549300R0VN9C371W0E07-2023-12-31-en

Contents


Board of Directors’ Report ...............................................................................................................................................................	3
Financial year 2023 .........................................................................................................................................................................	3
Corporate Governance Statement ................................................................................................................................................	11
Statement of non-financial information ........................................................................................................................................	11
Shares and shareholders ...............................................................................................................................................................	28
Key figures ........................................................................................................................................................................................	33
Board of Directors’ proposal on the use of profit ..........................................................................................................................	36
Consolidated financial statements, IFRS ......................................................................................................................................	37
Consolidated statement of income ...............................................................................................................................................	37
Consolidated statement of comprehensive income ...................................................................................................................	38
Consolidated balance sheet ..........................................................................................................................................................	39
Consolidated statement of changes in shareholders’ equity ....................................................................................................	41
Consolidated statement of cash flows .........................................................................................................................................	43
Notes to the Consolidated financial statements .........................................................................................................................	44
1.Group performance ..............................................................................................................................................	47
1.1.Reporting segments .............................................................................................................................................	47
1.2.Sales .......................................................................................................................................................................	51
1.3.Selling, general, and administrative expenses ................................................................................................	55
1.4.Other operating income and expenses .............................................................................................................	55
1.5.Personnel expenses and number of personnel ...............................................................................................	56
1.6.Share-based payments .......................................................................................................................................	58
1.7.Finance income and expenses ..........................................................................................................................	61
1.8.Income taxes .........................................................................................................................................................	62
1.9.Earnings per share ...............................................................................................................................................	65
2.Operational assets and liabilities .......................................................................................................................	67
2.1.Net working capital and capital employed ........................................................................................................	67
2.2.Trade receivables .................................................................................................................................................	68
2.3.Other receivables .................................................................................................................................................	69
2.4.Inventory ................................................................................................................................................................	70
2.5.Trade and other payables ...................................................................................................................................	71
2.6.Provisions ..............................................................................................................................................................	72
2.7.Post-employment obligations .............................................................................................................................	74
3.Intangible assets and property, plant, and equipment ....................................................................................	79
3.1.Goodwill and intangible assets ...........................................................................................................................	79
3.2.Property, plant, and equipment ..........................................................................................................................	83
3.3.Right-of-use assets ..............................................................................................................................................	85
3.4.Depreciation and amortization ............................................................................................................................	87
4.Capital structure and financial instruments ......................................................................................................	88
4.1.Financial risk management .................................................................................................................................	88
4.2.Financial assets and liabilities by category ......................................................................................................	93
4.3.Liquid funds ...........................................................................................................................................................	96
4.4.Equity......................................................................................................................................................................	96
4.5.Borrowings and lease liabilities ..........................................................................................................................	99
4.6.Interest-bearing net debt reconciliation .............................................................................................................	101
4.7.Contingent liabilities and other commitments ..................................................................................................	102
4.8.Derivative instruments .........................................................................................................................................	102
5.Consolidation ........................................................................................................................................................	105
5.1.Principles of consolidation ..................................................................................................................................	105
5.2.Subsidiaries ...........................................................................................................................................................	107
5.3.Associated companies, joint ventures, and related party transactions ........................................................	109
5.4.Acquisitions and business disposals .................................................................................................................	110
5.5.Discontinued operations ......................................................................................................................................	112
5.6.New accounting standards ..................................................................................................................................	114
5.7.Exchange rates used ...........................................................................................................................................	115
6.Other notes ............................................................................................................................................................	116
6.1.Audit fees ...............................................................................................................................................................	116
6.2.Lawsuits and claims .............................................................................................................................................	116
Financial Statements of the Parent Company, FAS ....................................................................................................................	117
Signatures of the Board of Directors’ Report and Financial Statements 2023 ........................................................................
Auditor's report on ESEF .................................................................................................................................................................

Metso Oyj – Board of Directors’ report and financial statements 2023 2

Board of Directors’ report

Financial year 2023

Metso revised its segment reporting as of September 30, 2023, by transitioning from three segments to two: Aggregates and

Minerals. The Smelting business, previously reported under the Metals segment, was moved to the Minerals segment, and the

Metals & Chemical Processing and Ferrous & Heat Transfer businesses from the Metals segment were classified as

discontinued operations. All income statement, order intake and order backlog figures presented in this Board of Directors'

report pertain to continuing operations, and the financial information for the comparison periods has been restated accordingly.

Figures in brackets refer to the corresponding period in 2022, unless otherwise stated.

Operating environment

Market activity continued strong in Metso’s customer industries during the first half of 2023, while high financing costs,

uncertainties related to general economic development, and challenges related to permitting, among other things, slowed

down investment decisions related to new mining equipment in the second half of the year. The number of requests for

proposals related to new equipment investments remained high throughout the year, supported by the predicted growth in

metal consumption related to society’s electrification. Activity in mining services was high throughout the year, positively

influenced by high utilization rates of mines supported by metal prices, as well as the growth in demand related to the

optimization of mine production and equipment rebuilds.

The beginning of the year was active in the aggregates market, especially in North America. Rising interest rates and

increased inventory levels weakened the market situation from summer until the end of the year. The European market

remained weak as in the previous year, while demand grew in countries such as India and Brazil.

Key figures


EUR million	2023	2022	Change %
Orders received	5,252	5,623	-7
Orders received by services business	2,955	2,833	4
% of orders received	56	50	–
Order backlog	2,951	3,303	-11
Sales	5,390	4,970	8
Sales by services business	2,891	2,558	13
% of sales	54	51	–
Adjusted EBITA	887	715	24
% of sales	16.5	14.4	–
Operating profit*	805	490	64
% of sales	14.9	9.9	–
Earnings per share, continuing operations, EUR*	0.65	0.39	67
Earnings per share, total, EUR*	0.66	0.36	83
Cash flow from operations	550	322	71
Gearing, %	33.8	29.1	–
Personnel at end of period	17,134	16,705	3

*Year 2022 includes a EUR 150 million non-recurring charge related to the wind-down of business in Russia.

Financial performance

The Group's annual orders received decreased by 7% and totaled EUR 5,252 million (EUR 5,623 million), due to weaker

market activity in Aggregates and a smaller number of large equipment orders in Minerals. Service orders grew 4%. While

Aggregates sales declined, Minerals reported sales growth, resulting in the Group's sales increasing by 8% to EUR

5,390 million (EUR 4,970 million). The order backlog at the end of the year was EUR 2,951 million (3,303 million).

The Group's adjusted EBITA increased to EUR 887 million up from EUR 715 million in the previous year. The adjusted EBITA

margin also improved to 16.5% from 14.4%. These improved results were driven by volume growth and successful price and

cost management. Operating profit was EUR 805 million, or 14.9% of sales (EUR 490 million and 9.9%) including negative

adjustments of EUR 18 million (EUR 163 million negative, largely related to the wind-down of the business in Russia). Profit

Metso Oyj – Board of Directors’ report and financial statements 2023 3

before taxes was EUR 724 million (EUR 426 million). The effective tax rate was 26% (25%). Earnings per share for continuing

operations were EUR 0.65 (EUR 0.39).

Cash flow from operations was EUR 550 million (EUR 322 million), thanks to improved profitability while the amount of net

working capital tied in the business increased, largely in the first half of 2023.

Impacts from currency and structural changes on orders received


EUR million, %	Aggregates	Minerals	Total
2022	1,481	4,143	5,623
Organic growth in constant currencies, %	-12	-1	-4
Impact of changes in exchange rates, %	-3	-3	-3
Structural changes, %	1	0	0
Total change, %	-14	-4	-7
2023	1,274	3,978	5,252

Impacts from currency and structural changes on sales


EUR million, %	Aggregates	Minerals	Total
2022	1,446	3,523	4,970
Organic growth in constant currencies, %	-5	19	12
Impact of changes in exchange rates, %	-3	-4	-4
Structural changes, %	1	0	1
Total change, %	-7	15	8
2023	1,346	4,044	5,390

Financial position

The Group’s net interest-bearing liabilities were EUR 884 million at the end of December (Dec 31, 2022: EUR 684 million).

The increase is attributed to the issuance of the EUR 300 million bond in November in preparation for an upcoming bond

maturity in June 2024. Gearing increased to 33.8% (Dec 31, 2022: 29.1%) and the debt-to-capital ratio to 35.0% (Dec 31,

2022: 33.3%). The equity-to-assets ratio was 40.2% (Dec 31, 2022: 39.2%).

The Group's liquidity position remained strong. Liquid funds, consisting of cash and cash equivalents, amounted to EUR

638 million (Dec 31, 2022: EUR 601 million), and there were no deposits or securities with a maturity of more than three

months (Dec 31, 2022: EUR 0 million).

Metso has a committed syndicated revolving credit facility of EUR 600 million with a maturity in 2026. The facility includes

sustainability performance targets impacting the cost of borrowing. At the end of the year, the facility was undrawn. The

company has a EUR 600 million Finnish commercial paper program, which was unutilized at the end of the year. Metso also

has a Euro Medium Term Note Program (EMTN) of EUR 2 billion, under which EUR 1,081 million at carrying value was

outstanding at the end of December (Dec 31, 2022: EUR 758 million).

During 2023, the company made several funding transactions:

• One-year extension to an existing EUR 100 million term loan agreement and maturity in September 2025

• First Sustainability Linked Bond for EUR 300 million with a coupon of 4.375% and maturity in 2030

• Draw-down of EUR 50 million research, development, and innovation (RDI) loan with European Investment Bank and

maturity in 2030

The average interest rate of total loans and derivatives was 4.3%, on December 31, 2023. The duration total interest-bearing

debt was 1.8 years and the average maturity 3.9 years.

Metso has a ‘BBB’ long-term issuer credit rating with stable outlook from S&P Global Ratings and a ‘Baa2’ long-term issuer

rating with stable outlook from Moody’s Investor Service.

Metso Oyj – Board of Directors’ report and financial statements 2023 4

Reporting segments: Aggregates

Key figures


EUR million	2023	2022	Change %
Orders received	1,274	1,481	-14
Orders received by services business	442	469	-6
% of orders received	35	32	–
Order backlog	453	561	-19
Sales	1,346	1,446	-7
Sales by services business	434	477	-9
% of sales	32	33	–
Adjusted EBITA	232	213	9
% of sales	17.2	14.8	–
Operating profit	214	195	9
% of sales	15.9	13.5	–

Orders received decreased 14% to EUR 1,274 million, due to weaker market activity. Lower orders affected sales, which

declined to EUR 1,346 million (EUR 1,446 million). Driven by a solid overall operational performance, adjusted EBITA

improved to EUR 232 million (EUR 213 million), corresponding to a margin of 17.2% (14.8%).

Reporting segments: Minerals

Key figures


EUR million	2023	2022	Change %
Orders received	3,978	4,143	-4
Orders received by services business	2,513	2,364	6
% of orders received	63	57	–
Order backlog	2,498	2,742	-9
Sales	4,044	3,523	15
Sales by services business	2,458	2,081	18
% of sales	61	59	–
Adjusted EBITA	707	538	31
% of sales	17.5	15.3	–
Operating profit	627	406	54
% of sales	15.5	11.5	–

Orders received saw a 4% decline year-on-year, due to lower equipment orders, while services orders grew by 6%. Sales

increased 15% to EUR 4,044 million driven by a strong order backlog. Equipment and services sales grew 10% and 18%,

respectively. Adjusted EBITA increased to EUR 707 million and adjusted EBITA margin improved to 17.5% (EUR 538 million

and 15.3%). Higher profitability was supported by increased deliveries and improved execution, better sales mix, and

successful cost management.

Capital expenditure and investments

Gross capital expenditure excluding right-of-use assets was EUR 170 million in 2023. This consisted of various small

investments at manufacturing sites as well as new service centers.

Research and development

R&D expenses including investments were EUR 73 million, or 1.4% of sales. Battery minerals play a significant role in the

current R&D and customer raw material test work.

Metso Oyj – Board of Directors’ report and financial statements 2023 5

Inventions and patents


Pieces	2023	2022
Invention disclosures	235	125
Patent applications (including utility models)	2,096	1,935
Individual granted patents in force, as of December 31	7,829	7,405
Inventions protected by patents, as of December 31	1,031	1,082

Corporate governance and remuneration

Metso Annual General Meeting 2023

The Annual General Meeting (AGM) was held on May 3, 2023, in Helsinki. The AGM resolved to change the company's

business name to “Metso” in accordance with the proposal of the Board of Directors. The AGM resolved to approve the Board

of Directors’ proposal to pay a dividend of EUR 0.30 per share from the financial year 2022 in two installments. The first

dividend installment of EUR 0.15 per share was paid on May 12, 2023, and the second installment of EUR 0.15 per share was

paid on November 6, 2023.

Metso Board composition and remuneration

The AGM resolved to elect nine members to the Board of Directors. The AGM resolved to re-elect the following members of

the Board of Directors: Kari Stadigh was elected as the Chair, Klaus Cawén as the Vice Chair, and Brian Beamish, Terhi

Koipijärvi, Ian W. Pearce, Emanuela Speranza and Arja Talma as members of the Board. Niko Pakalén and Reima Rytsölä

were elected as new Board members. The term of office of the Board will expire at the end of Metso next Annual General

Meeting.

