Interim Report January-September 2009

OUTOTEC OYJ                     INTERIM REPORT                 OCTOBER 23, 2009  AT 9:00 AM

INTERIM REPORT JANUARY-SEPTEMBER 2009

"The market activity in the mining and metals industry picked up slightly towards the end of the reporting period, but the market remains challenging. Some of the negotiations that were put on hold in the fall of 2008 have now been re-opened, but companies are cautious in making decisions regarding new investments because there are still financing issues and production plants have unused capacity.

Our gross profit margin was on a good level because of license fees and good project execution. However, due to the lower sales volume, we have been adjusting our operations by reducing the number of temporary employees and subcontractors as well as by optimizing our global office network. We are continuously following the workload of our personnel and we are prepared to further increase our cost-saving measures. It is, however, equally important for us to maintain our sales, offering and delivery capabilities, technological competitive advantages and be prepared to capitalize on growth opportunities.

We have been strengthening our presence in India, China and the CIS countries, and we have also developed our offerings for the energy and industrial water treatment sectors. The first successful result in these new areas is the EUR 110 million contract for a new oil shale processing plant with Eesti Energia. In addition, the recent announcement relating to the combination of Outotec and Larox supports our growth targets and Larox's products and services fit seamlessly into our technology portfolio. By combining our sales and service networks and product portfolios, we can provide even more comprehensive solutions and services to our customers".

INTERIM REPORT JANUARY-SEPTEMBER 2009

MARKETS

The market conditions remain challenging in the mining and metals industry. Many mining and metals companies have been updating their investment plans toward the end of the third quarter, but decision-making is slow regarding new investments because there are still financing issues and production plants have unused capacity. The market conditions vary by metal. On one hand, aluminium and steel producers are facing depressed metals prices and high inventories, and on the other hand, copper and gold prices remain on a good level.  

Most of the growth in metals consumption will come from developing economies and, according to market research; China represents nearly 50% of the growth in 2009. Also India continues to develop its infrastructure utilizing its large natural resource base.

There is continuous demand for modernization and debottlenecking at mine sites and metals processing plants as well as for energy-efficient and environmentally friendly technologies, equipment and services. As ore grades decline, more processing capacity will be needed. Also, complex ore bodies require new or modernized solutions, which enable economically viable production and better metals recovery.

There are also new opportunities for Outotec in the development of alternative energy resources and in industrial water treatment. Outotec offers applications and services for oil shale processing and bio-energy production for power plants through recent joint ventures. The world's recoverable oil shale resources are many times greater than those of conventional oil reserves, with large oil shale deposits to be found in the US, Brazil, China, Jordan, Russia and Estonia. Outotec's technologies can also be applied beyond the mining and metals industry to waste burning plants, electronics manufacturers and other industries which need water treatment.

ORDER INTAKE

Order intake in the reporting period amounted to EUR 446.6 million (Q1-Q3/2008: EUR 1,033.9 million) including plant deliveries, several smaller equipment deliveries and services to existing customers. The orders received in the third quarter came to EUR 201.5 million (Q3/2008: EUR 259.8 million) and included plant deliveries, smaller equipment, spare parts and services.

Major new orders in the third quarter included:

There were no major orders in the second quarter.

Major new orders in the first quarter included:

ORDER BACKLOG

The order backlog at the end of the reporting period totaled EUR 980.0 million (September 30, 2008: EUR 1,484.5 million), representing a 34% decline from the comparison period.

At the end of the reporting period, Outotec's order backlog included 21 projects with an order backlog value in excess of EUR 10 million, accounting for 71% of the total backlog. According to a management estimate, roughly 23% of the current backlog will be delivered in 2009 and the rest in 2010 and beyond.  At the end of the reporting period, Outotec's order backlog included roughly EUR 100 million in suspended projects, which have been taken into account in the progress estimate. Roughly 2% of the projects in Outotec's current backlog are for mining companies that are developing their first processing plants.

