UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

Metso Corporation

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 October 25, 2006

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 — September 30, 2006

(Helsinki, Finland, October 25, 2006) — Metso Corporation (NYSE: MX; OMXH: MEO1V)

Strong order intake and profitability improvement continue; Confident outlook for 2007

Highlights of the third quarter

-		New orders worth EUR 1,321 million were received in July-September, i.e. 44 percent more than in the comparison period last year (EUR 916 million in Q3/05).
-		The order backlog grew by 47 percent from the end of September 2005 and was EUR 3,022 million at the end of September 2006 (EUR 2,059 million at September 30, 2005).
-		Net sales increased by 12 percent and totaled EUR 1,169 million (EUR 1,045 million in Q3/05).
-		Operating profit was EUR 120.4 million, i.e. 10.3 percent of net sales (EUR 95.5 million and 9.1% in Q3/05).
-		Earnings per share were EUR 0.59 (EUR 0.47 in Q3/05).
-		Net cash generated by operating activities was EUR 143 million (EUR 15 million in Q3/05).
-		Return on capital employed (ROCE) was 22.1 percent (18.3% in Q3/05).

“Metso’s operating environment remained favorable in the third quarter, resulting in brisk order intake. Consequently, we have now a very strong order backlog, some two-thirds of which will be delivered in 2007 or later,” says Jorma Eloranta, President and CEO of Metso Corporation. “To make the most of this situation, we are now further strengthening our delivery capabilities and global supplier network. We are also steadily developing our aftermarket operations.”

Eloranta points out that Metso’s development has been very consistent — and very strong. “On a rolling 12-months basis Metso’s orders received exceeded EUR 5.6 billion, which illustrates that we have moved into a totally new size category. At the same time, our cost structure has remained healthy despite the strong growth, and our cash flow is also strong.”

“We estimate our good performance to continue also during the last quarter, and consequently it is obvious that 2006 will be the best year ever for Metso. Furthermore, the continued favorable market outlook, strong order backlog and the ongoing internal development projects give us confidence that 2007 will be another good year for Metso,” Eloranta sums up.

Key figures

										Change				Q1-Q3/				Q1-Q3/				Change
EUR million		Q3/06				Q3/05				%				06				05				%				2005
Net sales			1,169				1,045				12				3,417				2,967				15				4,221
Operating profit			120.4				95.5				26				332.2				233.5				42				335.0
% of net sales			10.3				9.1								9.7				7.9								7.9
Earnings per share from continuing operations, basic, EUR			0.59				0.47				26				2.03				1.10				85				1.57
Earnings per share from continuing and discontinued operations, basic, EUR			0.59				0.47				26				2.03				1.22				66				1.69

										Change				Q1-Q3/				Q1-Q3/				Change
EUR million		Q3/06				Q3/05				%				06				05				%				2005
Orders received			1,321				916				44				4,148				3,208				29				4,745
Order backlog from continuing operations at end of period															3,022				2,059				47				2,350
Net cash generated by operating activities			143				15				853				368				121				204				164
Return on capital employed (ROCE), annualized, %															22.1				18.3								18.8
Equity to assets ratio at end of period, %															38.0				36.3								37.5
Gearing at end of period, %															16.6				25.3								22.4

Metso’s third-quarter 2006 review

Operating environment and demand for products in July-September

In the third quarter, the demand for Metso’s products and services continued much the same as in the first half of the year. The construction, mining and energy industry markets were good overall, while the pulp and paper industry markets were satisfactory. The demand for aftermarket services continued to be good in all customer industries.

With respect to Metso Paper’s products, the demand for new paper and board machines was still focused on Asia, and particularly on China. The demand for rebuilds leveled off as expected in Europe and North America partly due to business restructuring in the paper companies. The demand for tissue machines remained good in all markets. The demand for fiber lines continued to be strong in South America and good in Asia.

In the construction industry, the demand for Metso Minerals’ aggregates production-related equipment was mainly good thanks to the ongoing road network projects around the world. The demand for mining equipment continued to be strong in all markets, especially in South America and Australia. The demand for metal recycling equipment was excellent.

The demand for Metso Automation’s field systems that are used for flow control remained excellent. Growth was fastest in the energy sector, due to increasing investments in refineries as a result of growing consumption of oil and gas. The demand for automation systems was good in the energy, oil and gas industry, and satisfactory in the pulp and paper industry.

Orders received in July-September

Metso’s order intake in the third quarter of 2006 was 44 percent higher than in the comparison period of last year. The order intake continued to grow strongest in Metso Minerals with 56 percent increase in the value of orders received on July-September last year. There was also strong growth in orders at Metso Paper (47 percent) and Metso Automation (31 percent). Metso Ventures’ orders were at last year’s level.