The AGM resolved that the members of the Board of Directors will be paid the same fixed annual remuneration as in the

previous term as follows:

• Chair: EUR 164,000

• Vice Chair: EUR 85,000

• Other members: EUR 69,000 each

and the additional remuneration to be paid for the members of the Board of Directors that are elected as members of the

committees of the Board will be also unchanged as follows:

• EUR 24,500 for the Chair of the Audit & Risk Committee

• EUR 10,500 each for the other members of the Audit & Risk Committee

• EUR 12,650 for the Chair of the Remuneration and HR Committee

• EUR 5,250 each for the other members of the Remuneration and HR Committee.

As a condition for the annual remuneration, the Board members are obliged, directly based on the AGM’s decision, to use 20

or 40 percent of their fixed total annual remuneration for purchasing Metso shares from the market at a price formed in public

trading. These purchases were carried out on May 5, 2023.

The AGM also resolved to approve the following meeting fees, unchanged from the previous term: EUR 900 for meetings

requiring travel within the Nordic countries, EUR 1,800 for meetings requiring travel within a continent, EUR 3,000 for

meetings requiring intercontinental travel, and EUR 900 for meetings with remote attendance.

Authorized public accounting firm Ernst & Young Oy was re-elected as Auditor for a term ending at the closing of the Annual

General Meeting 2024. Ernst & Young Oy has appointed Mikko Järventausta, APA, as the principally responsible auditor. The

remuneration to the Auditor was decided to be paid against the Auditor’s reasonable invoice approved by the company.

The AGM approved the Board’s proposals, which related to authorizing the Board to decide on the repurchase of an

aggregate maximum of 82,000,000 of Metso’s own shares (corresponding to approximately 9.9 percent of all shares) and

authorizing the Board to decide on the issuance of shares and the issuance of special rights entitling to shares.

Metso Oyj – Board of Directors’ report and financial statements 2023 6

Metso Executive Team

Metso’s Executive Team consists of the following members:

Pekka Vauramo, President and CEO

Eeva Sipilä, CFO, Deputy CEO

Markku Simula, President, Aggregates

Markku Teräsvasara, President, Minerals, Deputy CEO

Piia Karhu, President, Metals

Sami Takaluoma, President, Services

Heikki Metsälä, President, Consumables

Nina Kiviranta, General Counsel

Carita Himberg, Chief People Officer, Human Resources

Personnel

Metso had 17,134 employees (16,705 employees) at the end of December 2023.

Personnel by area


	Share, %
Europe	33
North and Central America	13
South America	27
Asia Pacific and Greater China	13
Africa, Middle East and India	14
Total	100

Other main events in 2023

Litigation related to three waste-to-energy plants in the UK

On February 9, 2023, Metso Outotec announced that it is in legal proceedings with MW High Tech Projects UK Limited in

connection with three waste-to-energy plants in the United Kingdom.

Full and final settlement agreement on ilmenite furnace project

On March 8, 2023, Metso Outotec and Advanced Metal Industries Cluster Company Limited (AMIC), a subsidiary of Tasnee,

signed a full and final settlement agreement in relation to the original engineering, procurement and construction (EPC)

contract, signed in May 2012, on the ilmenite furnace project in Saudi Arabia.

Conveyance of own shares based on the long-term incentive plans

On March 15, 2023, a total of 692,256 treasury shares were conveyed without consideration to 131 key persons and

executives from the Performance Share Plan 2020–2022 and Deferred Share Plan 2020–2022. The Board of Directors had

decided on the conveyance on February 17, and the directed share issue was based on an authorization given by the Annual

General Meeting 2022.

Annual report for 2022

On March 22, 2023, the Annual Report for 2022 was published. The report consists of five sections: Business Overview,

Financial Review, Corporate Governance Statement, Remuneration Report and GRI Supplement.

Strategic review of the Metals businesses

On March 29, 2023, the strategic review of the Metals businesses was completed. As a conclusion, the company decided to

initiate the divestment of the Metals & Chemical Processing and Ferrous & Heat Transfer businesses, while the Smelting

business will remain part of its portfolio.

S&P Global Ratings credit rating upgrade

On April 24, 2023, S&P Global Ratings upgraded Metso's credit rating to BBB with stable outlook.

Metso Oyj – Board of Directors’ report and financial statements 2023 7

Acquisition of Häggblom

On June 27, 2023, Metso signed an agreement to acquire Ab A. Häggblom Oy, a privately owned Finnish engineering and

manufacturing company. The acquisition was completed in August. The transaction value was not disclosed, it has no material

impact on Metso’s financials.

Acquisition of Brouwer Engineering

On July 24, 2023, Metso signed an agreement to acquire Brouwer Engineering, a privately owned Australian company

specializing in automation, control systems and electrical solutions for bulk material handling solutions.

Acquisition of Tedd Engineering

On October 2, 2023, Metso announced that it had signed an agreement to acquire Tedd Engineering, a privately owned

company specialized in automation, control systems and electrical solutions for mobile equipment and aftermarket, primarily

focusing on the aggregates business. Tedd Engineering employed approximately 70 employees and is based in Chesterfield,

UK. Its sales in the financial year that ended in June 2023 were approximately GBP 15 million. The acquisition was completed

on November 1.

Update of segment reporting

On October 2, 2023, Metso announced that it has updated its segment reporting by moving its two businesses currently under

divestment (Metals & Chemical Processing and Ferrous & Heat Transfer), both of which have been reported under the Metals

segment, into discontinued operations, and the transfer the Smelting business to the Minerals segment. The changes became

effective on September 30, 2023.

Update of the Group's financial targets

On October 27, 2023, the Board of Directors decided to update Metso’s financial targets. The Group’s profitability target was

upgraded and will call for an adjusted EBITA margin exceeding 17% over the cycle (previously exceeding 15% over the cycle).

Other financial targets remained unchanged.

Composition of the Shareholders’ Nomination Board and its proposals

On November 7, 2023, Metso’s Shareholders’ Nomination Board published its proposals to the Annual General Meeting,

planned to be held on April 25, 2024. The Nomination Board proposes that the Board of Directors would have nine members

and that Brian Beamish, Klaus Cawén, Terhi Koipijärvi, Niko Pakalén, Ian W. Pearce, Reima Rytsölä, Emanuela Speranza,

Kari Stadigh, and Arja Talma would be re-elected as Board members. The Nomination Board also proposes that Kari Stadigh

would be re-elected Chair of the Board and Klaus Cawén Vice Chair.

All the Board member candidates have given their consent to be elected and have been assessed to be independent of the

company and its significant shareholders, except for Reima Rytsölä, who has been assessed to be independent of the

company but not independent of its significant shareholders.

The Nomination Board will propose fixed annual remuneration to the Board members as follows (current remuneration in

brackets):

• Chair EUR 171,000 (EUR 164,000)

• Vice Chair EUR 87,000 (EUR 85,000)

• Other members EUR 70,500 (EUR 69,000)

An additional remuneration will be proposed to be paid to the Board members that are elected as members of the Audit & Risk

Committee and the Remuneration and HR Committee as follows (current remuneration in brackets):

• Chair of the Audit & Risk Committee EUR 25,500 (EUR 24,500)

• Members of the Audit & Risk Committee EUR 10,700 (EUR 10,500)

• Chair of the Remuneration and HR Committee EUR 13,000 (EUR 12,650)

• Member of the Remuneration and HR Committee EUR 5,350 (EUR 5,250)

The Nomination Board will propose that, as a condition for the annual remuneration, the Board members should be obliged,

directly based on the Annual General Meeting’s decision, to use 20% or 40% of their fixed total annual remuneration to

purchase Metso shares from the market at a price formed in public trading and that the purchase be carried out within two

weeks from the publication of the interim report for January 1 – March 31, 2024.

Metso Oyj – Board of Directors’ report and financial statements 2023 8

The Nomination Board will propose the following meeting fees to be paid for attending the meetings of the Board and its

committees:

• EUR 900 for meetings requiring travel within the Nordic countries

• EUR 1,800 for meetings requiring travel within a continent

• EUR 3,000 for meetings requiring intercontinental travel

• EUR 900 for meetings with remote attendance

Metso’s Board of Directors will include all the above-mentioned proposals in the notice of the Annual General Meeting of 2024.

Metso’s Shareholders’ Nomination Board consists of:

• Annareetta Lumme-Timonen (Investment Director, Solidium Oy) as Chair

• Philip Ahlgren (Partner, Cevian Capital Partners Ltd.)

• Risto Murto (President and CEO, Varma Mutual Pension Insurance Company)

• Mikko Mursula (Deputy CEO, Ilmarinen Mutual Pension Insurance Company)

• Kari Stadigh (Chair of Metso’s Board of Directors)

The Shareholders’ Nomination Board consists of the representatives of the four largest registered shareholders of the

company based on the ownership situation as of August 15 annually, as well as the Chair of Metso’s Board of Directors.

Kari Stadigh did not participate in the decision-making concerning the remuneration of the Board members.

Commencement of new plan periods in long-term incentive plans

On December 20, 2023, The Board of Directors of Metso Corporation has approved the commencement of a new plan period

2024-2026 in the following share-based long-term incentive programs of the Company: The Performance Share Plan (also

"PSP") and the Restricted Share Plan (also "RSP"). Metso originally announced the establishment of the PSP and the RSP

structure on July 1, 2020.

Russia business update

Metso condemns Russia’s military offensive against Ukraine and is deeply saddened by the humanitarian crisis it has caused.

Since the start of the offensive, Metso has not taken any new orders for deliveries to Russia and has fully complied with all

applicable sanctions against Russia. The company concluded its wind-down of the orders taken before the start of the war

during the first quarter of 2023. To cover the costs of the wind-down process, the company booked a non-recurring charge of

EUR 150 million in the second quarter of 2022. At the end of 2023, EUR 45 million of the charge remained unused to cover

any potential final expenses. Metso continues to fully comply with all applicable sanctions against Russia.

Short-term business risks and market uncertainties

The uncertainty in the global markets may affect Metso's market environment. While easing of the prevailing tight monetary

policy by central banks is expected as inflation has moderated, macroeconomic risks continue to pose uncertainty on global

economic growth causing challenges both for Metso's customers and suppliers. High financing costs risk having a negative

impact on customers' capex decision-making. There are also other market and customer-related risks that could cause on-

going projects to be postponed, delayed, discontinued or terminated.

Continued geopolitical uncertainties also impact the company's global supply chains and may affect the ability to deliver on

time and/or on budget. The financial position of suppliers may be at risk, due to working capital requirements and increased

funding costs, which could also lead to challenges with on-time deliveries. If suppliers are unable to deliver and the company

is unable to find alternative sources in the time required, it may lead to contractual penalties and/or obligations.

Uncertain market conditions could adversely affect our customers’ payment behavior and increase the risk of lawsuits, claims

and disputes taken against Metso in various countries related to, among other things, Metso’s products, projects and other

operations.

Even though currency exposure of firm delivery and purchase agreements is hedged, exchange rate fluctuations may impact

the company's financial position.

Information security and cyber threats could disturb or disrupt Metso’s businesses and operations.

In discontinued operations, the company has a risk related to the UK waste-to-energy projects from 2015, where, in addition to

delayed delivery and non-performance claims, the customer is claiming fraudulent misrepresentation and deliberate breach in

Metso Oyj – Board of Directors’ report and financial statements 2023 9

its claims and lawsuits. Metso has assessed that it can protect itself against these claims and lawsuits. Even though

provisions have been made against these risks, the possibility of additional liabilities materializing cannot be excluded.

Disputes related to delivery execution and resulting in extra costs and/or penalties are a risk for Metso. In contracts related to

the delivery of major projects, the liquidated damages attributable to, for instance, delayed delivery or non-performance may

be significant. Even though provisions are provided for in accordance with accounting principles, the possibility of additional

liabilities materializing cannot be excluded.

Metso is involved in some disputes that may lead to or are in litigation and arbitration. Differing interpretations of international

contracts and laws may cause uncertainties in estimating the outcome of these disputes. The enforceability of contracts in

certain market areas may be challenging or difficult to foresee.

Market outlook

According to the company's disclosure policy, Metso’s market outlook describes the expected sequential development of

market activity during the following six-month period using three categories: improve, remain at the current level, or decline.

Metso expects the market activity in Minerals will remain at the current level, while the activity in Aggregates is expected to

improve.

In its previously published outlook in October 2023, the company expected the overall market activity to remain at the current

level in both Minerals and Aggregates.

Metso Oyj – Board of Directors’ report and financial statements 2023 10

Corporate governance statement

Metso has published a separate Corporate governance statement for 2023 that complies with the recommendations of the

Finnish Corporate Governance Code for listed companies and covers other central areas of corporate governance. The

statement is available on our website, separately from the Board of Directors’ report.

Statement of non-financial information

Metso, headquartered in Finland, has a presence globally in close to 50 countries. The company is a leader in the

development of sustainable products, end-to-end solutions and aftermarket services for the aggregates, minerals processing,

and metals refining industries. Metso has defined sustainability as a strategic priority, and it has committed to contribute to

limiting the global average temperature increase to 1.5 °C through its sustainability agenda.

This Statement of non-financial information contains a description of Metso’s business model as well as risks, key

performance indicators and other details related to Environmental responsibility, Social responsibility and employees, Human

rights, and Anti-corruption and bribery, as required by the Finnish Accounting Act. This includes an overview of the targets and

key performance indicators for the material topics that steer Metso’s sustainability activities. In addition, this Statement of non-

financial information includes information about the extent to which Metso activities are eligible and aligned with the EU

Taxonomy, as required by the EU Taxonomy Regulation and the Finnish Accounting Act.