Outotec's sales in the reporting period totaled EUR 657.9 million (Q1-Q3/2008: EUR 819.2 million), which was 20% lower than in the comparison period. Sales for the third quarter were EUR 188.7 million (Q3/2008: EUR 318.1 million). The decline in sales resulted from the smaller order backlog, especially in the Base Metals division, and the rescheduling of some major projects under execution. 

The Services business, which is included in the divisions' and other businesses' sales figures, totaled EUR 103.3 million in the reporting period (Q1-Q3/2008: EUR 87.0 million), up 19% from the comparison period. Majority of the increase came from Outotec Auburn, which was acquired in October 2008. The sales volume of the Services business in the third quarter totaled EUR 29.9 million (Q3/2008: EUR 35.4 million). Service business sales in the third quarter were lower than in 2008 because there were fewer revamp projects and spare part deliveries related to new investment projects. In addition, customers' lower capacity utilization has affected the overall service demand. 

The operating profit for the reporting period was EUR 45.3 million (Q1-Q3/2008: EUR 72.7 million), representing 6.9% of sales (Q1-Q3/2008: 8.9%). The decrease was the result of lower sales volume, decreased license fee income, fewer project completions and higher fixed costs. The operating profit includes EUR 2.4 million one-time positive effect from the amicable settlement of all disputes related to the Pattison Sand project. The unrealized and realized exchange gains related to currency forward contracts, which are not included in the hedge accounting, increased profitability by EUR 1.6 million (Q1-Q3/2008: unrealized and realized loss of EUR 9.1 million). The operating profit in the third quarter was EUR 15.1 million (Q3/2008: EUR 28.9 million). The main reasons for lower operating profit were the significantly lower sales volume, fewer project completions and higher fixed costs.

In the reporting period, Outotec's fixed costs were EUR 7.9 million higher than in the comparison period. The increase was mainly caused by fixed costs of Outotec Auburn, increased sales work, developing business operations in India, one-time costs related to adjustments of office network and development of the services business worldwide.

Outotec's profit before taxes for the reporting period was EUR 47.6 million (Q1-Q3/2008: EUR 83.9 million). Profit before taxes was favorably impacted by the net financial income of EUR 2.3 million (Q1-Q3/2008: EUR 11.2 million) from the high net cash position. The decline in net financial income is primarily due to lower interest rates. Net profit for the period was EUR 33.3 million (Q1-Q3/2008: EUR 58.8 million). Taxes totaled EUR 14.3 million (Q1-Q3/2008: EUR 25.1 million). This represents an effective tax rate of 30.0%. Earnings per share were EUR 0.80 (Q1-Q3/2008: EUR 1.40).

Outotec's return on equity for the reporting period was 19.3% (Q1-Q3/2008: 36.8%), and return on investment was 30.2% (Q1-Q3/2008 53.5%).

*) Unallocated items primarily include invoicing of internal management and administrative services.

**) Unallocated items primarily include internal management and administrative services and share of the result of associated companies.

The Minerals Processing division's sales in the reporting period decreased by 7% from the comparison period and totaled EUR 255.0 million (Q1-Q3/2008: EUR 274.8 million). Operating profit was EUR 23.1 million (Q1-Q3/2008: EUR 10.4 million). High starting order backlog, good project execution and reduced bottlenecks in the delivery pipeline positively affected the sales but due to lower order intake, sales in the reporting period were lower than in the comparison period. Operating profit for the reporting period includes EUR 2.4 million one-time positive effect from the amicable settlement of all disputes related to the Pattison Sand project. Operating profit for the reporting period also includes unrealized and realized exchange gains related to currency forward contracts of EUR 0.4 million (Q1-Q3/2008: unrealized and realized loss of EUR 6.8 million).

The Base Metals division's sales in the reporting period decreased by 51% from the comparison period and totaled EUR 102.4 million (Q1-Q3/2008: EUR 208.9 million). The decrease in sales was primarily due to low order intake in the first half of 2009, lower starting order backlog, and rescheduling of some projects. The operating profit was EUR 5.6 million (Q1-Q3/2008: EUR 31.5 million). The significantly lower sales figure relative to the division's fixed costs and decreased license fee income were the main reasons for the division's low operating profit.