The largest orders received in July-September included a large papermaking line for Guangzhou Paper in China, a rebuild of a wood processing and bleaching line and a kraft liner washing line for Klabin in Brazil, a tissue machine for Georgia-

Pacific in North America, crushing, screening and grinding equipment for an iron ore enrichment process for Minerações Brasileiras Reunidas S/A (MBR) in Brazil and grinding, crushing and screening equipment for Xstrata Plc’s Mt Isa Mine operation in Australia.

Financial performance in July-September

Metso’s net sales continued to grow strongly in the third quarter, as in the first half-year. The net sales of Metso Minerals and Metso Paper increased clearly over 10 percent. Metso Automation’s net sales remained at last year’s level in spite of strong order backlog mainly due to delays in deliveries of valves. Metso Automation’s delivery capability was impeded by a shortage of components, limited availability of subcontractor capacity as well as the fire that took place in July at the Helsinki valve assembly plant in Finland. The deliveries of Metso Ventures grew by almost 25 percent.

Metso’s profitability continued to improve in July-September with 26 percent higher operating profit than in the comparison period last year. Metso’s operating profit margin rose to 10.3 percent. Metso Minerals and Metso Paper improved their operating profits on the comparison period due to increased delivery volumes. The third quarter operating profit of Metso Automation was weaker than in the comparison period. The main reason for this were the increased fixed costs due to strengthening of sales and service resources.

Metso’s January-September 2006 Interim Review

Orders received and order backlog

In January-September, the value of orders received by Metso rose by 29 percent on the comparison period (January-September 2005), and totaled EUR 4,148 million. The order intake grew in all business areas. The order intake grew relatively strongest in Metso Paper’s Tissue Business Line, Metso Minerals’ Minerals Processing Business Line and Metso Automation’s Field Systems Business Line. Metso’s order backlog grew by 29 percent on the end of 2005 and stood at EUR 3,022 million at the end of September.

Orders received by business area

		Q1-Q3/06								Q1-Q3/05
		EUR				% of				EUR				% of
		million				orders				million				orders
						received								received
Metso Paper			1,495				35				1,240				38
Metso Minerals			1,933				46				1,368				42
Metso Automation			555				13				430				13
Metso Ventures			249				6				224				7
Intra-Metso orders received			(84	)							(54	)
Total			4,148				100				3,208				100

Orders received by market area

		Q1-Q3/06								Q1-Q3/05
		EUR				% of				EUR				% of
		million				orders				million				orders
						received								received
Europe			1,522				37				1,341				42
North America			879				21				680				21
South and Central America			519				12				344				11
Asia-Pacific			946				23				700				22
Rest of the world			282				7				143				4
Total			4,148				100				3,208				100

Net sales

In January-September, Metso’s net sales rose by 15 percent on the comparison period and totaled EUR 3,417 million. The increase was due both to the continuing good market situation and to strengthened competitiveness, and was attributable especially to Metso Minerals. Approximately two percentage points of the increase of net sales were attributable to the exchange rate translation effect. Aftermarket operations accounted for 37 percent (38% in Q1-Q3/05) of Metso’s net sales (excluding Metso Ventures). Measured in euros, the volume of aftermarket operations increased by 13 percent.

Net sales by business area

		Q1-Q3/06								Q1-Q3/05
		EUR				% of net				EUR				% of net
		million				sales				million				sales
Metso Paper			1,269				36				1,192				39
Metso Minerals			1,551				45				1,218				40
Metso Automation			420				12				421				14
Metso Ventures			240				7				196				7
Intra-Metso net sales			(63	)							(60	)
Total			3,417				100				2,967				100

Net sales by market area

		Q1-Q3/06								Q1-Q3/05
		EUR				% of net				EUR				% of net
		million				sales				million				sales
Europe			1,431				42				1,341				45
North America			749				22				628				21
South and Central America			436				13				337				12
Asia-Pacific			623				18				509				17
Rest of the world			178				5				152				5
Total			3,417				100				2,967				100

Financial result

In January-September, Metso’s operating profit was EUR 332.2 million, or 9.7 percent of net sales (EUR 233.5 million and 7.9% in Q1-Q3/05). The improvement in profitability was mainly attributable to Metso Minerals, where strong growth in delivery volumes and competitive cost structure supported positive financial performance. The reduction in the operating loss of the Tissue Business Line to near break-even bolstered Metso Paper’s profitability.

Metso’s net financial expenses were EUR 28 million (EUR 33 million).

Metso’s profit from continuing operations before taxes was EUR 304 million (EUR 200 million).

