The company’s net sales in 2006 were EUR 8 million and it employs approximately 40 people.

On March 1, 2007, Metso Paper sold the majority of Metso Paper AG in Delémont, Switzerland. Metso Paper remains as a minority shareholder in the company. Metso Paper AG is a supplier of roll logistic systems, solutions and services. The company has about 70 employees and annual net sales of approximately EUR 10 million.

Acquisition and integration of the Pulping and Power businesses

Metso closed the acquisition of Aker Kvaerner’s Pulping and Power businesses on December 29, 2006. The estimated acquisition price is EUR 341 million, including EUR 6 million in expenses related to the acquisition and EUR 52 million in net cash. The process to define the final balance sheet values of the acquired businesses continues in accordance with the agreement.

Metso estimates that the annual cost savings achievable through synergies will amount to EUR 20-25 million after integration. About one third of these are expected to be realized during 2007. The non-recurring expenses resulting from integration of the acquired businesses are estimated to be less than EUR 10 million, of which EUR 1 million was recognized in the first quarter and the rest are expected to be recorded in the remaining three quarters in 2007.

Integration of the acquired businesses into Metso Paper has proceeded according to plan. During the first quarter, the customer interface organization was restructured and employee negotiations were conducted regarding the pruning of overlapping activities in Sweden and Finland.

The amortization of intangible assets resulting from the transaction is estimated to be EUR 37 million in 2007, EUR 20 million in 2008 and after that EUR 13 million annually until the intangible assets have been fully amortized. The rest of the transaction price exceeding the balance sheet value will remain as goodwill, which is not amortized. In the first quarter, the amortization of intangible assets amounted to EUR 9 million.

Personnel

Metso had 25,616 employees at the end of March, which was 62 less than at the end of 2006 (25,678 employees). In the first quarter, Metso had an average of 25,647 employees.

Personnel by area

		Mar 31, 2007				Dec 31, 2006				Change %
Finland			9,275				9,281				0
Other Nordic countries			3,555				3,580				(1	)
Other Europe			2,993				3,067				(2	)
North America			3,708				3,715				0
South and Central America			2,410				2,439				(1	)
Asia-Pacific			2,341				2,262				4
Rest of the world			1,334				1,334				—
Total personnel			25,616				25,678				0

Subpoena from U.S. 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.

Share ownership plan

Metso has a share ownership plan for 2006-2008. The maximum number of shares to be allocated to the 2006-2008 incentive plan is 360,000 Metso Corporation shares.

The share ownership plan for the year 2006 was directed to 60 Metso managers. Based on the 2006 earnings period, 99,961 shares corresponding to 0.07 percent of Metso shares were distributed at the end of March 2007. Members of Metso’s Executive Team received 25,815 shares.

Metso’s Board of Directors decided in February to direct the 2007 share ownership plan to a total of 84 Metso managers. The entire Metso Executive Team is included in the sphere of the 2007 incentive plan. The potential reward from the plan will be based on the achieved operating profit of Metso Corporation and its business areas in 2007. The share ownership plan in 2007 will cover a maximum of 125,500 Metso shares. The Metso Executive Team’s allocation of this total is a maximum of 26,500 shares. If the value of Metso share, determined as the average trading price during the first two full weeks of March 2008, exceeds EUR 48, the number of grantable shares for the 2007 plan will be decreased by a corresponding ratio. Payment of the potential rewards will be decided during the first quarter of 2008.

The maximum number of shares to be allocated for the 2008 earnings period as well as the share value limit will be decided by Metso’s Board of Directors in the beginning of 2008.

Shares, options and share capital

A total of 35,000 shares were subscribed with Metso Corporation’s 2003A stock options during a period of February 8 – March 15, 2007. The resulting increase in share capital of EUR 59,500.00 was entered into the Finnish Trade Register on March 29, 2007. The shares were listed on the Helsinki Stock Exchange together with the existing shares as of March 30, 2007. Dividend and other shareholder rights of the new shares commenced from the registration date.