The Metals Processing division's sales in the reporting period decreased 16% from the comparison period to EUR 278.0 million (Q1-Q3/2008: EUR 330.8 million). The decrease in sales was mainly due to the rescheduling of some projects. Operating profit came to EUR 24.6 million (Q1-Q3/2008: EUR 38.9 million). Operating profit declined because of lower sales volume and decreased license fee income. Operating profit for the reporting period also includes unrealized and realized exchange gains related to currency forward contracts of EUR 2.1 million (Q1-Q3/2008: unrealized and realized loss of EUR 0.2 million).

Net cash flow from operating activities in the reporting period was positive at EUR 15.2 million (Q1-Q3/2008: EUR 143.4 million). The change was mainly caused by an increase in working capital in 2009 as compared to the significant decrease in working capital in 2008.

At the end of the reporting period, Outotec's cash and cash equivalents totaled EUR 279.9 million (September 30, 2008: EUR 371.4 million). The net change in cash and cash equivalents was also affected by the dividend payment of EUR 42.0 million in March 2009 (April 2008: EUR 39.9 million). The company invests its excess cash in short-term money market instruments such as bank deposits and corporate commercial papers. Investments are made within pre-approved counterparty-specific limits and tenors, which Outotec reviews regularly. On September 30, 2009, no money market investment had remaining maturity exceeding three months.

Outotec's working capital amounted to EUR -147.3 million on September 30, 2009 (September 30, 2008: EUR -239.3 million). The change in working capital was the result of low order intake and subsequently lower advance payments received in the reporting period.

The balance sheet structure remained strong, and the financing structure was healthy. Net interest-bearing debt on September 30, 2009 came to EUR -279.3 million (September 30, 2008: EUR -370.5 million). The advances received at the end of the reporting period totaled EUR 203.0 million (September 30, 2008: EUR 264.7 million), representing a decrease of 23% from the comparison period. Outotec's gearing at the end of the reporting period was -119.1% (September 30, 2008: -175.4%), and the equity-to-assets ratio was 44.5% (September 30, 2008: 38.9%).

The company's capital expenditure in the reporting period was EUR 13.3 million (Q1-Q3/2008: EUR 10.0 million), which consisted mainly of the establishment of a joint venture company for bio-energy technology business, investments in information technology, intellectual property rights, and machinery for the Outotec Turula workshop.

Guarantees for commercial commitments, including advance payment guarantees issued by the parent and other Group companies decreased from the comparison period because of lower order intake and were EUR 352.7 million (September 30, 2008: EUR 435.0 million) at the end of the reporting period.

Outotec has an agreement with a third-party service provider concerning administration and hedging of the share-based incentive program for key personnel. As part of this agreement, for hedging the underlying cash flow risk, the service provider has purchased a total of 550,000 Outotec shares (in 2008: 265,000), which have been funded by Outotec and accounted as treasury shares in Outotec's consolidated balance sheet. At the end of the reporting period, the amount of these treasury shares was 332,534.

In July, Outotec and Eesti Energia entered into a joint venture for the commercialization of sustainable oil shale processing technology and for holding of the intellectual property rights related to new Enefit technology. Eesti Energia has a 60% stake in the company with Outotec owning 40%.

In May, Outotec announced an agreement with a Finnish company Real Time Systems Oy to cooperate in the development of a new-generation measuring and regulating system for electric arc furnaces. Outotec is funding the development work and is a minor shareholder of Real Time Systems Oy and has a call option on the company.

In February, Outotec and a Swedish company Skellefteå Kraft AB agreed to establish a joint company, GreenExergy AB. The company focuses on the development, marketing and delivery of bio-energy technologies to power plants for the production of bio-energy from forestry and sawmill residues. Outotec's stake is 45%, Skellefteå Kraft's 33%, and three additional Swedish companies each have a minor stake in the joint venture.