In 2023 Metso updated its sustainability agenda, which now comprises the following focus areas: Planet Positive offering and

innovations for customers, Metso’s people and culture, environmental efficiency in its own operations and responsible supply

chain. Responsible business conduct is the foundation of Metso’s sustainability approach. This updated assessment used the

double materiality approach of the upcoming requirements of the EU Corporate Sustainability Reporting Directive (CSRD).

To provide investors with information on how companies are dealing with climate-related issues, the Task Force on Climate-

related Financial Disclosures (TCFD) has created a voluntary framework to help businesses identify, measure and report their

financial implications of climate change. This Statement of non-financial information also describes Metso’s climate change-

related governance, strategy, and risk management practices, aligned with the TCFD recommendations, as well as the metrics

and targets to measure the impacts.

In addition to the information set out in this statement, Metso reports its economic, social, and environmental performance

annually in accordance with the Global Reporting Initiative (GRI) Standards. The reporting includes the industry-specific

indicators (SASB Index) identified in the Sustainability Accounting Standards Board’s (SASB) Industrial Machinery & Goods

Standard. The Annual report 2023, including a GRI supplement, will be published in March 2024.

Metso's business model and value creation

Metso drives profitable growth and sustainable operations across its customer industries, in line with its 1.5-degree climate

commitment, to create value for its customers, shareholders and other stakeholders. Metso focuses on supporting the

electrification and decarbonization of the mining and aggregates industries, while ensuring rapid increase in the production of

energy transition minerals. This can be achieved through its extensive equipment and aftermarket offering for its customers.

Metso’s offering helps its customers to maintain and increase production, improve productivity, and reduce operating costs,

risks and environmental footprint. Metso continuously develops its portfolio to meet its customers’ growing needs for energy

and emissions reductions, water resources management, resource efficiency, circularity and safety. Fundamental to Metso’s

value creation are its technological know-how, global operations and services footprint as well as its competitive product

offering, strong brand and continuous innovation. Digitalization is an additional key driver of value creation at Metso. It enables

the development of new business models, improving efficiency and enhancing safety. Enhancing the utilization of data and

analytics enables optimization of customers’ equipment, processes and full flowsheets, which can lead to significant

productivity gains and cost savings.

Metso is organized into two segments: Aggregates and Minerals. Within these segments Metso operates through business

and market areas. Metso has a market- and customer-specific supply chain network, with manufacturing optimized between

in-house operations and purchases from suppliers. This model provides Metso with flexibility and helps it to best serve its

customers across the business cycles.

Metso’s business areas are accountable for their performance in terms of orders and sales, operating profit and capital

employed, and they contribute to the company’s profitable growth strategy, including the sustainability agenda, through

business-specific initiatives. The business areas, together with market area teams, are responsible for managing customer

relationships, and information on customer satisfaction is regularly gathered to further improve customer processes and

Metso Oyj – Board of Directors’ report and financial statements 2023 11

relationships. Metso has a multichannel approach to its markets, with sales channels tailored for specific regions, customer

industries and customer types. Metso’s direct sales teams and experts provide competence in technologies and processes. In

addition, Metso works with distributors to increase its local presence and has digital sales channels to support reachability and

ease of doing business.

Central to Metso’s value creation is its Planet Positive offering of over 100 products. This portfolio creates value both for

Metso’s customers as well as for other stakeholders. Its products are meaningfully more sustainable than the market

benchmark or similar products of the previous generation based on factors that also drive total lifetime cost of ownership, e.g.,

energy and water efficiency. Planet Positive products therefore typically also offer commercial benefits to both Metso and its

customers. Metso’s technology strategy and R&D prioritize growth of the Planet Positive products portfolio and sales. This is

driven by the deep know-how of Metso’s 17,134 employees and around 30 locations with research and development

capabilities, as demonstrated by 7,829 national technology patents.

Metso generates employment and wealth in local communities as an employer and a buyer of goods and services. Metso’s

procurement spend was approximately EUR 3.6 billion in 2023. Around 20,000 suppliers in 100 countries benefit from long-

term partnerships and Metso's responsible business practices. The company also contributes to local communities through

cooperation with universities and other research institutes, as well as by participating in local community corporate social

responsibility initiatives. In 2023, Metso paid EUR 1,076 million in wages, EUR 187 million in taxes and EUR 248 million in

dividends to its shareholders.

Sustainability governance

Sustainability is fundamental to Metso’s business at all levels of the organization. Metso’s Board of Directors oversees Metso’s

sustainability strategy and governance and follows up with management to ensure that the sustainability agenda is pursued

effectively. The Audit and Risk Committee (”ARC”) assists the Board in monitoring and reviewing the sustainability targets and

reporting. During the 2023 strategy review, the Board of Directors reviewed the sustainability strategy and approved updated

targets. The Board of Directors tracks progress of the Group’s strategy implementation, including progress on sustainability

targets. The Board of Directors reviews and approves Metso’s Statement of non-financial information, which includes the

sustainability targets and KPIs. Metso’s Board has safety as a standing item in every meeting. Other topical agenda items in

2023 were overseeing preparations for the Corporate Sustainability Reporting Directive, including approving the double

materiality results. The Board’s Remuneration and HR committee is the expert committee focused on overseeing Metso’s

performance culture, succession planning and remuneration, including sustainability related target setting.

The President and CEO, assisted by the Metso Leadership Team, is responsible for the management of the company in

accordance with the targets set by the Board and the applicable laws and regulations. The Leadership Team ensures the

implementation of the sustainability agenda and regularly reviews sustainability targets and Metso’s development of the Planet

Positive product portfolio. Performance against these targets is reported to the Metso Leadership Team on a quarterly basis.

In 2023, the Metso Leadership Team focused on preparing for the new sustainability regulation and the double materiality

assessment requirements. The Leadership Team’s meetings have safety and people topics as a standing item in every

meeting, and employee engagement is reviewed quarterly. The topical safety agenda items in 2023 were progress in Life-

Saving Rules training and red flag sites. People topics in the 2023 meetings included e.g. talent pool development and

increasing female talent, as well as succession planning. Also on the agenda during the year was a high level human rights

impact assessment from which several topics will be prioritized for future years. Customer engagement through NPS (net

promoter score) is measured continuously and reviewed by the Leadership Team regularly.

The Chief Financial Officer, who is a member of the Metso Leadership Team, has overall accountability for sustainability. The

CFO and the Sustainability and QEHS team jointly steer Metso’s group-level approach to material sustainability issues in

cooperation with the businesses and other corporate functions. This includes the development of the overall sustainability

agenda and sustainability practices and communications, as well as the implementation of corporate policies. The

Sustainability and QEHS team contributes to sustainability-related training, risk assessment and management, as well as

external reporting in cooperation with other corporate functions, and it is also responsible for the proactive management of

internal and external stakeholders’ expectations.

The Sustainability Steering Group includes leaders and subject matter experts from different business areas and corporate

functions. The Sustainability Steering Group meets twice a quarter to review the overall progress of the sustainability agenda

and performance against targets and to provide guidance on sustainability matters, governance and action plans.

The heads of the business areas, who are part of the Metso Leadership Team, are accountable for sustainability matters in

their respective business areas. Responsibility for implementing the sustainability agenda and actions in day-to-day operations

belongs to line management in each business area, market area and corporate function. Business areas have set

sustainability targets for the strategy period 2024–2026.

Metso Oyj – Board of Directors’ report and financial statements 2023 12

Risks, risk management system and policies

Operating in a sustainable way and promoting sustainability throughout the value chain is a high priority for Metso, as

environmental, social or governance misconduct can affect the company’s reputation and have long-term financial and other

consequences, including business interruptions and lost work hours. The non-financial risks in this statement have been

identified in accordance with the Finnish Accounting Act and are separate from the financial risks identified in note 4.1 of the

Consolidated financial statement.

The Board of Directors oversees Metso’s overall enterprise risk management. Under the direction of the Board of Directors,

Metso takes a systematic approach to managing non-financial matters, including implementing appropriate policies, risk

management, due diligence processes and a risk-focused governance system and organization.

The assessment of sustainability-related risks is part of Metso’s systematic risk management process, as set out in Metso’s

Enterprise Risk Management policy. The assessment includes, for example, regulatory, physical and other climate-related

risks, and it covers all operations. In addition to assessing the probability and impact of these risks, opportunities are identified

as well. The aim of this process is to minimize the adverse impacts of strategic, financial and operational risks, to remove or

mitigate hazards and to take advantage of opportunities.

Risks are identified by a group of senior specialists across businesses and functions; potential impacts are evaluated and

mitigation approaches are determined annually. Sustainability risks are then incorporated in the company’s overall risk register

and risk assessment. The results are reported annually to Metso’s Board of Directors, the Audit and Risk Committee, and the

Leadership Team.

Certain sustainability risks are assessed on a sales project level in accordance with Metso’s global project risk management

process. Business interruption risks are assessed, and audits of the main manufacturing sites are conducted regularly.

Several climate-related risks, including natural events, are evaluated as part of these audits. Business impact plans take into

account plans to mitigate possible business interruptions, and the annual risk management plan defines the activities and

priorities for the coming year. Business line management is operationally accountable for managing the most relevant risks as

part of its daily activities.

Metso’s Code of Conduct, approved by the Board of Directors, sets out the company’s expectations for business conduct. The

Code of Conduct, Supplier Code of Conduct, HR Policies, Human Rights Policy, and Donation & Sponsorship Policy, as well

as Quality and Environment, Health and Safety (EHS) Policies, define the basic requirements for meeting Metso’s

environmental, social and economic responsibilities.

Internal control practices are aligned with Metso’s risk management process as approved by the Board of Directors. An audit

framework is in place to support risk management by ensuring compliance and continuous business development.

Metso’s integrated management system complies with the requirements of international standards. Key units of Metso are

certified to ISO 9001 (quality), ISO 14001 (environment), and ISO 45001 (safety) standards.

Environmental responsibility

Planet Positive offering and innovations

Metso’s most significant environmental impacts result from the use of its products and processes by customers. Metso’s

sustainable product offering and innovations are therefore important in managing these environmental impacts. It is important

for equipment and services suppliers like Metso to support the mining industry in the transition towards more sustainable

operations and decarbonization while enabling increased production of minerals, such as copper and nickel, to support global

electrification. Metso’s products, processes and services are designed to help customers operate safely, achieve higher

productivity, and reduce their resource intensity.

The mining, metals and aggregates industries face increasing demands to reduce the use of energy and water resources, and

to mitigate dust, noise and biodiversity impacts, as well as to comply with increasingly stringent environmental legislation. In

particular, developing innovative solutions that are more energy efficient is one of the key priorities for the mining industry,

where the comminution process, consisting of crushing and grinding, is the most energy-intensive stage of minerals

production. Given the decreasing grade of orebodies, which requires even more processing of ore to achieve the same

volume of metal, improving efficiency is key. Improvements in comminution efficiency can therefore result in significant energy

savings, reduce plant operating costs, increase resource efficiency, and reduce greenhouse gas emissions.

Metso’s Planet Positive offering, launched in 2021, is central to Metso’s sustainability agenda and the 1.5 °C journey. Metso’s

Planet Positive portfolio includes solutions that offer significant improvements in reducing energy and carbon intensity, water

use, pollution, and embedded carbon compared to an industry baseline or benchmark technology. In addition, a Planet

Positive product is required to perform at the same or preferably higher level than the industry benchmark in terms of health

Metso Oyj – Board of Directors’ report and financial statements 2023 13

and safety, pollution, and biodiversity impact. Electric solutions are an important part of the Planet Positive portfolio; Metso’s

offering for the mining and metals industries allows customers to choose renewable energy sources. Metso’s offering in

aggregates is currently around 40% electric and additionally includes dual power source products.

Planet Positive sales in 2023 were EUR 1,447 million, which represents 27% of total sales. Metso aims to grow its Planet

Positive sales faster than overall sales and to have a Planet Positive product in every part of the customer value chain where

Metso operates. To achieve this, Metso targets 80% of its R&D spend to Planet Positive by 2030 and 100% of its R&D project

spend to projects with sustainability targets for energy efficiency, emissions reductions, water efficiency, circularity, or safety

improvements at a yearly basis. Planet Positive sales also form part of Metso’s long-term management incentive plans.

In 2023, Metso received several large-, small- and medium-sized Planet Positive orders that support future Planet Positive

sales growth. These included e.g. orders for battery minerals processing plants, such as a lithium hydroxide refinery,

supporting the global energy transition and electrification, a full-scope sustainable comminution circuit flowsheet concept, as

well as repeat orders for filter modernizations and related services from several major mining companies. In 2023, Metso

launched close to ten Planet Positive products, including new technologies, adaptations of the existing offering for new

customer segments, as well as updates to existing product families. In addition, several strategic partnerships were formed

with customers to develop future technologies, including green steel solutions, a full-scale hydrogen-ready anode furnace, and

solutions for sustainable beneficiation and processing of battery minerals.