In the second quarter, Metso recognized a nonrecurring deferred tax asset of EUR 57 million in the income statement with respect to its U.S. operations where Metso had unrecognized deferred tax losses. The recognition is based on the fact that Metso’s U.S. operations turned clearly profitable. Excluding this nonrecurring deferred tax asset, Metso’s tax rate for 2006 is estimated to be about 24 percent.

The profit attributable to shareholders for the January-September period was EUR 287 million, corresponding to earnings per share of EUR 2.03.

Metso’s return on capital employed (ROCE) was 22.1 percent, and the return on equity (ROE) was 29.5 percent.

Cash flow and financing

Metso’s net cash generated by operating activities was EUR 368 million. In January-September, EUR 16 million in net working capital was released. 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 291 million (EUR 88 million).

Net interest-bearing liabilities totaled EUR 228 million at the end of September. Gearing (the ratio of net interest-bearing liabilities to shareholders’ equity) was 16.6 percent, while the equity to assets ratio was 38.0 percent. In April, Metso paid dividends for 2005 of EUR 198 million.

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

Metso’s gross capital expenditure was EUR 98 million including EUR 9 million in acquisitions (EUR 86 million, including EUR 13 million in acquisitions). Capital expenditure was mainly related to information systems, as well as to extensions and maintenance of production facilities. Production facilities are being extended at, for example, Metso Minerals’ units in Tampere, Finland, and Columbia, South Carolina, the USA. It is estimated that gross capital expenditure, excluding acquisitions, for the whole year will be approximately EUR 120 million.

Acquisitions

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. The entire share capital of the company was 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 Shanghai unit employs around 450 people and focuses on manufacturing paper and board machine sections for Metso Paper’s delivery projects in China. The company was previously owned by Shandong Chenming and Shanghai Heavy Machinery.

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 acquired business of Svensk Gruvteknik will be integrated with Metso Minerals and the acquired business of Svensk Pappersteknik with Metso Paper. The debt-free purchase price totaled approximately EUR 4 million. The total net sales of the acquired businesses in 2005 were EUR 11 million, and they employ some 110 people.

In April, Metso and Aker Kvaerner signed the final purchase agreement whereby Metso will acquire Aker Kvaerner’s Pulping and Power business. The closing will require the relevant regulatory approvals. The acquisition was filed with the EU competition authorities in June, and it was extended into the second phase in the EU review process at August 14, 2006. The second phase will take up to 90 working days, with possible extensions. Metso and Aker Kvaerner continue to cooperate constructively with the Commission to lift any doubts that might exist and to solve any potential competition concerns.

Research and development

In January-September, Metso’s research and development expenses totaled EUR 80 million (EUR 68 million), representing 2.3 percent of net sales.

The rebuild of Metso Paper’s PM2 pilot paper machine at Jyväskylä, Finland was completed in September. 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.

In the third quarter, Metso Automation launched the new-generation metsoDNA CR solution. The new product launches also included IQMoisture, which is a fast on-line measurement method developed to control the machine- and cross-direction moisture profiles of paper and board machines.

Personnel

At the end of September Metso’s operations employed 23,342 people. In January-September, Metso employed an average of 22,786 people. The acquisition of Shanghai-Chenming Paper Machinery in August increased Metso Paper’s personnel by 450 in China. Thanks to growth in business Metso Minerals’ personnel increased by 371 especially in Finland, Brazil and India. Investments in sales and customer service resources increased Metso Automation’s personnel by more than 100. Geographically, the number of personnel increased most in Asia.

Personnel by area

		Sep 30,				Dec 31,
		2006				2005				Change %
Finland			8,542				8,340				2
Other Nordic countries			2,532				2,491				2
Other Europe			3,040				2,959				3
North America			3,568				3,526				1
South and Central America			2,234				2,070				8
Asia-Pacific			2,121				1,498				42
Rest of the world			1,305				1,294				1
Total personnel in continuing operations			23,342				22,178				5

Changes in the Metso Executive Team

Metso’s Executive Team and its members’ areas of responsibility changed in August. The members of the new Executive Team are: Risto Hautamäki, responsible for Metso Paper, Bertel Langenskiöld, responsible for the Fiber Business Line and the integration of Aker Kvaerner’s Pulping and Power units after closing of the acquisition, Matti Kähkönen responsible for Metso Minerals, Pasi Laine responsible for Metso Automation and Vesa Kainu responsible for Metso Ventures. The Chairman of the Executive Team is Jorma Eloranta, President and CEO, and the Vice Chairman is Olli Vaartimo, Executive Vice President and CFO.

In September, Metso announced that Vesa Kainu, President of Metso Ventures, will retire on February 28, 2007.