Following this increase, the Company’s share capital at the end of March was EUR 240,982,843.80 and the total number of shares was 141,754,614. At the end of March, the Parent Company held 60,841 Metso shares. Additionally, a partnership included in Metso’s consolidated financial statements held 200,039 Metso shares. Together these shares represent 0.18 percent of all the shares and votes. During the first quarter of 2007, the average number of outstanding shares excluding the own shares mentioned above was 141,364,382.

After cancellations and exercised options there remains a total of 100,000 year 2003A options, all of them being held by Metso’s subsidiary, Metso Capital Ltd.

Metso’s market capitalization excluding the own shares was EUR 5,596 million on March 31, 2007.

BUSINESSES

Metso Paper

EUR million		Q1/07				Q1/06				Change %				2006
Net sales			666				417				60				2,092
Earnings before interest, tax and amortization (EBITA)			37.1				23.8				56				105.6
% of net sales			5.6				5.7								5.0
Operating profit			25.4				21.5				18				89.8
% of net sales			3.8				5.2								4.3
Orders received			653				544				20				2,276
Order backlog at end of period			2,190				1,459				50				2,225
Personnel at end of period			11,469				8,902				29				11,558

Aker Kvaerner’s Pulping and Power businesses were acquired as of December 29, 2006, and the acquired balance sheet was consolidated to Metso on December 31, 2006. The acquired businesses had no effect to Metso’s income statement for 2006 and are therefore not included in the comparative segment information except for order backlog and personnel as at December 31, 2006.

Metso Paper’s net sales increased in January-March by 60 percent and were EUR 666 million. About two thirds of this growth was attributable to the acquisition of the Pulping and Power businesses at the end of 2006. The comparable net sales growth originated mostly from the Paper and Board business line. The aftermarket operations accounted for 26 percent of net sales (35% in Q1/06). The decline in the share of aftermarket business was due to the change in Metso Paper’s structure. Measured in euros, the volume of aftermarket business increased by 19 percent and the growth came from the Pulping and Power businesses.

Metso Paper’s EBITA was EUR 37.1 million, or 5.6 percent of net sales and operating profit was EUR 25.4 million, or 3.8 percent of net sales. The first quarter’s operating profit includes a EUR 9 million amortization of intangible assets related to the acquisition of the Pulping and Power businesses, and a EUR 3 million provision for a credit loss related to a customer project. The rise in the price of stainless steel impacted component prices and thus Metso Paper’s profitability. The Panelboard business recorded a small operating profit in the first quarter.

The value of orders received by Metso Paper increased by 20 percent on the comparison period and were EUR 653 million. The growth was mostly due to the acquisition of the Pulping and Power businesses. In the first quarter, the Paper and Board business line received orders from Asia for four new machines. A long-term maintenance agreement was signed in the review period with Plattling Papier’s mill in Germany. This is Metso Paper’s first extensive service agreement for a paper mill, which is still under construction. The end-of-March order backlog, EUR 2,190 million, was nearly the same as at year-end 2006.

Metso Minerals

EUR million		Q1/07				Q1/06				Change %				2006
Net sales			540				503				7				2,199
Earnings before interest, tax and amortization (EBITA)			68.7				61.5				12				302.1
% of net sales			12.7				12.2								13.7
Operating profit			67.8				60.2				13				297.7
% of net sales			12.6				12.0								13.5
Orders received			771				686				12				2,655
Order backlog at end of period			1,497				1,043				44				1,277
Personnel at end of period			9,545				8,914				7				9,433

Metso Minerals’ first-quarter net sales increased by 7 percent and were EUR 540 million. Deliveries of the Mining business line were up on the comparison period, while those of the Construction business line remained at the level of the comparison period. Deliveries of the Recycling business line were down on the comparison period due to the timing of projects. The aftermarket operations accounted for 44 percent of net sales (44% in Q1/06).

The operating profit of Metso Minerals was EUR 67.8 million, or 12.6 percent of net sales. The Mining business line improved its operating profit from the comparison period mainly due to volume growth. The operating profit of the Construction business line was at the level of the comparison period.