RESEARCH AND TECHNOLOGY DEVELOPMENT

Outotec's research and technology development expenses in the reporting period totaled EUR 15.9 million (Q1-Q3/2008: EUR 14.7 million), representing 2.4% of sales (Q1-Q3/2008: 1.8%). Outotec filed 38 new priority patent applications (Q1-Q3/2008: 29), and 168 new national patents (Q1-Q3/2008:182) were granted.

The contract signed with Pueblo Viejo for a copper recovery plant is a breakthrough in combining Outotec's hydrometallurgical expertise, including new OKTOP® reactors, and Paques THIOTEQ® biotechnology in copper production.

In August, Outotec launched new proprietary cooling towers enabling lower emissions and larger cooling capacity than conventional cooling towers.

The cooperation with Real Time Systems Oy in the development of a new-generation measuring and regulating system will bring significant savings for the furnace operators, who use electric arc furnaces in the production of steel from scarp.

In May, Outotec committed to the Baltic Sea Action Summit project, which is supported by the Finnish government. As part of its commitment to a healthier Baltic Sea, Outotec will focus on minimizing metal-containing dusts and sulfur dioxide emissions within the metals industry as well as on reducing metal-containing effluents.

In March, Outotec announced the expansion of its technology offerings to two new sectors: energy and industrial water treatment. Outotec's competencies and offerings in the energy sector include coal charring, gasification and combustion technologies for various plants, also comprising oil shale pyrolysis. In the reporting period, oil shale combustion test work was conducted at Outotec's Frankfurt Research Center. The test work relates to basic engineering for the oil-shale-based oil production plant to be built in Narva, Estonia. In July, Outotec announced EUR 110 million project to build the oil-shale-based oil production plant. As part of the technology expansion, the Swedish joint venture GreenExergy AB will offer bio-energy technologies for power plants. Offerings for the industrial water treatment sector include solutions for concentrators, hydrometallurgical plants, non-ferrous and ferrous smelters and refineries, sulfuric acid plants, alumina plants, closed mines and old tailings ponds.

Outotec and Codelco finished testing the TankCell® 300 flotation cells at Chuquicamata, Chile. The results showed a better recovery and lower energy consumption than the previous solution. Outotec commissioned a new automated Courier® 6i SL slurry analyzer and sampling system at Australia's largest underground mine. It is one of the world's most advanced systems in the field of minerals processing. In January, Outotec launched a new OKTOP® reactor family. While all reactors were previously individually designed, the new OKTOP® reactors are built from modules which are tailored to give optimum results.

At the end of the reporting period, Outotec had a total of 2,555 employees (September 30, 2008: 2,498). The greatest decline in personnel numbers was in South America due to fewer temporary employees with the greatest increase in personnel in North America stemming from the acquisition of Outotec Auburn. For the reporting period, Outotec had on average 2,568 employees (Q1-Q3/2008: 2,434). The average number of personnel increased by 134 individuals from the comparison period through acquisition, business growth, and active recruitment in 2008. Temporary personnel accounted for about 8% of the total number of employees.

The number of employees has declined by 119, or 4%, since year-end 2008. The reductions were mainly related to the temporary employee contracts in the Americas, Australia, and some parts of Europe. In contrast, Outotec has continued to increase its personnel in Asia. At the end of September 2009, the company had, in addition to the personnel on Outotec's payroll, approximately 240 (June 30, 2009: 350) full-time equivalent, contracted people working in project execution. The number of contracted workers at any given time changes with the active project mix and project commissioning, local legislation and regulations, and seasonal fluctuations.

In the reporting period, salaries and other employee benefits totaled EUR 117.4 million (Q1-Q3/2008: EUR 114.5 million).