Changes in the corporate structure

In September, Metso announced that it would dismantle the Metso Ventures business area as of January 1, 2007. Two of Metso Ventures’ three foundries will be transferred under Metso Paper and one under Metso Minerals. Metso Panelboard will become part of Metso Paper. The potential for developing Metso Powdermet’s operations into a materials technology unit will be clarified by the end of the year. Valmet Automotive will be reported as a separate financial holding unit. Segment information in accordance with the planned new corporate structure is presented in the table section of the Interim Review.

In August, Metso Automation decided to change its organization as of October 1, 2006. The new business lines within Metso Automation are Flow Control and Process Automation Systems.

Metso Minerals has decided to renew its operating model. As of January 1, 2007 the operations will be organized according to the three core customer segments, construction, mining and recycling. The change targets to enhance customer service and to accelerate Metso Minerals’ profitable growth.

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 Chairman of the Board and Jaakko Rauramo, Chairman of the Board of SanomaWSOY Corporation, was re-elected Vice Chairman of the Board. Christer Gardell, Managing Partner of Cevian Capital, and Professor Yrjö Neuvo, Ph.D. (EE), were elected new members of the Board. The Board members re-elect were Svante Adde, Managing Director, Compass Advisers, London, Maija-Liisa Friman, President and CEO of Aspocomp Group Oyj, and Satu Huber, State Treasury, Director of Finance and Head of the Finance Division. 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 for 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 consisted of EUR 0.70 in line with Metso’s dividend policy, and an extra dividend of EUR 0.70. The dividend was paid on April 20, 2006, to the shareholders who had been entered as shareholders in the Corporation’s shareholder register maintained by the Finnish Central Securities Depository Ltd. by the dividend record date, April 7, 2006.

Share capital and market capitalization

At the end of September, Metso’s share capital was EUR 240,812,843.80 and the number of shares was 141,654,614, of which the Corporation held 60,841 treasury shares, i.e. 0.04 percent of the total shares and votes. The shares were acquired in 1999 for a total price of EUR 654,813. The average number of outstanding shares in January-September, excluding treasury shares, was 141,593,773.

On September 30, 2006 Metso’s market capitalization was EUR 4,109 million, excluding the treasury shares.

Share ownership plan

Metso has established a share ownership plan for the 2006-2008 strategy period. Accordingly, Metso’s Board of Directors has decided to target the 2006 plan to 55 Metso managers, including the entire Metso Executive Team.

The potential reward will depend on the operating profit attained by Metso and its business areas in 2006. The incentives will consist of both shares and cash, with the cash component dedicated to cover taxes and tax-related payments. The 2006 share ownership plan will cover a maximum total of 120,000 Metso treasury shares, of which the Metso Executive Team can account for at most 27,400 shares. Payment of potential rewards will be decided during the first quarter of 2007.

Metso repurchases its 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 are to be acquired through public securities trading on the Helsinki Stock Exchange, at the share price prevailing on the day of acquisition.

Based on the authorization Metso Corporation’s Board of Directors decided on April 28, 2006 to repurchase at most 300,000 of its own shares on the Helsinki Stock Exchange for use in the above mentioned share ownership plan. The acquisition of the shares will reduce the parent company’s distributable funds, which were EUR 391 million at the end of September. No shares had been repurchased by the publication date of the January-September 2006 Interim Review.

Metso Paper

										Change				Q1-Q3/				Q1-Q3/				Change
EUR million		Q3/06				Q3/05				%				06				05				%				2005
Net sales			446				396				13				1,269				1,192				6				1,702
Operating profit			32.2				25.7				25				80.3				63.2				27				90.9
% of net sales			7.2				6.5								6.3				5.3								5.3
Orders received			472				322				47				1,495				1,240				21				1,993
Order backlog at end of period															1,482				1,012				46				1,267
Personnel at end of period															8,766				8,300				6				8,201

In January-September, Metso Paper’s net sales grew by 6 percent on the level of the comparison period (January-September 2005) and totaled EUR 1,269 million. The biggest increases on the comparison period were attributable to the deliveries of the Fiber and Tissue Business Lines. Aftermarket operations accounted for 34 percent of net sales (34% in Q1-Q3/05).

Metso Paper’s operating profit increased to EUR 80.3 million, or 6.3 percent of net sales. Profitability improved primarily due to the measures taken in previous years to streamline the cost structure. The improvement in profitability came from Tissue and Paper and Board businesses.

The value of orders received by Metso Paper increased by one fifth on the comparison period and totaled EUR 1,495 million. The orders of all business lines grew clearly, with the orders of the Tissue Business Line growing relatively the most. The major orders included a papermaking line for Guangzhou Paper in China, a papermaking line for Nippon Paper Industries in Japan and a pulping line for Bahia

Pulp in Brazil. At the end of September the order backlog was EUR 1,482 million, which was 17 percent higher than at the end of 2005.