Environmental efficiency in own operations

Metso aims to continuously reduce the environmental impacts of its operations and has set science-based CO2 emission

reduction targets. This includes aiming to halve the emissions of its own production by 2030, reduce emissions from logistics

by 20% by 2025, increase emissions avoided by customers using its products by 20% by 2025, and work with suppliers to

encourage them to set their own science-based CO2 emission targets. The Science Based Targets Initiative has validated

Metso’s climate targets, and all SBT targets have 2019 as their baseline. In 2021, Metso further strengthened its commitment

by setting a new target to reach net zero CO2 emissions in its own operations by 2030. Metso also aims to reduce its water

consumption per employee by 15% in water-scarce locations.

Metso has calculated its scope 1, 2, and 3 greenhouse gas emissions in line with the GHG protocol methodology. Close

monitoring of environment-related indicators enables Metso to continuously improve its management and environmental

performance.

Metso has incorporated ESG metrics into its incentive plans to reward participants for the company's positive contributions

toward sustainability. These ESG metrics have been a part of Metso’s long-term incentive plans for a number of years. An

ambitious, multi-year goal to reduce CO2 emissions from its own manufacturing and logistics processes was adopted in 2021.

Since then, Metso has also set a goal to support its customers in achieving their sustainability targets through Metso’s Planet

Positive offering. Currently, Metso does not use internal carbon pricing mechanisms in its calculations.

Climate change

Climate change affects many aspects of Metso’s business and the company regularly analyzes climate change-related risks

and opportunities and their potential impact on the business. Transitional and physical risks as well as opportunities resulting

from climate change are reported in this Statement of non-financial information, in accordance with the recommendations of

the Task Force on Climate-Related Financial Disclosures (TCFD).

As a company with a global presence, the impacts of climate change on Metso’s own operations as well as on its customers’

and suppliers’ operations will not be the same everywhere. Regional variations in climate change and the impacts on activities

necessitate individual assessment of issues in order to address them correctly and effectively. An assessment of climate

change-related risks and opportunities across various time horizons is conducted as part of Metso’s regular corporate risk

assessment process and is included in the strategy work. In assessing climate change impacts, Metso considers a time

horizon of 0–3 years to be the most relevant for assessing the short term, 3–10 years the medium term, and 10 years and

beyond the long term.

Among the significant risks and opportunities identified for Metso are the ability to develop environmentally efficient products

to meet future customer needs and the ability to operate in a changing business and external environment. Additionally,

environmental legislation, customer energy supply, the global regulatory environment, and political and social unrest are

factors that are considered to be material. All climate change-related risks, with an estimate of their probability and possible

impact relative to annual sales, are noted and assessed. The potential risks and opportunities identified based on the

assessment and their estimated potential financial impacts are presented in the following tables.

Metso Oyj – Board of Directors’ report and financial statements 2023 14

Climate change related risks


Category	Description	Financial impact	Time horizon
Transitional risks
Technology	Future sustainability-related requirements will influence market expectations and lead to completely new or alternative technology solutions and processes. Inability to meet these requirements threatens business continuity in the long term.	High	Medium – Long
	Non-optimal choices in R&D expenditure may affect the speed and quality of the development of Metso’s product and services offering. Inability to develop the innovations needed for the increasing commodity supply required for the energy transition.	Intermediate	Medium
Market	Climate change will impact the physical and business environment; emerging technologies and the transition to a lower carbon economy may change business models and customer demand. Shifts in customer demand and general market requirements may challenge companies to adapt to these changes. Inability to meet the new demand is a threat to business. Increased volatility may result in supply chain challenges.	High	Short – Medium
	Metso’s Planet Positive portfolio of products may be more subject to the business cycle than the overall portfolio, which may result in loss of value during industry downturns.	Intermediate	Short – Medium
	Availability of energy, especially clean energy, will become increasingly important. However, affordable access to clean energy might be restricted, particularly in remote customer locations and with significant differences between countries, and this can increase operating costs and decrease profitability.	Intermediate	Medium
Reputation	Stigmatization of the industry and a negative perception of companies may adversely affect Metso’s or its’ customers’ reputation and social acceptance.	Intermediate	Medium
	Negative reputation (Metso’s or the industry’s) can adversely impact investors’ decisions. This may affect industry structures and Metso’s ability to serve carbon- intensive segments.	Intermediate	Medium
Policy & Legal	Climate change concerns are likely to generate new, stricter regulations and legislation. Environmental and emissions reporting obligations will increase.	Intermediate	Short
Physical risks
Chronic	Customers’ access to inputs, e.g. water, can be hindered by chronic changes in the environment. For some customers, this may mean reduced business and therefore decreased sales. Increasingly visible impacts of climate change may lead to social and political disruption, which may affect Metso’s customers’ ability to operate.	Intermediate	Medium – Long
	Chronic risks, e.g. access to water, responding to higher temperatures and heat waves, will require adaptations in Metso’s own operations.	Low	Short – Medium
Acute	Increased frequency and severity of various natural hazards (floods, storms, heat waves, etc.) including the follow-on social impacts.	Low	Short

Metso Oyj – Board of Directors’ report and financial statements 2023 15

Climate change related opportunities


Category	Description	Financial impact	Time horizon
Products and services	New services and products across the value chain will help the mining and metals industries respond to a more volatile environment with increasing demand for sustainability solutions. This will create new business opportunities.	High	Medium
	Continuous development of new Planet Positive products or services and optimizing existing products and services through R&D and innovation to meet customers’ future needs.	High	Short – Medium
Resilience	Global presence, with sufficient presence in all key regions, and strong business development capability enable a solid foundation to adapt to and profit from changes in the market environment.	Intermediate	Short – Medium
	Being the preferred partner with a good reputation and wide social acceptance will improve customer and investor confidence and financing opportunities.	Low	Medium
Energy source	Companies developing and offering clean energy solutions and demonstrating increased energy efficiency will have a competitive edge in countries that are still developing their green energy sectors.	Low	Short – Medium
Markets	Electrification, e.g. electric vehicles, will increase the demand for certain metals, such as copper and other battery metals, which will strengthen the demand for minerals and hence the outlook of mining and Metso’s business.	High	Short – Medium
	More stringent regulatory development may increase the demand for Metso’s Planet Positive solutions.	Intermediate	Medium
Resource efficiency	Environmental efficiency (for example low carbon raw materials and /or small footprint in own operations) will become increasingly important and can add to the attractiveness of Metso’s solutions.	Low	Medium

To address the risks and opportunities described above, Metso is taking a proactive approach in its strategy and operations.

Metso actively monitors the changing physical and business environment and has ongoing engagement with its stakeholders.

As part of the TCFD reporting, Metso analyzed the organization’s strategy and resilience against different future scenarios: a

future where the global average warming will be limited to 1.5 degrees, which is also its strategic target (the ‘Right way’

scenario), a scenario where we risk warming of 4 degrees, i.e. where little has been done to fight climate change (the ‘No way’

scenario), as well as a middle-of-the-road scenario describing a future between these two extremes (the ‘Half way’ scenario).

The basis of these scenarios relies on the information and data provided by widely recognized organizations, such as the

Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and the World Bank.

In the ‘Right way’ scenario, tighter regulation favors Metso’s market-leading solutions for customers, enabling them to retain

their license to operate and to operate efficiently. Renewables and electrification would create strong demand for copper and

battery metals, and spending on infrastructure accelerates. In addition to this being the best climate change outcome, the

diversity of Metso’s businesses as well as its focus on and investment in enabling technologies would likely result in increased

business opportunities, and it is therefore considered to be the most desirable future outlook for Metso.

In the ‘Half way’ scenario, tighter regulations are still expected to create greater demand for water recycling and water

efficiency solutions. Renewables and electrification would also create demand for copper and battery metals, although to a

lesser extent than in the ‘Right way’ scenario. In addition, opportunities would arise from an increase in spending on highways,

railways, and elevations for buildings and roads.

By contrast, in the ‘No way’ scenario, significant spending on infrastructure would be expected as a response to physical

environmental hazards. Water scarcity may create difficulties, but at the same time it could also result in increased demand for

water-efficient technologies. The risks set out in the ‘No way’ scenario are the most material for Metso, and additional

measures and expenditure could be needed to ensure its resilience in this scenario. Due to the diversity of Metso’s

businesses, its technologies can provide solutions to tackle future challenges in these scenarios as well as maintain resilience.

Social responsibility and employees – Metso’s people and culture

Building a strong performance culture is defined as one of the four top priorities for Metso, and the People and Culture agenda

is embedded into the company’s overall business strategy. The focus areas in the strategy period are leadership development,

growth of all employees, building the right organizational capabilities, and attracting, developing, and engaging current and

future employees. Central to the agenda are also promoting the wellbeing of employees, enabling a great employee

experience, continuously developing teams and ways of working, and a strong focus on inclusion. Metso’s Code of Conduct is

the cornerstone of how it conducts business. It defines the basic principles of behavior for all Metso employees. Fair and equal

treatment of every person in the company is expected from all employees. The Code also applies to contractors, suppliers,

customers, and Metso’s other business partners.

Metso Oyj – Board of Directors’ report and financial statements 2023 16

To measure its performance, Metso conducted four employee engagement surveys in 2023: two full surveys for all employees,

and two shorter pulse surveys for white-collar workers. Metso uses the Employee Net Promoter Score (eNPS) to track

employee engagement and has witnessed a positive trend throughout the years of measuring. The results are subsequently

analyzed, teams discuss their respective results and make action plans to improve any areas that show concerns. With the

systematic work, Metso has been able to reach the KPI target and ranks in the top 10% compared to the industry benchmark.

The eNPS result in December 2023 was 54. During 2023 there was a slight improvement in the inclusion score measured in

the employee engagement surveys. Metso now ranks in the top 5% of the industry benchmark cohort for Inclusion. In the long

term, Metso aims to be in the top 10%.

The wellbeing of employees is a priority at Metso, and many global and local activities were initiated in 2023. On a global

level, the company offers training and webinars in various physical and mental wellbeing topics such as resilience, sleeping

and recovery. However, most concrete actions happen at a local level. There has been a significant improvement in the

wellbeing results in Metso’s employee engagement survey. In December 2023, the result was in the top 5% of the external

benchmark for health & wellbeing and mental wellbeing.

Leadership development continued in 2023, with around 1,600 line managers participating in Metso’s key global leadership

program, Leaders4PositiveChange. In addition, a tailor-made strategic leadership program continued.

Metso recognizes that a diverse workforce is a strength that also impacts business results. The company aims to create and

sustain a work environment that values diversity and inclusion as well as provides equal opportunities. Metso has an Equal

Opportunity and Diversity Policy that extends the general principles of Metso’s Code of Conduct. The underlying principle of

this policy is Metso’s commitment to promoting equal opportunities and fair treatment for all employees regardless of gender,

age, race, religion or beliefs, ethnic or national origins, marital/civil partnership status, sexual orientation or disability.

Employees are selected and promoted based on merit and experience.

In 2023, Metso continued to build on the 2021 and 2022 actions for fair pay in the company. In 2021, Metso collaborated with

an external partner to conduct a comprehensive global fair pay analysis, and in response to the findings, a one-time

investment of EUR 2.2 million was made in 2022 to rectify gender-related pay gaps. In 2023 Metso took concrete steps to

refine the company’s talent acquisition process, crafting a more inclusive framework for hiring. The Inclusive Talent Acquisition

program also addresses one of the key findings from the fair pay analysis, which was that a significant portion of salary

differences could be traced back to decisions made during the initial hiring process. Furthermore, Metso rolled out an Inclusive

Talent Acquisition training program to strengthen awareness regarding biases that can influence recruitment decisions.

Majority of Metso leaders completed the training during the year.

In 2023, Metso set a new long-term target to increase the proportion of women in middle and senior management positions.

The target is to achieve a ratio of 30% female / 70% male for middle and senior management positions by the end of 2030. In

2023, the ratio was 17/83%. In 2023, Metso also launched a Conscious Inclusion eLearning, a Digital Inclusion Quick Guide

and training on accessibility; it also launched Metso Women’s Leadership Forum and hosted a Diversity and Inclusion month

globally. Various D&I-themed webinars and events were also organized at Metso offices around the world.

Health and safety

Metso has an uncompromising approach to health and safety for all employees, partners, customers and other stakeholders,

and it has ambitious targets to ensure a safe workplace. Metso continuously and actively mitigates the occupational health

and safety risks in its operations; Metso targets zero harm.

The main focus of Metso’s health and safety approach is its fatality prevention program. It includes high-level safety directives

that set out detailed health and safety requirements for all businesses. The program is focused on the 10 most common risks

that could cause severe injuries: chemicals, confined spaces, forklifts, hand tools, hazardous energy, lifting, machine safety,

road travel, working at heights and working at customer sites. These risks are mitigated in a range of ways, including safety

equipment and tools, working procedures, continuous training, and leadership involvement. A gap analysis project was started

in 2023 requesting all locations to evaluate the current situation, look for gaps and make corrective action plans against the

safety directives.

Ten Life-Saving Rules and actions that set out the requirements to prevent fatalities, especially in high-potential risk

environments, were launched in 2022. A comprehensive training program was started the same year with front-line operations,

and it continued throughout the organization in 2023 with 90% completion rate. These rules are non-negotiable, and a breach

of these can result in serious consequences not only for the employee or contractor involved but also for the supervisor and

manager of the persons involved. The Life-Saving Rules are focused on improving safety for operational employees and are

complementary to Metso’s Modus Operandi program, which sets out the expected safety behaviors for everyone working for

Metso.