On June 4, 2009, Outotec's Board of Directors appointed Mr. Pertti Korhonen, 48, M. Sc. (Electronics Eng.), as the new president and Chief Executive Officer of Outotec Oyj. Mr. Korhonen joined Outotec on September 1, 2009, and began serving as Chief Operating Officer on October 1, 2009. He will assume the CEO duties on January 1, 2010. Current CEO Tapani Järvinen will retire at the end of 2009.

SHARE-BASED INCENTIVE PROGRAMS

Outotec has two share-based incentive programs for the company's key personnel: the first, Incentive Program 2007-2008, was announced on March 23, 2007, and the second, Incentive Program 2008-2010, was announced on March 3, 2008.

Share-based incentive program 2007-2008

The program began on January 1, 2007, and ended December 31, 2008. The reward compensated to the key personnel was determined by based on whether the targets set for the development of the company's net profit and order backlog had been reached. The total reward for the two earning periods was EUR 6.5 million, which was paid to 22 individuals in the second quarter, with 202,779 shares allocated and EUR 3.4 million paid in cash to cover taxes.

Share-based incentive program 2008-2010

The incentive program for 2008-2010 comprises three earning periods: calendar years 2008, 2009, and 2010. The Board of Directors determines the amount of the maximum reward for each individual, the earning criteria and the targets established for them separately on an annual basis. The reaching of the targets established for the earning criteria will determine how great a portion of the maximum reward will be paid. For the 2009 and 2010 earning periods, the incentive program involves approximately 60 individuals. The reward is paid in shares and as a cash payment. The reward will not be paid if the individual's employment ends before the close of the earning period. The individual must also hold the earned shares and remain employed with the company for at least two years after the close of the earning period.

For the earning period 2008, 14,687 shares were allocated to 33 individuals and EUR 0.2 million paid in cash to cover taxes. Those individuals, who were included in the initial share-based incentive program 2007-2008, were not included in the 2008 earning period.

RESOLUTIONS OF THE 2009 ANNUAL GENERAL MEETING

Outotec Oyj's Annual General Meeting (AGM) was held on March 18, 2009, in Helsinki, Finland. The Annual General Meeting approved the parent company and the consolidated financial statements, and discharged the members of the Board of Directors and the CEO from liability for the 2008 financial year.

Dividend

The Annual General Meeting decided that a dividend of EUR 1.00 per share be paid for the financial that year ended on December 31, 2008. The dividends, totaling EUR 42.0 million, were paid on March 30, 2009.

The Board of Directors

The Annual General Meeting decided on the number of the Board members, including chairman and vice chairman, to be five (5). Mr. Carl-Gustaf Bergström, Mr. Karri Kaitue, Mr. Hannu Linnoinen, Mr. Anssi Soila and Mr. Risto Virrankoski were re-elected as members of the Board of Directors for the term expiring at the end of the next Annual General Meeting.

The Annual General Meeting re-elected Mr. Risto Virrankoski as the chairman of the Board of Directors. In its assembly meeting, the Board re-elected Mr. Karri Kaitue as the vice chairman of the Board of Directors. In addition, the Board re-elected Mr. Carl-Gustaf Bergström and Mr. Hannu Linnoinen as members of the Audit Committee, Mr. Linnoinen acting as the chairman of the Audit Committee.

The Annual General Meeting also confirmed the remunerations to the Board members as follows: chairman EUR 5,000 per month and other Board members EUR 3,000 per month each, vice chairman and chairman of the Audit Committee an additional EUR 1,000 per month each. Each Board member also EUR 500 for attendance at each Board and Committee meeting as well as reimbursement for direct costs related to Board work.

Board's authorizations

The Annual General Meeting authorized the Board of Directors to resolve the repurchasing of the company's own shares as follows:

The authorization has not been exercised as of October 23, 2009. The authorization shall be valid until the next Annual General Meeting.

The Annual General Meeting authorized the Board of Directors to resolve the issuance of shares as follows:

This authorization is intended to be executed in conjunction with the Larox acquisition.  For additional information, please see the company's Stock Exchange Release from October 15, 2009.