Metso Minerals

										Change				Q1-Q3/				Q1-Q3/				Change
EUR million		Q3/06				Q3/05				%				06				05				%				2005
Net sales			519				454				14				1,551				1,218				27				1,735
Operating profit			75.9				53.6				42				206.6				125.0				65				177.6
% of net sales			14.6				11.8								13.3				10.3								10.2
Orders received			632				405				56				1,933				1,368				41				1,936
Order backlog at end of period															1,189				801				49				852
Personnel at end of period															8,892				8,379				6				8,521

In January-September, Metso Minerals’ net sales rose by 27 percent on the comparison period and totaled EUR 1,551 million. The net sales increased strongly in all business lines. Metso Minerals’ aftermarket operations accounted for 44 percent of net sales (47% in Q1-Q3/05). The growth of project and equipment deliveries reduced the relative proportion of aftermarket operations. Measured in euros, the volume of aftermarket operations increased by 19 percent.

The operating profit of Metso Minerals increased to EUR 206.6 million, which was 13.3 percent of net sales. Profitability improved the most in the Crushing and Screening Business Line and the Minerals Processing Business Line, due to strong volume growth and a competitive cost structure.

The value of orders received by Metso Minerals increased by 41 percent and totaled EUR 1,933 million. The growth was the strongest in the Minerals Processing and the Crushing and Screening Business Lines, primarily due to continued strong demand from the mining industry. The largest orders in January-September included a grate kiln system for LKAB in Sweden, grinding mills and mining crushers for Boddington Gold Mine (BGM) in Australia, and crushing, screening and grinding equipment for Minerações Brasileiras Reunidas S/A (MBR) in Brazil. The order backlog increased by 40 percent on the end of 2005 and was EUR 1,189 million at the end of September.

Metso Automation

														Q1-Q3/				Q1-Q3/
EUR million		Q3/06				Q3/05				Change %				06				05				Change %				2005
Net sales			146				148				(1	)			420				421				0				584
Operating profit			20.0				25.8				(22	)			54.9				57.3				(4	)			80.7
% of net sales			13.7				17.4								13.1				13.6								13.8
Orders received			183				140				31				555				430				29				580
Order backlog at end of period															309				191				62				179
Personnel at end of period															3,315				3,206				3				3,169

In January-September, Metso Automation’s net sales totaled EUR 420 million, the same level as in the comparison period. Despite the strong order backlog from the previous quarters, the net sales growth fell short of expectations, because deliveries of field equipment were delayed. Metso Automation’s delivery capability was impeded by a shortage of components, limited availability of subcontractor capacity as well as the fire that took place in July at the Helsinki valve assembly plant in Finland. As the problems have been addressed, the delivery volumes are expected to grow during the last quarter. Aftermarket operations

accounted for 23 percent of net sales (21% in Q1-Q3/05). Measured in euros, the volume of aftermarket operations increased by 6 percent.

Metso Automation’s operating profit was EUR 54.9 million, or 13.1 percent of net sales. Although profitability improved clearly in the North American business unit, Metso Automation’s overall profitability was weaker than in January-September last year. Strengthening of sales and customer service resources clearly boosted orders received but simultaneously raised fixed costs that had a negative impact on operating profit.

The value of Metso Automation’s orders increased by 29 percent on the comparison period and totaled EUR 555 million. Especially orders received by the Field Systems Business Line rose on the comparison period. The order backlog rose by 73 percent on the end of 2005 and was EUR 309 million at the end of September, which is Metso Automation’s all-time record. The order backlog included, more than earlier, deliveries that were scheduled for the next year.

Metso Ventures

										Change				Q1-Q3/				Q1-Q3/				Change
EUR million			Q3/06				Q3/05			%				06				05				%				2005
Net sales			78				63				24				240				196				22				284
Operating profit (loss)			(0.9	)			(0.5	)			(80	)			7.3				6.1				20				10.8
% of net sales			(1.2	)			(0.8	)							3.0				3.1								3.8
Orders received			62				66				(6	)			249				224				11				324
Number of cars produced			6,440				4,160				55				24,157				13,926				73				21 233
Order backlog at end of period															115				92				25				104
Personnel at end of period															2,040				1,755				16				1 993

In January-September, Metso Ventures’ net sales rose by 22 percent on the comparison period and totaled EUR 240 million, mainly due to Valmet Automotive’s increased delivery volumes.