The value of orders received by Metso Minerals was up by 12 percent on the comparison period and totaled EUR 771 million. Growth came evenly from all business lines. The trend in order intake was most favorable in Continental and Eastern Europe. In North America, orders received for mining equipment increased significantly. The order backlog increased by 17 percent on the end of 2006 and was EUR 1,497 million at the end of March.

Metso Automation

EUR million		Q1/07				Q1/06				Change %				2006
Net sales			146				134				9				613
Earnings before interest, tax and amortization (EBITA)			15.9				15.7				1				88.3
% of net sales			10.9				11.7								14.4
Operating profit			15.5				15.3				1				86.7
% of net sales			10.6				11.4								14.1
Orders received			228				191				19				717
Order backlog at end of period			356				234				52				276
Personnel at end of period			3,379				3,170				7				3,352

Metso Automation’s net sales increased in January-March by 9 percent and were EUR 146 million. Deliveries of the Flow Control business line, which manufactures field equipment, increased, while those of the Process Automation Systems business line remained at the level of the comparison period. The aftermarket operations accounted for 22 percent of net sales (24% in Q1/06). Measured in euros, the volume of the aftermarket operations remained at the level of the comparison period.

Metso Automation’s operating profit amounted to EUR 15.5 million or 10.6 percent of net sales. Operating profit was negatively affected by a steep increase in the price of raw materials used in valve casting.

The value of orders received by Metso Automation increased by 19 percent on the comparison period and rose to EUR 228 million. The growth originated mainly from field equipment orders from the power, oil and gas industry. The order backlog increased by 29 percent on the end of 2006 and was EUR 356 million at the end of March.

Valmet Automotive

Valmet Automotive’s net sales in January-March were EUR 28 million. Operating profit was EUR 4.4 million, or 15.7 percent of net sales. In the first quarter, Valmet Automotive manufactured an average of 127 cars per day, but in early April the manufacturing volumes dropped according to plan to 102 cars per day. The decrease was due to general uncertainty in the automotive markets. Valmet Automotive’s number of personnel was adjusted in the first quarter to correspond with the current production level.

Events after the review period

Decisions of the Annual General Meeting

The Annual General Meeting of Metso Corporation approved on April 3, 2007 the accounts for 2006 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 2006. In addition, the Annual General Meeting approved the proposals of the Board of Directors to amend the Articles of Association and to authorize the Board of Directors to resolve of a repurchase of the Corporation’s own shares and of a share issue.

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 along with the director remuneration. 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 the Chairman of the Board and Jaakko Rauramo was re-elected the Vice Chairman of the Board. Eva Liljeblom, Professor at the Swedish School of Economics and Business Administration, Helsinki, Finland, was elected as a new member of the Board. The Board members re-elected were Svante Adde, Maija-Liisa Friman, Christer Gardell and Yrjö Neuvo. The term of office of Board members lasts until the end of the following Annual General Meeting.

The Annual General Meeting decided that the annual remuneration for Board members would 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 would be EUR 500 per meeting.

The auditing company, Authorized Public Accountants PricewaterhouseCoopers was re-elected to act as Auditor of the Corporation until the end of the next Annual General Meeting.

The Annual General Meeting decided that a dividend of EUR 1.50 per share would be paid for the financial year which ended on December 31, 2006. The dividend was paid on April 17, 2007.

Board committees

The Board of Directors elected members among the Board for the Audit Committee and Compensation Committee at its assembly meeting.

The Board’s Audit Committee consists of Maija-Liisa Friman (Chairman), Svante Adde and Eva Liljeblom. The Board of Directors assigned Svante Adde as the financial expert of the Audit Committee.

The Board’s Compensation Committee consists of Matti Kavetvuo (Chairman), Jaakko Rauramo, Christer Gardell and Yrjö Neuvo.