Employee safety, risk observations, safety conversations and safety training hours are continuously measured. Metso’s key

indicators for safety are lost-time injury frequency rate per million working hours (LTIFR), which was 1.2 in 2023, and total

Metso Oyj – Board of Directors’ report and financial statements 2023 17

recordable injury frequency rate (TRIFR), which was 3.0 in 2023. The scope of LTIFR and TRIFR reporting covers Metso’s

premises, employees and contractors working under Metso’s direct supervision, as well as project sites. All serious accidents

are reviewed by top management to ensure proper investigations and corrective actions are completed. All employees and

contractors not only have the right but also the obligation to refuse and to report any unsafe work.

Another important safety priority is making sure that products and services are safe to use and maintain; thus, the safety of

operation and maintenance is considered in the early phases of product development. The Product Compliance Management

process ensures that products designed and supplied by Metso worldwide meet all applicable safety requirements throughout

the product life cycle.

Metso manages incidents, hazards, and development initiatives through its QEHS management and product compliance

management systems, as well as through customer feedback collected after each major delivery and through customer

surveys.

Human rights

Metso is committed to respecting human rights and the United Nations (UN) Guiding Principles on Business and Human

Rights. Metso is also committed to the UN Global Compact Initiative and its principles, as well as to the principles of the

Universal Declaration of Human Rights and the International Labor Organization’s Declaration of Fundamental Principles and

Rights at Work. These commitments are incorporated in Metso’s Code of Conduct and Supplier Code of Conduct, and in its

Human Rights, HR, Quality and EHS policies. In addition, the Metso Modern Slavery Statement sets out practices and actions

to mitigate the risk of modern slavery or human trafficking in Metso’s own business and in its supply chain. Metso also

supports and operates according to the principles described in the OECD Guidelines for Multinational Enterprises. Metso does

not accept any form of compulsory, forced, or child labor, slavery or human trafficking, unlawful employment terms, unsafe

working conditions or unlawful environmental impacts within its own operations, including investment decisions related to

mergers, acquisitions, and divestments, and it has zero tolerance for any such activity in its supply chain.

All employees are entitled to be treated with respect, and there is zero tolerance for discrimination, harassment or illegal

threats. Metso follows all applicable national laws and regulations regarding working hours and employee compensation. In

2023, Metso completed a high level human rights impact assessment and assessed its human rights due diligence processes

and risks to identify areas for future focus. In addition, Metso is committed to regularly reviewing its due diligence practices

and human rights policies and procedures. Metso requires that suppliers, business partners and other stakeholders also follow

similar standards. A range of internal controls are in place, such as an anonymous whistleblower channel that is available to

employees and external parties.

Human rights-related topics, including safety and labor rights, are reviewed regularly in Metso’s own operations and in its

supply chain.

Responsible supply chain

Due to the cyclical nature of its customer industries, Metso outsources a significant proportion of its manufacturing. Metso

expects its suppliers to follow its Supplier Code of Conduct, which is based on Metso’s Code of Conduct, as well as

established international best practices.

Based on supplier assessments for existing and new suppliers, the need for third-party or internal supplier sustainability audits

as well as any further actions are defined. New supplier assessments form part of Metso’s procurement function’s ongoing

processes; the aim is to evaluate new direct suppliers in high-risk countries against Metso’s sustainability criteria. In addition,

committing to Metso Supplier Code of Conduct is part of Metso’s supplier onboarding process.

Human and labor rights, environmental and safety practices, compliance with laws and regulations, and anti-bribery provisions

are covered by third-party supplier audits, supplier self-assessments and Metso’s internal supplier sustainability audits. Key

supplier requirements are also incorporated into contract obligations, and a contract breach can result in consequences,

including potential termination of a supplier relationship.

After an audit has been performed, suppliers are provided with audit findings and may be subject to possible re-audits. In

2023, 172 supplier sustainability audits including human rights topics were conducted. To further support its suppliers’

sustainability actions, Metso educates and advises its suppliers regarding their performance on sustainability. Metso has

created several supplier e-learning courses about its expectations for supplier sustainability, human rights and safety, as well

as the Science Based Target (SBT) methodology for CO2 emissions reduction and how its suppliers can contribute to reducing

CO2 emissions in the supply chain. One key action in 2023 was engaging with suppliers regarding setting a science-based

target (SBT) for CO2 emissions reductions. 25.6 percent of direct procurement spend in 2023 was with suppliers that have set

SBTs.

Metso Oyj – Board of Directors’ report and financial statements 2023 18

In 2023, Metso started reporting according to the Carbon Border Adjustment Mechanism (CBAM) regulation and is engaging

with its suppliers to initiate the collection of CO2 emissions data per product shipped into the EU territories.

Metso strives to develop a shared understanding with suppliers in the areas of innovation, cost efficiency, quality and

sustainability in order to manage risks related to outsourcing.

Business conduct – anti-corruption and bribery

Metso endorses responsible business practices and complies with national and international laws and regulations. The

company has zero tolerance for corruption. Metso works against corruption in all its forms and requires its suppliers and

business partners to follow the same principles and to fully comply with all applicable anti-corruption laws. Metso’s Code of

Conduct, Supplier Code of Conduct, and Anti-Corruption Policy are the key policies that define the anti-corruption measures

required from Metso’s employees, customers, agents, suppliers, distributors and other business partners.

Metso conducts compliance checks on customers, suppliers, and other business partners through third-party screening tools,

data portals that are linked to Metso’s customer relationship management systems, and supplier data management systems.

All sales agents, distributors and other representatives are further required to confirm their compliance with the company’s

Code of Conduct requirements.

Metso employees have a responsibility for ensuring compliance with anti-corruption and anti-bribery measures. A range of

internal controls are in place, and employees are strongly encouraged to report any suspected wrongdoing or misconduct to

their supervisors, to management, or to Compliance or Internal Audit, e.g. using Metso’s internally and externally available

whistleblower channel. All reports are treated as confidential and anonymous, and Metso commits to ensuring that there are

no negative repercussions for the reporting person. To ensure effective and efficient investigation and remediation, the roles

and responsibilities regarding evaluation, investigation and remediation are defined in Metso’s internal procedure. Metso is

committed to remediation and to implement relevant improvement actions to prevent re-occurrence.

To mitigate risks and to ensure compliance with the company’s Code of Conduct, Metso provides regular compliance training.

The latest Code of Conduct training was launched in September 2023; by the end of the year, 99.4% of employees had

completed the training. Employees are required to complete the training every year. The Code of Conduct training is also a

mandatory part of the induction program for new employees.

The VP, Compliance and Risk Management regularly reports to the General Counsel and to the Audit and Risk Committee of

Metso’s Board of Directors regarding compliance cases and corrective actions taken.

Metso Oyj – Board of Directors’ report and financial statements 2023 19

Key non-financial performance indicators


Non-financial topic	Target for 2023	Key performance indicator	2023	2022
Environmental responsibility
CO2 emissions: Scope 1 & 2 (market based)	Decrease CO2 emissions by 68% compared to 2019 baseline	CO2 emissions of own production	32,182 tCO2 (-73% compared to 2019) 1)	44,595 tCO2
CO2 emissions: Logistics	Decrease CO2 emissions by 20% compared to 2019 baseline	CO2 emissions from logistics	163,000 tCO2 (-7% compared to 2019)	160,000 tCO2
Suppliers with CO2 targets 2)	20% of direct procurement spend is with suppliers that have set an SBT CO2	% of direct procurement spend with an SBT target	25.6%	22.3%
Planet Positive portfolio	Grow Planet Positive sales faster than overall sales	Planet Positive sales (EUR million)	1,447 3)	1,225 3)
Social responsibility and employees – Metso’s people and culture
Health and safety	Continuous improvement in lost-time injury frequency rate	Lost-time injuries per million hours worked (LTIFR) 4)	1.2	1.2
	Continuous improvement in total recordable injury frequency rate	Total recordable injury frequency per million hours worked (TRIFR) 4)	3.0	2.7
Metso’s people and culture	Employee Net Promoter Score (eNPS) to be in top 10% of the industry benchmark	eNPS benchmark score range %	Top 10%	Top 10%
Human rights
Responsible supply chain	117 supplier sustainability audits per year conducted in higher-risk areas	Number of supplier sustainability audits conducted	172	131
Business conduct – anti-corruption and bribery
Code of Conduct training	All active employees, including blue-collar workers, trained in Code of Conduct. Excludes external workforce	Code of Conduct training completion rate (%)	99.4%	97.8%

1) Compared to the original SLB bond baseline 2022 48,944 tCO2 this is equivalent to -34%. Compared to restated 2022 figure the reduction is

28%.

2) Figure restated due to data improvement and to include direct spend only. % of procurement spend for all suppliers that have committed to

SBT or equivalent target in 2023 was 26.2% and in 2022 22.9%.

3) Discontinued operations are not included in the Planet Positive sales 2023 and comparative figures for 2022 have been restated

accordingly. Other figures in this table include discontinued operations.

4) Includes employees and contractors.

EU Taxonomy

The EU Taxonomy is a classification system that translates the EU’s climate and environmental objectives into criteria for

assessing economic activities for investment purposes. Companies that fall under the scope of the Non-Financial Reporting

Directive must disclose to what extent their activities meet the criteria set out in the EU Taxonomy.

The EU Taxonomy includes six environmental objectives: climate change mitigation, climate change adaptation, sustainable

use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and

protection and restoration of biodiversity and ecosystems. Economic activities that make a substantial contribution to at least

one of the Taxonomy’s environmental objectives are recognized as green, or ’environmentally sustainable’, as long as they do

not significantly harm any of the other environmental objectives and they meet minimum social safeguards.

In June 2021, criteria that define which activities substantially contribute to the first two (out of the six) environmental

objectives, climate change mitigation and climate change adaptation, were published. The criteria for the remaining four

environmental objectives were published in June 2023. For the 2023 reporting period, the share of Taxonomy-eligible and

Metso Oyj – Board of Directors’ report and financial statements 2023 20

Taxonomy-aligned activities (revenue, capex and opex) as well as qualitative information is disclosed for the climate-related

environmental objectives. In addition, the share of Taxonomy-eligible activities (revenue, capex and opex) is disclosed for the

other four environmental objectives.

Metso, as a technology company serving the aggregates, minerals processing and metals refining industries, aims to support

customers’ energy transition towards net zero and decarbonization of their industries in line with the overall Taxonomy

objectives. More specifically, Metso has assessed which of its activities are included in the EU Taxonomy and have the

potential to contribute to the climate change mitigation, climate change adaptation, sustainable use and protection of water

and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of

biodiversity and ecosystems objectives.

For the eligibility assessment, Metso’s products mainly fall under the Taxonomy activities for Climate mitigation ’3.6

Manufacture of other low carbon technologies’ (mining and aggregates machinery), ’3.9 Manufacture of iron and

steel’ (consumables), ’8.2 Data-driven solutions for GHG emissions reductions’ (digital solutions) and ’9.1 Close to market

research, development and innovation’ (test work and technical services). In addition, some of Metso’s products fall under the

Taxonomy activities for Circularity ‘3.3 Demolition and wrecking of buildings and other structures’ and ‘5.1 Repair,

refurbishment and remanufacturing’. However, some services provided by Metso, whilst enabling process optimization and

lifetime extensions through modernizations and upgrades, fall outside the scope of activities included in the EU Taxonomy and

are therefore classified as non-eligible. When Metso sells parts purchased from a subcontractor without altering or modifying

them in any way or without owning the design of those parts, those parts also fall outside of the scope of the EU Taxonomy.

In 2023, Metso assessed whether its eligible products meet the Taxonomy alignment criteria regarding ’substantial

contribution’, ’do no significant harm’ (DNSH) for Climate mitigation, and minimum social safeguards. Many of Metso’s

products have the potential to substantially contribute to the climate change mitigation objective of the EU Taxonomy. These

products are considered to be enabling activities, as they enable GHG emission reductions in other sectors of the economy

(mining sector) (products in activity 3.9 being transitional).

‘Substantial contribution’ was assessed on a product or product group level, while the DNSH criteria and ‘minimum social

safeguards’ were assessed on a group level (with some exceptions where DNSH criteria was assessed on a product level).

The ‘substantial contribution’ assessment of the share of taxonomy-aligned economic activities for each eligible activity was

based on the Taxonomy technical screening criteria. Metso also assessed whether its eligible products that substantially

contribute to ‘Climate mitigation’ objective meet the DNSH criteria and has concluded that its activities are in line with the

criteria laid out in the EU Taxonomy. Specifically, Metso has established and implemented procedures to minimize any

adverse impacts of its operations on the environment and complies with all relevant environmental requirements applicable to

its operations; key units of Metso are certified to ISO 14001 (environment) standard and all required sites also have permits

that comply with national legislation.

Metso has reviewed the ‘minimum social safeguards‘ set out in the EU Taxonomy Regulation concerning human rights,

corruption, taxation and fair competition, and concluded that it meets the principles of each of the EU Taxonomy’s ‘minimum

social safeguards’. Specifically, Metso supports and operates according to the principles described in the OECD Guidelines for

Multinational Enterprises. In addition, Metso is committed to respecting human rights and the United Nations (UN) Guiding

Principles on Business and Human Rights. Metso is also committed to the UN Global Compact Initiative and its principles, as

well as to the principles of the Universal Declaration of Human Rights and the International Labor Organization’s Declaration

of Fundamental Principles and Rights at Work. Metso’s Code of Conduct, Supplier Code of Conduct, Human Rights Policy and

Anti-Corruption Policy are the key policies that define the required measures for Metso’s employees, customers, agents,

suppliers, distributors and other business partners. More information about human rights, bribery and anti-corruption is

provided in other sections of this Statement of non-financial information.