This authorization shall be valid until the next Annual General Meeting.

Auditors

KPMG Oy Ab, authorized public accountants, has been re-elected as the company's auditor, with Mauri Palvi as auditor in charge. The fees for the auditor are paid according to invoice.

The Annual General Meeting decided to amend Section 9 of the Articles of Association so that notice to convene the General Meeting shall be issued no later than 21 days prior to the General Meeting.

SHARES AND SHARE CAPITAL

Outotec's shares are listed on the NASDAQ OMX Helsinki (OTE1V). Outotec's share capital is EUR 16.8 million, consisting of 42.0 million shares. Each share entitles its holder to one vote at the company's general shareholder meetings.

TRADING, MARKET CAPITALIZATION AND SHAREHOLDERS

In the reporting period, the volume-weighted average price for a share in the company was EUR 15.80, the highest quotation for a share was EUR 23.24 and the lowest EUR 9.30. The trading of Outotec shares in the reporting period exceeded 81 million shares, with a total value of over EUR 1,280 million. On September 30, 2009, Outotec's market capitalization was EUR 913.1 million and the last quotation for the share was EUR 21.74. On September 30, 2009, the company did not hold any treasury shares for trading purposes.

Outotec has an agreement with a third-party service provider concerning administration and hedging of share-based incentive program for key personnel. As part of this agreement, for hedging the underlying cash flow risk, the service provider has purchased a total of 550,000 Outotec shares (in 2008: 265,000) that have been funded by Outotec and accounted as treasury shares in Outotec's consolidated balance sheet. At the end of the reporting period, the amount of these treasury shares was 332,534.

On September 30, 2009, Outotec had 15,401 shareholders and shares held in 13 nominee registers accounted for 61.45% of all Outotec shares. On May 6, 2009, Barclays Global Investors UK Holdings Ltd's holding in shares of Outotec Oyj fell below 5%. Its holding in shares of Outotec was 2,068,377 shares, which represents 4.92% of the share capital and votes in the company. On April 7, 2009, Barclays Global Investors UK Holdings Ltd's holding in shares of Outotec Oyj exceeded 5%. Barclays Global Investors UK Holdings Ltd's holding in shares of Outotec was 2,111,054 shares, which represented 5.02% of the share capital and votes in the company.

EVENTS AFTER THE REPORTING PERIOD

On October 15, 2009, Outotec agreed with certain main shareholders of Larox Corporation on share transactions, in which they sell all their Larox series A and B shares to Outotec. The shares to be purchased correspond altogether to 94.40% of all the votes in Larox, to 99.99% of all Larox series A shares and to 61.89% of all Larox series B shares. The purchase price for the shares shall be paid in the form of new Outotec shares (see Board's authorizations under Resolutions of the 2009 Annual General Meeting). Upon completion of the share transactions, Outotec will make a mandatory public tender offer for all the remaining Larox series A and B shares.

Combining the businesses of Outotec and Larox will further strengthen Outotec's position as a leading global provider of technology solutions and services to the mining and metals industry and will allow Larox to develop its business in an international, financially solid technology group operating in the same industry. The transaction values Larox as a whole at approximately EUR 93 million. The completion of the Share Transactions is conditional on the receipt of necessary approvals from the competition authorities.

SHORT-TERM RISKS AND UNCERTAINTIES

Outotec's customers operate primarily in the mining and metals industry and in geographical areas which are at different stages of the economic cycle. The current economic downturn may further reduce the demand for Outotec's products and services impacting order intake in 2009. Outotec's gross margin is impacted by product mix and license fee income related to certain technologies. A lack of these types of orders reduces the amount of license fee and subsequently gross margin.

The demand for export credits has remained high. Possible limitations on the availability of export credits and financing as well as changes to project scopes and prices in the offer stages may further lengthen sales negotiations and postpone order effectiveness.

