From the CEO

Record-breaking order secures good start to the year

The net sales for the first quarter of the year remained low. The order intake, on the other hand, reached a record high. Also taking into account the significant amount of orders we received during the final quarter of 2011, we can already at this stage be fairly certain of our outlook for the year in progress.

The proportion of mill-scale projects presently in our order book is exceptionally large. Once an order has been received, net sales begin to accumulate more slowly for mill-scale projects than for individual line or equipment deliveries. Due to this our net sales remained low in the first quarter despite our good order book situation at the beginning of the year. Our result was negative as a result of the low net sales. In light of the actual net sales of EUR 15 million, the operating loss of some half a million euros was in line with our estimates.

For several years now the volume of new orders has fluctuated dramatically from quarter to quarter. We have typically received major orders at the end of the year and at the beginning of the year. The middle of the year has, however, been quiet on the order front. We have been unable to identify any specific reason for this recurring fluctuation which has continued for several years. The variation in the volume of our order intake has created powerful fluctuations in our net sales with a delay of around two quarters of a year. At least for the three first quarters of the current year our net sales will follow this rhythm.

The year has begun in a challenging market situation, with the exception of the notably large mill order which we received in February. Construction activity in our customers' main markets is still at a fairly low level, decreasing the need for our customers to make any major investments in new capacity. Various projects are being moved forward, however in this type of situation their activation is uncertain.

A strong order book provides Raute with the keys to a distinctly positive result and the chance to focus our efforts on the implementation of our strategy and on development projects which will guarantee us a better position to meet the challenges of the changing markets and, on the other hand, the opportunities presented by the improving markets when the global economy regains its stability.

May 4, 2012

Tapani Kiiski
President and CEO