Metso is awaiting further common market understanding about the taxonomy Nuclear & Gas templates and has therefore not

included them in its reporting. Metso is following this development closely and will adopt new recommendations accordingly.

The alignment assessment of eligible products in activity ’3.6 Manufacture of other low carbon technologies’, which requires a

life-cycle calculation of GHG emission savings, was completed for several Planet Positive products and will be extended in

2024 to the rest of the portfolio. The results of this assessment are shown in the tables below. In 2023, 20% of Metso’s

products and services in terms of revenue were assessed as EU Taxonomy-aligned activities.

Metso Oyj – Board of Directors’ report and financial statements 2023 21

Proportion of turnover from products and services associated with Taxonomy-aligned economic activities 1)

2023

Substantial contribution

criteria

DNSH criteria (’Does

Not Significantly

Harm’) 4)

Economic

activities

Code(s)

Absolute turnover (EUR million)

Proportion of turnover (%)

Climate change mitigation (Y; N; N/

EL)

Climate change adaptation (Y; N; N/

EL)

Water (Y; N; N/EL)

Pollution (Y; N; N/EL)

Circular economy (Y; N; N/EL)

Biodiversity (Y; N; N/EL)

Climate change mitigation (Y/N)

Climate change adaptation (Y/N)

Water (Y/N)

Pollution (Y/N)

Circular economy (Y/N)

Biodiversity (Y/N)

Minimum safeguards (Y/N)

Taxonomy

Aligned

(A.1) or

Eligible

(A.2)

proportion

turnover,

2022 (%)

Cate-

gory

(enab-

ling

activity)

(E)

Category

(transi-

tional

activity)

(T)

A. TAXONOMY-ELIGIBLE ACTIVITIES 2)

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of other low

carbon technologies

CCM

3.6

418.6

Manufacture of iron and

steel 3)

CCM

3.9

517.5

10%

Close to market

research, development

and innovation

CCM

9.1

161.2

Turnover of

environmentally

sustainable activities

(Taxonomy-aligned)

(A.1)

1,097.4

20%

21%

Of which enabling

579.8

11%

Of which transitional

517.5

10%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL;

N/EL

EL;

Manufacture of other low

carbon technologies

CCM

3.6

3,630.1

67.0%

68.0%

Manufacture of iron and

steel 3)

CCM

3.9

28.5

0.5%

Close to market

research, development

and innovation

CCM

9.1

49.7

0.9%

0.2%

Demolition and wrecking

of buildings and other

structures 5)

CE3.3

0.0

N/EL

Repair, refurbishment

and remanufacturing 5)

CE5.1

12.0

0.2%

N/EL

Turnover of Taxonomy-

eligible but not

environmentally

sustainable activities

(not Taxonomy-aligned

activities) (A.2)

3,720.3

69.0%

0.2%

69%

Total (A.1 + A.2)

4,817.6

89.0%

0.2%

90%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-

non-eligible activities (B)

572.7

11%

10%

Total (A+B)

5,390.3

100%

1) Figures reported are in line with Metso’s Consolidated financial statements 2023 and have been prepared in accordance with International

Financial Reporting Standards (for further details, see note 1.2 to the Consolidated financial statements). Identification of eligible and aligned

revenue was based on group-level reporting and capex and opex are allocated as % sales of that business area. In addition, revenue related

to each aligned activity is based on reported external revenue and presented as relevant under single contribution criteria and taxonomy

activity and therefore the risk of double counting has been avoided. Metso recognizes revenue from contracts with customers and reports

under two segments: Minerals and Aggregates. Revenue for the year 2023 was EUR 5,390 million, of which EUR 4,044 million is attributable

to Minerals, and EUR 1,346 million attributable to Aggregates. Metals & Chemical Processing and Ferrous & Heat Transfer businesses have

been classified as discontinued operations and consequently Metso presents revenue only for continuing operations. Comparison period has

been restated accordingly.

Metso Oyj – Board of Directors’ report and financial statements 2023 22

2) Includes products where Metso owns the design of the products, although the products might be manufactured by subcontractors.

3) In its alignment assessment of the products allocated to Taxonomy activity 3.9, Metso included products where steel was manufactured in

electric arc furnaces or in induction furnaces, which is a more energy-efficient technology than an electric arc furnace, and where the steel

scrap input relative to product output is not lower than 70% to produce high-alloy steel.

4) ‘Do no significant harm’ was assessed for other environmental objectives: climate change adaptation, sustainable use and protection of

water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity

and ecosystems. With regards to outsourced products, compliance with the criteria was justified with Metso's Supplier Code of Conduct,

where Metso's suppliers are encouraged to have a systematic approach to protecting the environment and continually look for ways to

minimize waste, emissions and discharge of their operations, products and services. Environmental practices and compliance with laws and

regulations are covered by Metso's third-party supplier audits, supplier self-assessments and internal supplier sustainability audits. Metso will

continue to increase its understanding of its compliance with the DNSH criteria of outsourced products in the coming years.

5) Details not reported due to sensitivity of information.

Metso Oyj – Board of Directors’ report and financial statements 2023 23

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities 1) 4)

2023

Substantial

contribution criteria

DNSH criteria (’Does

Not Significantly

Harm’)

Economic activities

Code(s)

Absolute CapEx (EUR million)

Proportion of CapEx (%)

Climate change mitigation (Y; N; N/

EL)

Climate change adaptation (Y; N;

N/EL)

Water (Y; N; N/EL)

Pollution (Y; N; N/EL)

Circular economy (Y; N; N/EL)

Biodiversity (Y; N; N/EL)

Climate change mitigation (Y/N)

Climate change adaptation (Y/N)

Water (Y/N)

Pollution (Y/N)

Circular economy (Y/N)

Biodiversity (Y/N)

Minimum safeguards (Y/N)

Taxonomy

aligned

(A.1) or

eligible

(A.2)

proportion

of CapEx,

2022 (%)

Cate-

gory

(enab-

ling

activity)

(E)

Category

(transitional

activity) (T)

A. TAXONOMY-ELIGIBLE ACTIVITIES 2)

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of other low

carbon technologies

CCM

3.6

3.9

Manufacture of iron and

steel 3)

CCM

3.9

21.1

10%

13%

Close to market research,

development and

innovation

CCM

9.1

2.5

CapEx of environmentally

sustainable activities

(Taxonomy-aligned) (A.1)

27.5

13%

17%

Of which enabling

6.4

Of which transitional

21.1

10%

13%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL;

Manufacture of other low

carbon technologies

CCM

3.6

90.2

43%

50%

Manufacture of iron and

steel 3)

CCM

3.9

1.2

Close to market research,

development and

innovation

CCM

9.1

0.8

0.4%

Demolition and wrecking of

buildings and other

structures 5)

CE3.3

0.0

Repair, refurbishment and

remanufacturing 5)

CE5.1

0.2

0.1%

CapEx of Taxonomy-

eligible but not

environmentally

sustainable activities (not

Taxonomy-aligned

activities) (A.2)

92.3

44%

0.1%

51%

Total (A.1 + A.2)

119.8

57%

0.1%

68%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-

eligible activities (B)

91.4

43%

32%

Total (A+B)

211.2

100%

1) Figures reported are in line with Metso’s Consolidated financial statements 2023 and are based on the data prepared in accordance with

International Financial Reporting Standards (for further details, see notes 3.1, 3.2, and 3.3 to the Consolidated financial statements). Metso's

taxonomy interpretation regarding capital expenditure has changed during the reporting period and consequently taxonomy-non-eligible

activities also include non-operative investments. Comparison period has been restated accordingly.

2) Includes products where Metso owns the design of the products, although the products might be manufactured by a subcontractor.

3) In its alignment assessment of the products allocated to Taxonomy activity 3.9, Metso included products where steel was manufactured in

electric arc furnaces or in induction furnaces, which is a more energy-efficient technology than an electric arc furnace, and where the steel

scrap input relative to product output is not lower than 70% to produce high-alloy steel.

Metso Oyj – Board of Directors’ report and financial statements 2023 24

4) Capital expenditure (capex) includes investment in intangible assets and property, plant and equipment (EUR 170 million), as well as in

right-of-use assets (EUR 41 million). Taxonomy-aligned capital expenditure for the year 2023 includes additions of EUR 2 million in intangible

assets, EUR 22 million in property, plant, and equipment, as well as EUR 3 million in right-of-use assets. Various small investments in

manufacturing sites and new service centers increased capital expenditure during the reporting period. For eligibility assessment, the capital

expenditure of each business area is allocated according to the eligible % sales of that business area. In addition, for alignment assessment,

the capital expenditure of each business area is allocated according to the aligned % sales of that business area. Metso has not identified any

capital expenditure which would fall under categories c) or b) of section 1.1.2.2 in the Delegated Acts, therefore all taxonomy-eligible capital

expenditure is classified as a) “investments in assets or processes associated with taxonomy-eligible or taxonomy-aligned economic activities”

5) Details not reported due to sensitivity of information.

Metso Oyj – Board of Directors’ report and financial statements 2023 25

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities 1) 4)

2023

Substantial contribution

criteria

DNSH criteria (’Does

Not Significantly

Harm’)

Economic

activities

Code(s)

Absolute OpEx (EUR million)

Proportion of OpEx (%)

Climate change mitigation (Y; N; N/

EL)

Climate change adaptation (Y; N;

N/EL)

Water (Y; N; N/EL)

Pollution (Y; N; N/EL)

Circular economy (Y; N; N/EL)

Biodiversity (Y; N; N/EL)

Climate change mitigation (Y/N)

Climate change adaptation (Y/N)

Water (Y/N)

Pollution (Y/N)

Circular economy (Y/N)

Biodiversity (Y/N)

Minimum safeguards (Y/N)

Taxonomy-

aligned

(A.1) or

eligible

(A.2)

proportion

of OpEx,

2022 (%)

Cate-

gory

(enab-

ling

activity)

(E)

Category

(transitio-

nal

activity)

(T)

A. TAXONOMY-ELIGIBLE ACTIVITIES 2)

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of other low

carbon technologies

CCM

3.6

48.8

38%

33%

Manufacture of iron and

steel 3)

CCM

3.9

10.1

Close to market

research, development

and innovation

CCM

9.1

7.3

OpEx of

environmentally

sustainable activities

(Taxonomy-aligned)

(A.1)

66.2

52%

47%

Of which enabling

56.1

44%

40%

Of which transitional

10.1

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL;

N/EL

EL;

Manufacture of other low

carbon technologies

CCM

3.6

53.0

42%

47.0%

Manufacture of iron and

steel 3)

CCM

3.9

0.4

0.3%

Close to market

research, development

and innovation

CCM

9.1

1.2

0.3%

Demolition and wrecking

of buildings and other

structures 5)

CE3.3

0.0

N/EL

Repair, refurbishment

and remanufacturing 5)

CE5.1

0.1

0.1%

N/EL

OpEx of Taxonomy-

eligible but not

environmentally

sustainable activities

(not Taxonomy-aligned

activities) (A.2)

54.8

43%

0.1%

47%

Total (A.1 + A.2)

121.0

95%

0.1%

94%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-

eligible activities (B)

6.5

Total (A+B)

127.5

100%

1) Figures reported are in line with Metso’s Consolidated financial statements 2023 and are based on the data prepared in accordance with

International Financial Reporting Standards. Metals & Chemical Processing and Ferrous & Heat Transfer businesses have been classified as

discontinued operations during the reporting period. Operating expenditure only considers continuing operations and comparison period has

been restated accordingly.

2) Includes products where Metso owns the design of the products, although the products might be manufactured by a subcontractor.

3) In its alignment assessment of the products allocated to Taxonomy activity 3.9, Metso included products where steel was manufactured in

electric arc furnaces or in induction furnaces, which is a more energy-efficient technology than an electric arc furnace, and where the steel

scrap input relative to product output is not lower than 70% to produce high-alloy steel.

Metso Oyj – Board of Directors’ report and financial statements 2023 26

4) Operating expenditure (opex) is defined as expenses related to research and development, building renovation measures, short-term lease,

maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment as

well as right-of-use assets, that are necessary to ensure the continued and effective functioning of such assets. All indirect costs such as oil,

electricity, real estate tax, etc. have been excluded from the amount. For the eligibility assessment, the operating expenditure of each

business area is allocated according to the eligible % sales of that business area. In addition, for the alignment assessment, the operating

expenditure of each business area is allocated according to the aligned % sales of that business area. Taxonomy-aligned operative

expenditure for the year 2023 includes EUR 50 in research and development expenditure, and EUR 17 million in other operative expenditures

disclosed previously. Increased research and development costs in battery minerals mainly contributed to the change in operative expenditure

during the reporting period. Metso has not identified any operative expenditure which would fall under categories c) or b) of section 1.2.3.2 in

the Delegated Acts, therefore all taxonomy-eligible operative expenditure is classified as a) “expenditure related to assets or processes

associated with taxonomy-eligible or taxonomy-aligned economic activities”.

5) Details not reported due to sensitivity of information.

In addition to the activities listed in the tables above, Metso also has products in Taxonomy activity ’8.2 Data-driven solutions

for GHG emissions reductions’. These products are often sold as part of another product, and their sales are therefore not

recorded or reported separately.