Outotec has systematic risk management procedures - Project Risk Identification and Management (PRIMA) - in place to monitor projects. In conjunction with Outotec's risk assessment for the third quarter in 2009, all unfinished work and projects, which use the percentage of completion and completed contract method, were monitored and evaluated and contingencies were updated. Projects whose stage of completion was close to 100% were evaluated and provisions for performance guarantees and warranty period guarantees, along with possible provisions for project losses, were updated. There were no material increases in the total project risk provisions. At the end of the reporting period, Outotec's order backlog included roughly EUR 100 million in suspended projects. Some of the suspended projects may be cancelled or renegotiated.  In any market situation, there is a risk of postponement in project business. 

In the third quarter of 2009, there were no material credit losses related to the payments by Outotec's counter-parties. If the economic downturn continues, these counterparties may be faced with having to renegotiate some payment terms. In addition, there is a risk that customers and suppliers will experience financial difficulties and that a lack of financing will result in bankruptcies, which can also result in some losses for Outotec.

More than half of Outotec's total cash flow is denominated in euros. The rest is divided among various currencies, including the US dollar, Australian dollar, Brazilian real, Canadian dollar, and South African rand. The weight of any given currency in new projects can fluctuate substantially, but most cash-flow-related risks are hedged in the short and long term. In the short-term, currency fluctuations may create volatility in the operating profit. The forecasted and probable cash flows are selectively hedged and are always on the basis of separate decisions and risk analysis. The cost of hedging is taken into account in project pricing.

Outotec's business model is based primarily on customer advance payments and on-demand guarantees issued by Outotec's relationship banks. Changes in advance payments received have an impact on the liquidity of Outotec. Exposure to on-demand guarantees has remained high. Cash held by Outotec is invested mainly in short-term bank deposits and, to a lesser extent, in Finnish corporate short-term commercial papers. The lower interest rate levels reduce the interest income generated from these investments.

Outotec is involved in a few legal and arbitration proceedings. During the second quarter, the 5th Enforcement Office of Istanbul enforced the Supreme Court's judgement according to which Nordea was obliged to pay Bagfas the value of the bank guarantee and legal fees up to EUR 4.8 million. According to the provisions of the facility arrangement between Nordea and Outotec, the latter has paid all costs and expenses incurred by Nordea. In the third quarter 2009, the arbitration proceedings between Outotec and Bagfas continued and Outotec has lodged before the arbitral tribunal an additional claim to cover the losses incurred in Turkey. Subsequently, the Supreme Court of Istanbul referred the case back to the court of first instance stating that the previously overruled claims of Bagfas have to be re-examined. Outotec made an additional provision of EUR 0.8 million due to the unexpected revival of the Turkish proceedings. Management expects that the outcome of the other pending proceedings will not have a material effect on Outotec's financial result.

The investments in the mining and metals industry will fall from the previous year because of the uncertainty in the worldwide economic conditions. There are feasibility studies in progress, which may turn into new orders, but the decision-making process takes time. Many customers are evaluating project scopes and prices, but they still face difficulties in arranging financing packages.

The prevailing uncertainty continues to obscure the outlook for the mining and metals industry. On the basis of the January-September result, existing order backlog, and new order prospects, the management expects that in 2009:

Operating profit is dependent on exchange rates, product mix, timing of new orders, and project completions. Operating profit tends to accrue more toward the year-end.

Espoo, on October 23, 2009

Outotec Oyj

Board of Directors

For further information, please contact:

Outotec Oyj

Tapani Järvinen, President and CEO

tel. +358 20 529211

Vesa-Pekka Takala, CFO

tel. +358 20 529211, mobile +358 40 5700074

Eila Paatela, Vice President - Corporate Communications

tel. +358 20 5292004, mobile +358 400 817198

Rita Uotila, Vice President - Investor Relations

tel. +358 20 5292003, mobile +358 400 954141

Format for e-mail addresses: firstname.lastname@outotec.com

All figures in the tables have been rounded and consequently the sum of individual figures may deviate from the sum presented. Key figures have been calculated using exact figures.