Metso evaluates possible delisting from the New York Stock Exchange

In the beginning of April, Metso Corporation’s Board of Directors decided to evaluate the possible deregistration and delisting of Metso Corporation’s shares from the New York Stock Exchange in view of the revisions to the U.S. Securities Exchange Act of 1934 published by the U.S. Securities and Exchange Commission on March 27, 2007, which will take effect in early June 2007. Metso Corporation’s Board of Directors will decide on the matter later this year after having completed the evaluation.

New service center in Guangzhou

In the beginning of the second quarter, Metso Paper made a decision to build a service center in Guangzhou, China. The value of the investment is approximately EUR 10 million. The new service center will start its operations in 2008.

Short-term risks of business operations

The significance of China as the primary market for new paper and board machines has increased even further, 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 aftermarket operations and increasing the flexibility of its delivery chain.

The delivery times for Metso 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 strong demand situation, the scarcity of certain components and subcontractor resources, particularly at Metso Minerals and Metso Automation, may also lengthen delivery times.

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 of operations or on the price of Metso share.

Short-term outlook

The favorable market outlook for Metso’s products and services is expected to continue for the rest of 2007.

Metso Paper’s market situation is estimated to continue much the same as in the year’s first quarter. The demand for paper, board and tissue machines and for fiber lines is expected to be satisfactory. The demand for power plants is estimated to be good. Also the demand for Metso Paper’s aftermarket services is expected to remain satisfactory.

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

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

It is estimated that Metso’s financial performance for the rest of the year will be stronger than in the first quarter. Metso’s net sales in 2007 are estimated to grow by more than 20 percent on 2006, thanks to the strong order backlog, continuing favorable market situation and the expanded business scope. The operating profit in 2007 is estimated to clearly improve. It is estimated that the operating profit margin in 2007 will be slightly below Metso’s target, which is over 10 percent. 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 financial performance are based on Metso’s current structure, order backlog and market outlook.

Helsinki, April 27, 2007

Metso Corporation’s Board of Directors

The interim review is unaudited

CONSOLIDATED STATEMENTS OF INCOME

		1-3/				1-3/				1-12/
EUR million		2007				2006				2006
Net sales			1,366				1,078				4,955
Cost of goods sold			(1,026	)			(778	)			(3,659	)
Gross profit			340				300				1,296
Selling, general and administrative expenses			(238	)			(206	)			(846	)
Other operating income and expenses, net			6				1				6
Share in profits of associated companies			0				0				1
Operating profit			108				95				457
% of net sales			7.9	%			8.8	%			9.2	%

		1-3/				1-3/				1-12/
EUR million		2007				2006				2006
Financial income and expenses, net			(8	)			(7	)			(36	)
Profit on continuing operations before tax			100				88				421
Income taxes on continuing operations			(30	)			(21	)			(11	)
Profit on continuing operations			70				67				410
Profit (loss) on discontinued operations			—				—				—
Profit (loss)			70				67				410
Profit (loss) attributable to minority interests			0				0				1
Profit (loss) attributable to equity shareholders			70				67				409
Profit (loss)			70				67				410
Earnings per share from continuing operations, EUR
Basic			0.50				0.47				2.89
Diluted			0.50				0.47				2.89
Earnings per share from discontinued operations, EUR
Basic			—				—				—
Diluted			—				—				—
Earnings per share from continuing and discontinued operations, EUR
Basic			0.50				0.47				2.89
Diluted			0.50				0.47				2.89

CONSOLIDATED BALANCE SHEETS

ASSETS

		Mar 31,				Mar 31,				Dec 31,
EUR million		2007				2006				2006
Non-current assets
Intangible assets
Goodwill			772				496				768
Other intangible assets			265				100				274
			1,037				596				1,042
Property, plant and equipment
Land and water areas			54				58				57
Buildings and structures			217				213				221