Stakeholder engagement

Continuous interaction with stakeholders – entities or individuals that have an impact on Metso's business or are affected by

Metso's activities, products and services – is important in defining and adapting Metso’s approach to sustainability. An active

dialogue with stakeholders enables the aligning of social, environmental and governmental practices and improves all parties'

decision-making and accountability. Metso redefined its key stakeholders as part of a double materiality analysis conducted in

2023. Metso’s engagement and most material topics with its key stakeholder groups (employees, suppliers and

subcontractors) in 2023 are described in more detail in other sections of this Statement of non-financial information.

Engagement with shareholders, customers, non-governmental organizations, local communities, media, universities,

vocational schools and research centers, as well as authorities, regulators and governments are summarized below. Metso’s

Leadership Team ensures the implementation of the sustainability agenda. Metso’s CFO, supported by the Sustainability &

QEHS team, is responsible for the proactive management of internal and external stakeholders’ expectations.

Metso is committed to long-term value creation for its shareholders, and Metso's sustainability performance is seen as an

important contributor to this. Key topics of interest to shareholders include Metso's Planet Positive offering and Metso’s

management of its environmental footprint impacts. Metso follows the principle of equality in its investor communications by

simultaneously providing all market participants with accurate, sufficient and timely information that may affect the value of

Metso’s share; such market-relevant information also includes sustainability topics. Metso’s disclosure policy, approved by the

Board of Directors, is compliant with MAR (Market Abuse Regulation) and promotes the reliable and consistent disclosure of

information.

Metso has active discussions with many of its customers to support them in reaching their sustainability targets and works with

them to make improvements to processes, products and own operations. In 2023, Metso completed an extensive

sustainability training program to give its customer-facing sales organization guidance on sustainability-related customer

discussions that support customers in their decarbonization and other sustainability ambitions.

Metso's media strategy is to provide easy access to useful, clear and accurate information, case studies and expert views

through multiple channels. Press coverage focus is with trade media, and interaction with media representatives is both local

and global. Metso's experts regularly meet trade press representatives at exhibitions and conferences. Metso actively

engages and has built close relationships with trade media such as Mining Magazine, Mining International and Aggregates

Business.

Metso cooperates with a number of non-governmental organizations (NGOs). Metso's sponsorships and donations are

focused on environmental protection and conservation, safety programs, and natural disaster relief, and its cooperation

partners include e.g. Plan International. At the end of 2022, Metso launched “Metso Volunteers”, a program to activate and

engage people to volunteer in their local communities. In addition, Metso is a responsible corporate citizen that works closely

with local communities around its operating sites. Metso creates social value to local communities by providing employment

opportunities and supporting corporate social responsibility projects that bring measurable benefits to local communities.

Community projects are based on local needs as defined through discussions with local communities and aim to integrate

volunteer work. In addition, Metso carries out co-funded community projects in collaboration with its customers. Metso's

engagement with authorities, regulators and government includes sustainable minerals and aggregates processing, green

energy transition and electrification, resource efficiency, automation and digitalized process optimization, as well as safety.

Metso's R&D collaboration with these stakeholders takes place mainly through the EU, Business Finland, and EIT Raw

Materials Knowledge and Innovation Community research programs.

Metso Oyj – Board of Directors’ report and financial statements 2023 27

Cooperation with universities and research institutes is regarded as an important in Metso's approach to sustainability and

innovation. Cooperation is applied through different projects, school visits, apprenticeship training, internships and dissertation

positions.

Further information

In addition, as required by the Finnish Accounting Act and set forth in EU Directive 2014/95/EU (rules on disclosure of non-

financial and diversity information by large companies), information related to non-financial matters is also available at:

• Business overview 2023, Metso’s strategy and business model

• Business overview 2023, Metso’s value creation model

• Corporate governance 2023, Risk management at Metso

• Corporate governance 2023, Metso’s risk map

Shares and shareholders

Metso has one share series, and each share entitles its holder to one vote at a General Meeting and to an equal amount of

dividend. Metso’s shares are registered in the Finnish book-entry system maintained by Euroclear.

Basic share information


Listed on	Nasdaq Helsinki
Trading code	METSO
ISIN code	FI0009014575
Industry	Industrials
Number of shares on December 31, 2023	828,972,440
Share capital on December 31, 2023	EUR 107,186,442.52
Market value on December 31, 2023	EUR 7,601.7 million
Listing date	October 10, 2006

Metso shares are also traded on alternative marketplaces like BATS CXE and BATS BXE.

Metso’s share and shareholders in 2023

On December 31, 2023, Metso’s share capital was EUR 107,186,442.52 and the total number of shares was 828,972,440.

More information on the past share capital changes is available at www.metso.com/corporate/investors/shares.

At the end of 2023, Metso had 84,488 shareholders in the book-entry system. The largest shareholder was Solidium Oy with

123,477,168 shares, equaling 14.9 percent of the Company’s shares. A total of 396,469,728 Metso shares were traded on the

Nasdaq Helsinki during 2023, equivalent to a turnover of EUR 3,975.6 million.

At the year-end, the members of Metso’s Board of Directors and President and CEO Pekka Vauramo held a total of 567,824

Metso shares, corresponding to 0.07 percent of the total number of shares and votes. More information about management

holdings is available in note 1.5.

Metso Oyj – Board of Directors’ report and financial statements 2023 28

Share key figures


	2023	2022
Share capital, at the end of year, EUR million	107	107
Number of shares, at the end of year, pcs
Number of outstanding shares, pcs	826,328,191	825,635,935
Own shares held by the Parent Company, pcs	2,644,249	3,336,505
Total number of shares, pcs	828,972,440	828,972,440
Average number of outstanding shares, pcs	826,216,292	827,414,162
Average number of diluted shares, pcs	827,145,340	828,073,068
Earnings/share, basic, EUR	0.66	0.36
Earnings/share, diluted, EUR	0.66	0.36
Net operative cash flow/share, EUR	0.37	0.15
Dividend/share 1), EUR	0.36	0.30
Dividend 1), EUR million	297	248
Dividend/earnings 1), %	55	82
Effective dividend yield 1), %	3.9	3.1
P/E ratio	13.9	26.4
Equity/share, EUR	3.16	2.84

1) The amount for year 2023 is Board of Directors' proposal to the Annual General Meeting.

Share performance and trading on Nasdaq Helsinki


	2023	2022
Closing price, December 31, EUR	9.17	9.61
Market capitalization, December 31, EUR million	7,601.7	7,936.0
Trading volume, NASDAQ OMX Helsinki Ltd, shares	396,469,728	504,693,506
% of shares 1)	47.83%	60.88%
Trading volume, NASDAQ OMX Helsinki Ltd, EUR million	3,975.6	4,080.4
Average daily trading volume, pieces	1,579,560	1,994,836
Relative turnover, %	0.2%	0.2%
Share performance, %	-4.6%	2.8%
Highest share price, EUR	11.61	10.59
Lowest share price, EUR	7.89	5.91
Weighted average share price, EUR	10.03	8.09

1) Of the total amount of shares for public trading.

Metso Oyj – Board of Directors’ report and financial statements 2023 29

Largest shareholders on December 31, 2023


	Owner	Shares and votes	% of total shares and voting rights
1	Solidium Oy	123,477,168	14.90
2	Varma Mutual Pension Insurance Company	24,122,359	2.91
3	Ilmarinen Mutual Pension Insurance Company	23,414,367	2.82
4	Elo Mutual Pension Insurance Company	12,441,000	1.50
5	Nordea	9,310,001	1.12
	Nordea Pro Finland Fund	2,403,501	0.29
	Nordea Finnish Stars Fund	1,450,272	0.17
	Nordea Finnish Passive Fund	848,196	0.10
	Nordea Premium Asset Management Balanced Fund	707,647	0.09
	Nordea Premium Asset Management Moderate Fund	674,122	0.08
	Nordea Life Insurance Finland Ltd.	596,016	0.07
	Nordea Bank ABP	547,612	0.07
	Nordea Nordic Fund	507,000	0.06
	Nordea Savings 50 Fund	482,610	0.06
	Nordea Premium Asset Management Growth Fund	326,841	0.04
	Nordea Savings 30 Fund	325,685	0.04
	Nordea Savings 75 Fund	323,003	0.04
	Nordea Savings 15 Fund	33,311	0.00
	Nordea Global Passive Fund	27,908	0.00
	Nordea Premium Asset Management Conservative Fund	24,826	0.00
	Nordea World Passive Fund	15,811	0.00
	Nordea European Passive Fund	11,444	0.00
	Nordea Bank Foundation	2,868	0.00
	Nordea Nordic Small Cap Fund	1,000	0.00
	Nordea Bank Finnish Agricultural Foundation	328	0.00
6	The State Pension Fund	8,300,000	1.00
7	OP Financial Group	8,173,895	0.99
	OP Finland Fund	4,063,763	0.49
	OP-Life Insurance Ltd.	1,793,049	0.22
	OP Finland Index	1,711,908	0.21
	OP Nordic Countries Index Fund	390,124	0.05
	OP Financial Group Research Foundation	93,235	0.01
	OP Europe Index	66,727	0.01
	OP Financial Group Personnel Fund	44,875	0.01
	OP World Index Fund	10,214	0.00
8	Aktia	3,731,668	0.45
	Investment Fund Aktia Capital	2,371,682	0.29
	Investment Fund Aktia Nordic	330,000	0.04
	Investment Fund Aktia Europe	325,000	0.04
	Investment Fund Aktia Nordic Small Cap	300,000	0.04
	Investment Fund Aktia Secura	300,000	0.04
	Investment Fund Aktia Solida	90,000	0.01
	Aktia Livförsäkring AB	14,986	0.00
9	Pension Insurance Company Veritas	3,500,000	0.42
10	Svenska litteratursällskapet i Finland r.f.	3,193,525	0.39

Metso Oyj – Board of Directors’ report and financial statements 2023 30


	Owner	Shares and votes	% of total shares and voting rights
11	Metso Corporation	2,644,249	0.32
12	Evli	2,478,932	0.30
	Evli Finland Select Fund	2,353,000	0.28
	Evli Ltd.	76,132	0.01
	Evli Finland Mix Fund	49,800	0.01
13	Danske Invest Finnish Equity Fund	2,352,400	0.28
14	Samfundet folkhälsan i Svenska Finland rf	2,143,764	0.26
15	Säästöpankki Kotimaa	2,113,248	0.25
16	Mandatum Life Insurance Company	2,077,658	0.25
17	Investment Fund Seligson & Co	2,018,424	0.24
18	Oy Etra Invest Ab	2,000,000	0.24
19	The Finnish Cultural Foundation	1,984,220	0.24
20	S-Bank Fenno Equity Fund	1,756,306	0.21
	20 largest owner groups in total	241,233,184	29.10

	Nominee-registered holders	431,994,472	52.11
	Other shareholders	155,710,470	18.78
	In the joint book-entry account	34,314	0.00
	Total	828,972,440	100.00

Breakdown of share ownership on December 31, 2023


Number of shares	Shareholders	% of shareholders	Total number of shares and votes	% of total shares and voting rights
1–100	21,909	25.93	1,001,230	0.12
101–1,000	41,003	48.53	17,369,602	2.10
1,001–10,000	19,563	23.15	55,500,679	6.70
10,001–100,000	1,846	2.18	44,472,815	5.36
100,001–1,000,000	135	0.16	40,154,684	4.84
1,000,001 and above	32	0.04	238,444,730	28.76
Total	84,488	100.00	396,943,740	47.88

Nominee-registered shares	11	0.00	431,994,472	52.11
In the joint book-entry account	0	0.00	34,228	0.00
Number of shares issued			828,972,440	100.00

Breakdown by shareholder category on December 31, 2023


Share, %	2023	2022
Nominee-registered and non-Finnish holders	58%	57%
Solidium Oy	15%	15%
Private investors	13%	13%
Finnish institutions, companies, and foundations	14%	15%
Total	100%	100%

Metso Oyj – Board of Directors’ report and financial statements 2023 31

Flaggings

Under the provisions of the Finnish Securities Markets Act, shareholders of listed companies have an obligation to notify both

the Finnish Financial Supervision Authority and the company of changes when their holdings reach, exceed or fall below a

certain threshold. Metso is not aware of any shareholders' agreements regarding Metso shares or voting rights. All flagging

notifications have been released as a stock exchange release are available at www.metso.com/corporate/media/news.

Incentive plans

Metso’s share ownership plans are part of the management remuneration program. For further information, see at

www.metso.com/corporate/investors/governance/remuneration and notes 1.5. and 1.6. Any shares to be potentially rewarded

are acquired through public trading, and therefore the incentive plans have no diluting effect on the share value.