Metso Ventures’ operating profit was EUR 7.3 million, or 3.0 percent of net sales. The profitability of Valmet Automotive improved, but Metso Panelboard reported an operating loss. A special task force has been set to address Metso Panelboard’s profitability improvement challenge.

The value of orders received by Metso Ventures rose by 11 percent and totaled EUR 249 million. The growth was especially due to the increased car production of Valmet Automotive. Metso Ventures’ order backlog rose by 11 percent on the end of 2005 and totaled EUR 115 million at the end of September.

Short-term outlook

No significant changes have occurred in Metso’s market outlook. The favorable market situation is expected to continue in the construction, mining and energy industries also in the final quarter of the year. The overall pulp and paper industry demand is expected to remain satisfactory.

Of Metso Paper’s products, the market outlook for new paper and board machines is the strongest in Asia, where several customers are actively considering new investments. In Europe and in North America, the demand for rebuilds and aftermarket services is expected to remain at the current level. The markets for both new tissue machines and tissue machine rebuilds are expected to be good. The markets for new fiber lines are expected to remain brisk in South America and good in Asia.

The demand for Metso Minerals’ construction equipment and related services is expected to remain good thanks to road network development projects and other infrastructure investments. The demand for mining industry and metal recycling equipment is expected to remain strong. The large mining companies are continuing to plan and implement extensive investments. In the mining industry the trend is towards larger equipment and projects.

Metso Automation’s market situation is expected to remain good in the energy, oil and gas industry and satisfactory in the pulp and paper industry.

Based on the strong order backlog and the favorable market outlook, it is estimated that Metso’s good financial performance will continue also for the rest of the year. Metso’s net sales are estimated to grow by clearly more than 10 percent in 2006. Continued favorable market situation, strong order backlog and ongoing internal development projects give a positive outlook for Metso’s financial performance in 2007.

The estimates concerning Metso’s net sales and operating profit do not include any changes resulting from acquisitions or divestitures.

Helsinki, October 25, 2006

Metso Corporation’s Board of Directors

The interim review is unaudited

CONSOLIDATED STATEMENTS OF INCOME

		7-9/				7-9/				1-9/				1-9/				1-12/
		2006				2005				2006				2005				2005
(Millions)		EUR				EUR				EUR				EUR				EUR
Net sales			1,169				1,045				3,417				2,967				4,221
Cost of goods sold			(857	)			(767	)			(2,480	)			(2,171	)			(3,110	)
Gross profit			312				278				937				796				1,111
Selling, general and administrative expenses			(189	)			(187	)			(611	)			(576	)			(794	)
Other operating income and expenses, net			(3	)			3				6				10				12
Share in profits of associated companies			0				0				0				1				1
Reversal of Finnish pension liability			—				1				—				2				5
Operating profit			120				95				332				233				335
% of net sales			10.3	%			9.1	%			9.7	%			7.9	%			7.9	%
Financial income and expenses, net			(10	)			(9	)			(28	)			(33	)			(43	)
Profit on continuing operations before tax			110				86				304				200				292
Income taxes on continuing operations			(26	)			(21	)			(16	)			(48	)			(72	)
Profit on continuing operations			84				65				288				152				220
Profit (loss) on discontinued operations			—				—				—				17				17
Profit (loss)			84				65				288				169				237

		7-9/				7-9/				1-9/				1-9/				1-12/
		2006				2005				2006				2005				2005
(Millions)		EUR				EUR				EUR				EUR				EUR
Profit (loss) attributable to minority interests			1				0				1				0				1
Profit (loss) attributable to equity shareholders			83				65				287				169				236
Profit (loss)			84				65				288				169				237
Earnings per share from continuing operations, EUR
Basic			0.59				0.47				2.03				1.10				1.57
Diluted			0.59				0.47				2.03				1.10				1.57
Earnings per share from discontinued operations, EUR
Basic			—				—				—				0.12				0.12
Diluted			—				—				—				0.12				0.12
Earnings per share from continuing and discontinued operations, EUR
Basic			0.59				0.47				2.03				1.22				1.69
Diluted			0.59				0.47				2.03				1.22				1.69

CONSOLIDATED BALANCE SHEETS

ASSETS

		Sep 30,				Sep 30,				Dec 31,
		2006				2005				2005
(Millions)		EUR				EUR				EUR
Non-current assets
Intangible assets
Goodwill			501				496				498
Other intangible assets			105				96				99
			606				592				597
Property, plant and equipment
Land and water areas			57				59				58
Buildings and structures			217				222				220
Machinery and equipment			290				279				286
Assets under construction			28				23				17
			592				583				581
Financial and other assets
Investments in associated companies			19				18				20
Available-for-sale equity investments			14				14				12
Loan and other interest bearing receivables			7				12				5