		Mar 31,				Mar 31,				Dec 31,
EUR million		2007				2006				2006
Machinery and equipment			312				280				318
Assets under construction			29				19				19
			612				570				615
Financial and other assets
Investments in associated companies			19				19				19
Available-for-sale equity investments			15				13				15
Loan and other interest bearing receivables			6				5				6
Available-for-sale financial assets			5				34				5
Deferred tax asset			218				156				228
Other non-current assets			29				47				33
			292				274				306
Total non-current assets			1,941				1,440				1,963
Current assets
Inventories			1,276				963				1,112
Receivables
Trade and other receivables			1,074				840				1,218
Cost and earnings of projects under construction in excess of advance billings			302				206				284
Loan and other interest bearing receivables			2				2				2
Available-for-sale financial assets			10				100				10
Tax receivables			20				15				16
			1,408				1,163				1,530
Cash and cash equivalents			371				494				353
Total current assets			3,055				2,620				2,995
Assets held for sale			—				—				—
TOTAL ASSETS			4,996				4,060				4,958

SHAREHOLDERS’ EQUITY AND LIABILITIES

		Mar 31,				Mar 31,				Dec 31,
EUR million		2007				2006				2006
Equity
Share capital			241				241				241
Share premium reserve			77				76				77
Cumulative translation differences			(45	)			(16	)			(45	)
Fair value and other reserves			436				434				432
Retained earnings			827				618				763
Equity attributable to shareholders			1,536				1,353				1,468
Minority interests			6				6				6
Total equity			1,542				1,359				1,474
Liabilities
Non-current liabilities
Long-term debt			590				589				605
Post employment benefit obligations			159				153				157
Deferred tax liability			54				21				57
Provisions			50				32				53
Other long-term liabilities			2				4				2
Total non-current liabilities			855				799				874
Current liabilities
Current portion of long-term debt			107				160				93
Short-term debt			50				29				132
Trade and other payables			1,302				936				1,238
Provisions			203				181				213
Advances received			653				399				655
Billings in excess of cost and earnings of projects under construction			230				164				222
Tax liabilities			54				33				57
Total current liabilities			2,599				1,902				2,610
Liabilities held for sale			—				—				—
Total liabilities			3,454				2,701				3,484
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES			4,996				4,060				4,958

		Mar 31,				Mar 31,				Dec 31,
EUR million		2007				2006				2006
NET INTEREST BEARING LIABILITIES
Long-term interest bearing debt			590				589				605
Short-term interest bearing debt			157				189				225
Cash and cash equivalents			(371	)			(494	)			(353	)
Other interest bearing assets			(23	)			(141	)			(23	)
Total			353				143				454

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

		1-3/				1-3/				1-12/
EUR million		2007				2006				2006
Cash flows from operating activities:
Profit (loss)			70				67				410
Adjustments to reconcile profit (loss) to net cash provided by operating activities
Depreciation			36				26				105
Provisions / Efficiency improvement programs			0				(2	)			(7	)
Interests and dividend income			6				8				26
Income taxes			30				21				11
Other			4				1				7
Change in net working capital			1				62				(18	)
Cash flows from operations			147				183				534
Interest paid and dividends received			0				1				(24	)
Income taxes paid			(24	)			(15	)			(68	)
Net cash provided by (used in) operating activities			123				169				442
Cash flows from investing activities:
Capital expenditures on fixed assets			(32	)			(26	)			(129	)
Proceeds from sale of fixed assets			6				9				14
Business acquisitions, net of cash acquired			—				—				(277	)
Proceeds from sale of businesses, net of cash sold			2				—				13
(Investments in) proceeds from sale of financial assets			3				33				154
Other			0				1				(2	)
Net cash provided by (used in) investing activities			(21	)			17				(227	)
Cash flows from financing activities:

		1-3/				1-3/				1-12/
EUR million		2007				2006				2006
Share options exercised			0				—				1
Redemption of own shares			—				—				(11	)
Dividends paid			—				—				(198	)
Net funding			(85	)			(8	)			35
Other			—				(5	)			(6	)
Net cash provided by (used in) financing activities			(85	)			(13	)			(179	)
Net increase (decrease) in cash and cash equivalents			17				173				36
Effect from changes in exchange rates			1				(2	)			(6	)
Cash and cash equivalents at beginning of period			353				323				323
Cash and cash equivalents at end of period			371				494				353