*) Of which advances paid for inventories amounted to EUR 8.6 million at September 30, 2009 (September 30, 2008: EUR 12.7 million and at December 31, 2008: EUR 16.4 million).

**) Gross advances received before percentage of completion revenue recognition amounted to EUR 1,128.9 million at September 30, 2009 (September 30, 2008: EUR 953.5 million and at December 31, 2008: EUR 909.3 million).

A = Share capital

B = Share premium fund

C = Other reserves

D = Fair value reserves

E = Treasury shares

F = Cumulative translation differences

G = Retained earnings

H = Minority interest

I = Total equity

*)  Outotec has an agreement with a third-party service provider concerning administration and hedging of share-based incentive program for key personnel. As part of this agreement, for hedging the underlying cash flow risk, the service provider has purchased 285,000 Outotec shares during year 2009 (2008: 265,000) that have been funded by Outotec and accounted as treasury shares in Outotec's consolidated balance sheet.

These interim financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies and methods have been applied to these interim financial statements as in the recent annual financial statements. These interim financial statements are unaudited.

Adoption of new interpretations

Outotec has applied the following revised standards from beginning of 2009:

Outotec has also applied the following revised standards and interpretation from beginning 2009, which do not impact on the Group's interim financial statements or financial statements.

Outotec will estimate the impact of the following standards and will apply the new standards from the financial period beginning January 1, 2010 onwards:

Use of estimates

IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Accounting estimates are employed in the financial statements to determine reported amounts, including the realizability of certain assets, the useful lives of tangible and intangible assets, income taxes, provisions, pension obligations, impairment of goodwill. These estimates are based on management's best knowledge of current events and actions; however, it is possible that the actual results may differ from the estimates used in the interim financial statements.

The pledges are used to secure local credit facilities of the Group's Canadian subsidiaries.

The above value of commercial guarantees does not include advance payment guarantees issued by the parent or other group companies. The total amount of guarantees for financing issued by group companies amounted to EUR 8.2 million at September 30, 2009 (September 30, 2008: EUR 5.7 million and at December 31, 2008: EUR 8.5 million) and for commercial guarantees including advance payment quarantees EUR 352.7 million at September 30, 2009 (September 30, 2008: EUR 435.0 million and at December 31, 2008: EUR 353.8 million).

*) of which EUR -0.7 million designated as cash flow hedges.

**) of which EUR 0.2 million designated as cash flow hedges.

***) of which EUR -5.1 million designated as cash flow hedges.

*) Unallocated items primarily include invoicing of internal management and administrative services.

**) Unallocated items primarily include internal management and administrative services and share of the result of associated companies.

INTERIM REPORT JANUARY-SEPTEMBER 2009 BRIEFING

A briefing will be held in Helsinki, Finland, in which CEO Tapani Järvinen and CFO Vesa-Pekka Takala will present Outotec's interim report, and Outotec's new CEO as of January 1, 2010, Pertti Korhonen will introduce himself.

BRIEFING

Date: Friday, October 23

Time: 2.00-3.30 pm (EEST)

Venue: Hotel Kämp, Meeting room Akseli Gallen-Kallela, Pohjoisesplanadi 29, Helsinki

JOINING VIA WEBCAST

You may follow the briefing via a live webcast at www.outotec.com. Please, click in and register approximately 5 to 10 minutes before the briefing. The webcast will also be recorded and published on Outotec's website for on demand viewing.

JOINING VIA TELECONFERENCE

You may also join the briefing by telephone. To register as a participant for the teleconference and Q&A session, please dial in 5 to 10 minutes before the beginning of the event:

FI/UK: +44 20 7162 0025

US/CANADA: +1 334 323 6201

Password: Outotec

In addition, an instant replay service of the conference call will be available until October 27, 2009 midnight on the following numbers:

UK: +44 20 7031 4064

US: 1 954 334 0342

Access code: 848264

The contact information is gathered for registration purposes only and it is not used for commercial purposes.

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