		Sep 30,				Sep 30,				Dec 31,
		2006				2005				2005
(Millions)		EUR				EUR				EUR
Available-for-sale financial assets			24				21				34
Deferred tax asset			187				146				163
Other non-current assets			33				13				39
			284				224				273
Total non-current assets			1,482				1,399				1,451
Current assets
Inventories			1,135				928				888
Receivables
Trade and other receivables			962				853				918
Cost and earnings of projects under construction in excess of advance billings			160				136				173
Loan and other interest bearing receivables			2				2				2
Available-for-sale financial assets			32				100				135
Tax receivables			20				27				14
			1,176				1,118				1,242
Cash and cash equivalents			493				340				323
Total current assets			2,804				2,386				2,453
Assets held for sale			—				—				—
TOTAL ASSETS			4,286				3,785				3,904

SHAREHOLDERS’ EQUITY AND LIABILITIES

		Sep 30,				Sep 30,				Dec 31,
		2006				2005				2005
(Millions)		EUR				EUR				EUR
Equity
Share capital			241				241				241
Share premium reserve			76				77				76
Cumulative translation differences			(35	)			(12	)			(9	)
Fair value and other reserves			438				422				424
Retained earnings			641				484				553
Equity attributable to shareholders			1,361				1,212				1,285
Minority interests			7				6				7

		Sep 30,				Sep 30,				Dec 31,
		2006				2005				2005
(Millions)		EUR				EUR				EUR
Total equity			1,368				1,218				1,292
Liabilities
Non-current liabilities
Long-term debt			588				748				593
Post employment benefit obligations			151				163				157
Deferred tax liability			22				15				20
Provisions			27				33				33
Other long-term liabilities			2				2				7
Total non-current liabilities			790				961				810
Current liabilities
Current portion of long-term debt			163				3				160
Short-term debt			35				31				35
Trade and other payables			1,028				938				925
Provisions			187				175				191
Advances received			472				336				312
Billings in excess of cost and earnings of projects under construction			213				98				146
Tax liabilities			30				25				33
Total current liabilities			2,128				1,606				1,802
Liabilities held for sale			—				—				—
Total liabilities			2,918				2,567				2,612
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES			4,286				3,785				3,904
NET INTEREST BEARING LIABILITIES
Long-term interest bearing debt			588				748				593
Short-term interest bearing debt			198				34				195
Cash and cash equivalents			(493	)			(340	)			(323	)
Other interest bearing assets			(65	)			(135	)			(176	)
Total			228				307				289

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

		7-9/				7-9/				1-9/				1-9/				1-12/
		2006				2005				2006				2005				2005
(Millions)		EUR				EUR				EUR				EUR				EUR
Cash flows from operating activities:
Profit (loss)			84				65				288				169				237
Adjustments to reconcile net profit (loss) to net cash provided by operating activities
Depreciation			26				27				78				76				102
Provisions / Efficiency improvement programs			(1	)			(3	)			(4	)			(10	)			(12	)
Interests and dividend income			7				9				22				33				39
Income taxes			26				21				16				48				72
Other			3				3				6				(17	)			(14	)
Change in net working capital			18				(88	)			16				(118	)			(170	)
Cash flows from operations			163				34				422				181				254
Interest paid and dividends received			(1	)			(10	)			(3	)			(25	)			(40	)
Income taxes paid			(19	)			(9	)			(51	)			(35	)			(50	)
Net cash provided by (used in) operating activities			143				15				368				121				164
Cash flows from investing activities:
Capital expenditures on fixed assets			(32	)			(27	)			(88	)			(72	)			(104	)
Proceeds from sale of fixed assets			2				11				11				39				46
Business acquisitions, net of cash acquired			(9	)			(12	)			(9	)			(13	)			(14	)
Proceeds from sale of businesses, net of cash sold			—				—				—				95				95
(Investments in) proceeds from sale of financial assets			10				(16	)			113				(65	)			(111	)
Other			1				0				(1	)			(1	)			(2	)
Net cash provided by (used in) investing activities			(28	)			(44	)			26				(17	)			(90	)
Cash flows from financing activities:
Share options exercised			—				—				—				72				72
Dividends paid			—				—				(198	)			(48	)			(48	)
Net funding			(4	)			(8	)			(14	)			(170	)			(158	)
Other			—				—				(6	)			(2	)			(2	)
Net cash provided by (used in) financing activities			(4	)			(8	)			(218	)			(148	)			(136	)
Net increase (decrease) in cash and cash equivalents			111				(37	)			176				(44	)			(62	)