Free cash flow

		1-3/				1-3/				1-12/
EUR million		2007				2006				2006
Net cash provided by operating activities			123				169				442
Capital expenditures on fixed assets			(32	)			(26	)			(129	)
Proceeds from sale of fixed assets			6				9				14
Free cash flow			97				152				327

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

																						Equi-
																						ty
						Sha-				Cumu-				Fair								attri-
						re				lative				value								bu-
						pre-				trans-				and								table
		Sha-				mium				lation				other				Retai-				to				Mino-				To-
		re				re-				ad-				re-				ned				share-				rity				tal
		capi-				ser-				just-				ser-				ear-				hol-				inte-				equi-
EUR million		tal				ve				ments				ves				nings				ders				rest				ty
Balance at Jan 1, 2006			241				76				(9	)			424				553				1,285				7				1,292
Dividends			—				—				—				—				—				—				—				—
Share options exercised			—				—				—				—				—				—				—				—
Translation differences			—				—				(13	)			—				—				(13	)			—				(13	)
Net investment hedge gains (losses)			—				—				4				—				—				4				—				4

																						Equi-
																						ty
						Sha-				Cumu-				Fair								attri-
						re				lative				value								bu-
						pre-				trans-				and								table
		Sha-				mium				lation				other				Retai-				to				Mino-				To-
		re				re-				ad-				re-				ned				share-				rity				tal
		capi-				ser-				just-				ser-				ear-				hol-				inte-				equi-
EUR million		tal				ve				ments				ves				nings				ders				rest				ty
Cash flow hedges, net of tax			—				—				—				10				—				10				—				10
Available-for- sale equity investments, net of tax			—				—				—				—				—				—				—				—
Other			—				—				2				—				(2	)			—				(1	)			(1	)
Net profit for the period			—				—				—				—				67				67				0				67
Balance at Mar 31, 2006			241				76				(16	)			434				618				1,353				6				1,359
Balance at Dec 31, 2006			241				77				(45	)			432				763				1,468				6				1,474
Dividends			—				—				—				—				—				—				—				—
Share options exercised			0				0				—				—				—				0				—				0
Translation differences			—				—				8				—				—				8				—				8
Net investment hedge gains (losses)			—				—				(8	)			—				—				(8	)			—				(8	)
Cash flow hedges, net of tax			—				—				—				(2	)			—				(2	)			—				(2	)
Available-for- sale equity investments, net of tax			—				—				—				—				—				—				—				—
Redemption of own shares			—				—				—				—				—				—				—				—
Other			—				—				—				6				(6	)			—				—				0
Net profit for the period			—				—				—				—				70				70				0				70
Balance at Mar 31, 2007			241				77				(45	)			436				827				1,536				6				1,542

ACQUISITIONS

Metso Minerals acquired North American metal recycling provider, Bulk Equipment Systems and Technologies Inc (B.E.S.T. Inc), on March 30, 2007. The acquisition price, which was paid in April, was approximately EUR 9 million. The company’s net sales were about EUR 2 million and net income approximately EUR 0.2 million in January-March 2007. Part of the excess purchase price, EUR 2 million, was allocated to intangible assets, representing the calculated preliminary fair values of acquired customer base, brands, new technology and order backlog. The remaining excess arising from the acquisition, EUR 7 million, represents goodwill related to Metso’s improved position in the North American metal recycling market.

Information on acquisitions for January-March 2007 is as follows (there were no acquisitions in the comparison period January-March 2006):

						Fair value
EUR million		Carrying amount				allocations				Fair value
Intangible assets			—				2				2
Property, plant and equipment			0				—				0
Inventories			1				0				1
Trade and other receivables			1				—				1
Deferred tax liabilities			—				(1	)			(1	)
Other liabilities assumed			(1	)			—				(1	)
Non-interest bearing net assets			1				1				2
Cash and cash equivalents acquired			0				—				0
Debt assumed			0				—				0
Purchase price			(9	)			—				(9	)
Goodwill			8				(1	)			7
Purchase price payable											(9	)

ASSETS PLEDGED AND CONTINGENT LIABILITIES

		Mar 31,				Mar 31,				Dec 31,
EUR million		2007				2006				2006
Mortgages on corporate debt			14				3				14
Other pledges and contingencies
Mortgages			2				2				2
Pledged assets			0				0				0
Guarantees on behalf of associated company obligations			—				—				—
Other guarantees			9				4				6
Repurchase and other commitments			9				12				10
Lease commitments			155				123				166

NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS

		Mar 31,				Mar 31,				Dec 31,
EUR million		2007				2006				2006
Forward exchange rate contracts			1,459				1,142				1,357
Interest rate and currency swaps			1				2				1
Currency swaps			1				1				1
Interest rate swaps			143				183				143
Interest rate futures contracts			—				—				—
Option agreements
Bought			11				5				7
Sold			12				11				6

The notional amount of electricity forwards was 463 GWh as of March 31, 2007 and 382 GWh as of March 31, 2006.

The notional amounts indicate the volumes in the use of derivatives, but do not indicate the exposure to risk.

KEY RATIOS

		1-3/				1-3/				1-12/
		2007				2006				2006
Earnings per share from continuing operations, EUR			0.50				0.47				2.89
Earnings per share from discontinued operations, EUR			—				—				—
Earnings per share from continuing and discontinued operations, EUR			0.50				0.47				2.89
Equity/share at end of period, EUR			10.86				9.56				10.38
Return on equity (ROE), % (annualized)			20.0				22.1				30.3
Return on capital employed (ROCE), % (annualized)			20.7				20.2				22.2
Equity to assets ratio at end of period, %			37.5				38.9				36.1
Gearing at end of period, %			22.9				10.5				30.8
Free cash flow			97				152				327
Free cash flow/share			0.68				1.07				2.31
Gross capital expenditure of continuing operations (excl. business acquisitions)			32				26				131
Business acquisitions, net of cash acquired			—				—				277
Depreciation and amortization of continuing operations			36				26				105
Number of outstanding shares at end of period (thousands)			141,494				141,594				141,359
Average number of shares (thousands)			141,364				141,594				141,581
Average number of diluted shares (thousands)			141,364				141,628				141,600

EXCHANGE RATES USED

		1-3/				1-3/				1-12/				Mar 31,				Mar 31,				Dec 31,
		2007				2006				2006				2007				2006				2006
USD (US dollar)			1.3161				1.2032				1.2630				1.3318				1.2104				1.3170
SEK (Swedish krona)			9.2248				9.3769				9.2533				9.3462				9.4315				9.0404
GBP (Pound sterling)			0.6722				0.6868				0.6819				0.6798				0.6964				0.6715
CAD (Canadian dollar)			1.5370				1.3829				1.4267				1.5366				1.4084				1.5281
BRL (Brazilian real)			2.7699				2.6216				2.7375				2.7195				2.6484				2.8105

BUSINESS AREA INFORMATION

Metso Ventures Business Area was dismantled as of January 1, 2007. Two of Metso’s three foundries were transferred to Metso Paper and one to Metso Minerals. Metso Panelboard became part of Metso Paper. Valmet Automotive is reported as part of Corporate Office and others group. Comparative segment information for 2006 is presented according to the new organization structure.

Aker Kvaerner’s Pulping and Power businesses were acquired as of December 29, 2006 and the acquired balance sheet was consolidated to Metso as of December 31, 2006. The acquired businesses had no effect to Metso’s income statement for 2006 and are therefore not included in the comparative segment information except for capital employed, order backlog and personnel as at December 31, 2006.

NET SALES

		1-3/				1-3/				4/2006-3/				1-12/
EUR million		2007				2006				2007				2006
Metso Paper			666				417				2,341				2,092
Metso Minerals			540				503				2,236				2,199
Metso Automation			146				134				625				613
Valmet Automotive			28				31				106				109
Corporate office and other			—				3				7				10
Corporate office and others total			28				34				113				119
Intra Metso net sales			(14	)			(10	)			(72	)			(68	)
Metso total			1,366				1,078				5,243				4,955