		7-9/				7-9/				1-9/				1-9/				1-12/
		2006				2005				2006				2005				2005
(Millions)		EUR				EUR				EUR				EUR				EUR
Effect from changes in exchange rates			0				3				(6	)			12				13
Cash and cash equivalents at beginning of period			382				374				323				372				372
Cash and cash equivalents at end of period			493				340				493				340				323

Free cash flow

		7-9/				7-9/				1-9/				1-9/				1-12/
		2006				2005				2006				2005				2005
(Millions)		EUR				EUR				EUR				EUR				EUR
Net cash provided by operating activities			143				15				368				121				164
Capital expenditures on fixed assets			(32	)			(27	)			(88	)			(72	)			(104	)
Proceeds from sale of fixed assets			2				11				11				39				46
Free cash flow			113				(1	)			291				88				106

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

										Cu-
										mu-
										la-
										ti-												Equi-
										ve				Fair								ty
						Share				trans-				value								attri-
						pre-				la-				and				Re-				butab-
		Share				mium				tion				other				tain-				le to				Mino-				To-
		ca-				re-				ad-				re-				ed				share-				rity				tal
		pi-				ser-				just-				ser-				earn-				hold-				inte-				equi-
		tal				ve				ments				ves				ings				ers				rest				ty
(Millions)		EUR				EUR				EUR				EUR				EUR				EUR				EUR				EUR
Balance at Jan 1, 2005			232				14				(48	)			436				363				997				5				1,002
Dividends			—				—				—				—				(48	)			(48	)			—				(48	)
Share options exercised			9				63				—				—				—				72				—				72
Translation differences			—				—				53				—				—				53				—				53
Net investment hedge gains (losses)			—				—				(17	)			—				—				(17	)			—				(17	)
Cash flow hedges, net of tax			—				—				—				(14	)			—				(14	)			—				(14	)
Available-for-sale financial assets, net of tax			—				—				—				—				—				—				—				—
Other			—				—				—				—				—				—				1				1
Net profit for the period			—				—				—				—				169				169				0				169
Balance at Sep 30, 2005			241				77				(12	)			422				484				1,212				6				1,218

										Cu-
										mu-
										la-
										ti-												Equi-
										ve				Fair								ty
						Share				trans-				value								attri-
						pre-				la-				and				Re-				butab-
		Share				mium				tion				other				tain-				le to				Mino-				To-
		ca-				re-				ad-				re-				ed				share-				rity				tal
		pi-				ser-				just-				ser-				earn-				hold-				inte-				equi-
		tal				ve				ments				ves				ings				ers				rest				ty
(Millions)		EUR				EUR				EUR				EUR				EUR				EUR				EUR				EUR
Balance at Dec 31, 2005			241				76				(9	)			424				553				1,285				7				1,292
Dividends			—				—				—				—				(198	)			(198	)			—				(198	)
Share options exercised			—				—				—				—				—				—				—				—
Translation differences			—				—				(41	)			—				—				(41	)			—				(41	)
Net investment hedge gains (losses)			—				—				14				—				—				14				—				14
Cash flow hedges, net of tax			—				—				—				12				—				12				—				12
Available-for- sale financial assets, net of tax			—				—				—				1				—				1				—				1
Other			—				—				1				1				(1	)			1				—				1
Net profit for the period			—				—				—				—				287				287				—				287
Balance at Sep 30, 2006			241				76				(35	)			438				641				1,361				7				1,368

The distributable funds of Metso Corporation at Sep 30, 2006 consist of retained earnings (EUR 641 million) excluding accelerated depreciation and untaxed reserves (EUR 1 million), treasury stock (EUR 1 million) and negative translation differences (EUR 35 million), and other reserves (EUR 202 million), totaling EUR 806 million. At the end of the period Metso Corporation held a treasury stock of 60,841 shares.

ASSETS PLEDGED AND CONTINGENT LIABILITIES

		Sep 30, 2006				Dec 31, 2005
(Millions)		EUR				EUR
Mortgages on corporate debt			3				3
Other pledges and contingencies
Mortgages			2				2
Pledged assets			0				0
Guarantees on behalf of associated company obligations			—				—
Other guarantees			5				5
Repurchase and other commitments			8				12
Lease commitments			127				125

Other guarantees include EUR 1 million guarantees given on behalf of sold businesses. The respective buyers have indemnified Metso and have committed themselves to release Metso from its guarantee obligations within agreed time periods.

NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS

		Sep 30, 2006				Dec 31, 2005
(Millions)		EUR				EUR
Forward exchange rate contracts			961				1,159
Interest rate and currency swaps			1				2
Currency swaps			1				1
Interest rate swaps			183				183
Interest rate futures contracts			—				20
Option agreements
Bought			14				29
Sold			14				55