Metso Oyj – Board of Directors’ report and financial statements 2023 32

Key figures


EUR million	2023	2022	2021	2020	2019
Sales	5,390	4,970	4,236	3,319	2,819
Operating profit (EBIT)	805	490	425	239	316
% of sales	14.9%	9.9%	10.0%	7.2%	11.2%
Profit before taxes	724	426	386	201	282
% of sales	13.4%	8.6%	9.1%	6.1%	10.0%
Profit for the period for continuing operations	537	318	294	149	217
% of sales	10.0%	6.4%	6.9%	4.5%	7.7%
Profit for the period for discontinued operations	8	-18	48	-11	7
Profit for the period	546	301	342	138	223
% of sales	10.1%	6.0%	8.1%	4.2%	7.9%
Profit attributable to shareholders of the company	543	301	342	138	224

Amortization of intangible assets	65	63	72	85	16
Depreciation of tangible assets	53	51	51	41	31
Depreciation of right-of-use assets	35	35	38	30	22
Depreciation and amortization, total	153	149	161	157	69
% of sales	2.8%	3.0%	3.8%	4.7%	2.4%

EBITA	869	553	498	324	332
% of sales	16.1%	11.1%	11.7%	9.8%	11.8%
EBITDA	957	643	587	396	385
% of sales	17.8%	12.9%	13.8%	11.9%	13.6%

Finance income and expenses, net	80	63	39	38	33
% of sales	1.5%	1.3%	0.9%	1.2%	1.2%
Interest expenses	78	44	23	30	32
% of sales	1.4%	0.9%	0.6%	0.9%	1.1%
Interest cover	11.9x	10.1x	14.9x	10.4x	11.5x

Gross capital expenditure	169	113	91	86	90
% of sales	3.1%	2.3%	2.1%	2.6%	3.2%
Net capital expenditure	165	104	69	83	82
% of sales	3.1%	2.1%	1.6%	2.5%	2.9%
Net cash flow from operating activities before financial items and taxes	550	322	608	587	173
Cash conversion, %	57%	50%	104%	148%	45%

Research and development	66	55	66	56	39
% of sales	1.2%	1.1%	1.6%	1.7%	1.4%

The income statement figures for years 2023 and 2022 are comparable. Key figures for the years 2019–2021 have not been

restated. More information is disclosed under note 5.5 Discontinued operations.

Metso Oyj – Board of Directors’ report and financial statements 2023 33


EUR million	2023	2022	2021	2020	2019
Balance sheet total	7,156	6,754	5,830	5,567	3,457
Equity attributable to shareholders	2,608	2,342	2,250	2,037	1,252
Total equity	2,618	2,350	2,251	2,040	1,254
Interest-bearing liabilities	1,528	1,293	952	1,345	1,001
Net working capital (NWC)	990	596	254	413	853
% of sales	18.4%	12.0%	6.0%	12.5%	30.3%
Capital employed	4,078	3,643	3,173	3,437	2,255
Return on equity (ROE), %	21.8%	13.1%	16.0%	8.3%	18.4%
Return on capital employed (ROCE) before taxes, %	22.3%	13.8%	14.1%	8.6%	16.2%
Return on capital employed (ROCE) after taxes, %	17.0%	10.5%	11.7%	6.5%	12.9%
Net debt	884	684	470	799	772
Gearing, %	33.8%	29.1%	20.9%	39.2%	61.5%
Equity to asset ratio, %	40.2%	39.2%	43.2%	39.5%	39.1%
Debt to capital, %	35.0%	33.3%	26.7%	37.2%	42.1%
Debt to equity, %	53.9%	50.0%	36.4%	59.1%	72.6%

Orders received	5,252	5,623	5,605	4,340	3,009
Order backlog, December 31	3,238	3,902	3,990	2,233	1,408

Personnel at end of year	17,134	16,705	15,630	15,466	12,894

Orders received for years 2023 and 2022 are comparable and present continuing operations. Key figures for the years 2019–

2021 have not been restated. The comparative figures related to the consolidated balance sheet have not been restated. More

information is disclosed under note 5.5 Discontinued operations. Order backlog and personnel at end of year include

continuing and discontinued operations.

Balance sheet for 2020 has been restated due to adjustments in the fair values of Outotec at the acquisition date. The

adjustments have an effect to goodwill, non-current deferred tax assets and liabilities, income tax liabilities, other current

liabilities and liabilities held for sale.

Key figures for 2019 are based on Metso Minerals carve-out data.

Metso Oyj – Board of Directors’ report and financial statements 2023 34

Formulas for the key figures


Earnings before finance expenses, net, taxes and amortization, adjusted (adjusted EBITA)	=	Operating profit + adjustment items + amortization
	=	Operating profit + adjustment items + amortization

Earnings per share, basic	=	Profit attributable to shareholders
Earnings per share, basic	=	Average number of outstanding shares during the year

Earnings per share, diluted	=	Profit attributable to shareholders
Earnings per share, diluted	=	Average number of diluted shares during the year

Interest cover	=	EBITDA
Interest cover	=	Finance income and expenses, net

Cash conversion, %	=	Net cash flow from operating activities before financial items and taxes	x 100
Cash conversion, %	=	EBITDA	x 100

Return on equity (ROE), %	=	Profit for the year	x 100
Return on equity (ROE), %	=	Total equity (average for the period)	x 100

Return on capital employed (ROCE) before taxes, %	=	Profit before tax + finance expenses	x 100
Return on capital employed (ROCE) before taxes, %	=	Capital employed (average for the period)	x 100

Return on capital employed (ROCE) after taxes, %	=	Profit for the period + finance expenses	x 100
Return on capital employed (ROCE) after taxes, %	=	Capital employed (average for the period)	x 100

Gearing, %	=	Net interest-bearing liabilities	x 100
Gearing, %	=	Total equity	x 100

Equity to assets ratio, %	=	Total equity	x 100
Equity to assets ratio, %	=	Balance sheet total - advances received	x 100

Debt to capital, %	=	Interest-bearing liabilities – lease liabilities	x 100
Debt to capital, %	=	Total equity + interest-bearing liabilities – lease liabilities	x 100

Debt to equity, %	=	Interest-bearing liabilities – lease liabilities	x 100
Debt to equity, %	=	Total equity	x 100

Interest-bearing liabilities	=	Interest-bearing liabilities, non-current and current + lease liabilities, non-current and current

Net interest-bearing liabilities	=	Interest-bearing liabilities - Non-current financial assets - loan and other interest- bearing receivables (current and non-current) - liquid funds

Gross capital expenditure	=	Investments in intangible assets and property, plant, and equipment, associated companies, and joint ventures

Net capital expenditure	=	Gross capital expenditure less divestment of intangible assets and property, plant, and equipment, associated companies, and joint ventures

Net working capital (NWC)	=	Inventories + trade receivables + other non-interest-bearing receivables + customer contract assets and liabilities, net - trade payables - advances received - other non-interest-bearing liabilities

Capital employed	=	Net working capital + intangible assets and tangible assets + right-of-use assets + non-current investments + interest-bearing receivables + liquid funds + tax receivables, net + interest payables, net

Net cash flow from operating activities	=	Net income + depreciation and amortization and other non-cash items - change in net working capital - interests and other financial items paid (net) - taxes paid

Net cash flow from operating activities / share, EUR	=	Net cash flow from operating activities
Net cash flow from operating activities / share, EUR	=	Outstanding shares at end of period

Effective dividend yield, %	=	Dividend per share	x 100
Effective dividend yield, %	=	Trading price at the end of the year	x 100

Price / earnings ratio (P/E)	=	Trading price at the end of the year
Price / earnings ratio (P/E)	=	Earnings per share

Equity / share	=	Equity attributable to shareholders
Equity / share	=	Number of outstanding shares at the end of the period

Metso Oyj – Board of Directors’ report and financial statements 2023 35

Board of Directors’ proposal on the use of profit

On December 31, 2023, the distributable equity of Metso Corporation was:


Invested non-restricted equity fund	EUR	434,272,229.86
Own shares	EUR	-22,514,857.99
Retained earnings	EUR	381,257,274.03
Net profit for the year	EUR	349,287,508.61
Distributable equity, total	EUR	1,142,302,154.51

The Board of Directors proposes that a dividend of EUR 0.36 per share be paid based on the balance sheet to be adopted for

the financial year, which ended December 31, 2023, and the remaining portion of the profit be retained and carried forward in

the Company’s unrestricted equity.


Dividend payment	EUR	297,478,148.76
Distributable equity after dividend payment	EUR	844,824,005.75

These financial statements were authorized for issue by the Board of Directors on February 15, 2024, after which, in

accordance with Finnish Company Law, the financial statements are either approved, amended, or rejected in the Annual

General Meeting.

Metso Oyj – Board of Directors’ report and financial statements 2023 36

Consolidated financial statements, IFRS

Consolidated statement of income

Year 2023 figures comprise continuing operations and year 2022 has been restated accordingly.


EUR million	Note	2023	2022
Sales	1.1, 1.2	5,390	4,970
Cost of sales	1.5, 3.4	-3,687	-3,642
Gross profit		1,703	1,328

Selling and marketing expenses	1.3, 1.5, 3.4	-438	-426
Administrative expenses	1.3, 1.5, 3.4	-372	-315
Research and development expenses	1.3, 1.5, 3.4	-66	-55
Other operating income	1.4	282	176
Other operating expenses	1.4	-306	-216
Share of results of associated companies	5.3	0	-1
Operating profit		805	490

Finance income	1.7	17	14
Foreign exchange gains/losses	1.7	4	-14
Finance expenses	1.7	-101	-63
Finance income and expenses, net		-80	-63

Profit before taxes		724	426

Income taxes	1.8	-187	-108
Profit for the year for continuing operations		537	318

Profit from discontinued operations	5.5	8	-18
Profit for the year		546	301

Profit attributable to
Shareholders of the Parent company		543	301
Non-controlling interests		2	0

Profit from continuing operations attributable to
Shareholders of the Parent company		535	319
Non-controlling interests		2	0

Profit from discontinued operations attributable to
Shareholders of the Parent company		8	-18
Non-controlling interests		0	0

Earnings per share, EUR 1)	1.9	0.66	0.36
Earnings per share, continuing operations, EUR 1)	1.9	0.65	0.39
Earnings per share, discontinued operations, EUR 1)		0.01	-0.03

1) Basic and diluted.

Metso Oyj – Board of Directors’ report and financial statements 2023 37

Consolidated statement of comprehensive income

Year 2023 figures comprise continuing operations and year 2022 has been restated accordingly.


EUR million	Note	2023	2022
Profit for the year		546	301

Other comprehensive income
Cash flow hedges, net of tax	1.8, 4.4, 4.8	-2	3
Currency translation on subsidiary net investment	1.8, 4.4	-27	13
Items that may be reclassified to profit or loss in subsequent periods		-29	17

Defined benefit plan actuarial gains and losses, net of tax	1.8, 2.7	-4	2
Items that will not be reclassified to profit or loss		-4	2

Other comprehensive income total		-33	18

Total comprehensive income		513	319

Total comprehensive income attributable to
Shareholders of the Parent company		510	319
Non-controlling interests		2	0

Total comprehensive income from continuing operations attributable to
Shareholders of the Parent company		502	337
Non-controlling interests		2	0

Total comprehensive income from discontinued operations attributable to
Shareholders of the Parent company		8	-18
Non-controlling interests		0	0

Metso Oyj – Board of Directors’ report and financial statements 2023 38

Consolidated balance sheet – Assets


EUR million	Note	2023	2022
Non-current assets
Goodwill and intangible assets	3.1, 3.4
Goodwill		1,097	1,128
Intangible assets		790	844
Total goodwill and intangible assets		1,886	1,972

Property, plant and equipment	3.2, 3.4
Land and water areas		39	40
Buildings		131	117
Machinery and equipment		211	193
Assets under construction		91	57
Total property, plant and equipment		472	407

Right-of-use assets	3.3, 3.4	114	115

Other non-current assets
Investments in associated companies	5.3	3	6
Non-current financial assets	4.2	2	2
Loan receivables	4.2	–	5
Derivative financial instruments	4.8	10	3
Deferred tax assets	1.8	234	225
Other non-current receivables	2.3, 4.2	22	20
Total other non-current assets		271	262

Total non-current assets		2,744	2,756

Current assets
Inventories	2.4	1,951	1,846
Trade receivables	2.2	855	799
Customer contract assets	1.2	308	354
Loan receivables	4.2	6	3
Derivative financial instruments	4.8	36	86
Income tax receivables	1.8	107	48
Other current receivables	2.3	273	263
Liquid funds	4.3	638	601
Total current assets		4,175	3,998

Assets held for sale	5.5	238	–

TOTAL ASSETS		7,156	6,754

Metso Oyj – Board of Directors’ report and financial statements 2023 39

Consolidated balance sheet – Equity and liabilities


EUR million	Note	2023	2022
Equity	4.4
Share capital		107	107
Share premium fund		20	20
Cumulative translation adjustments		-177	-150
Fair value and other reserves		1,131	1,122
Retained earnings		1,527	1,243
Equity attributable to shareholders		2,608	2,342

Non-controlling interests		10	7

Total equity		2,618	2,350

Liabilities
Non-current liabilities
Borrowings	4.2, 4.5	1,167	998
Lease liabilities	4.2, 4.5	86	87
Post-employment benefit obligations	2.7	90	96
Provisions	2.6	63	59
Derivative financial instruments	4.8	18	33
Deferred tax liabilities	1.8	182	193
Other non-current liabilities	2.5	7	2
Total non-current liabilities		1,614	1,470

Current liabilities
Borrowings	4.2, 4.5	243	176
Lease liabilities	4.2	32	31
Trade payables	2.5	675	787
Provisions	2.6	235	248
Advances received	1.2	325	281
Customer contract liabilities	1.2	322	474
Derivative financial instruments	4.8	28	47
Income tax liabilities	1.8	186	138
Other current liabilities	2.5	711	752
Total current liabilities		2,756	2,934

Total non-current and current liabilities		4,369	4,404

Liabilities held for sale	5.5	169	–

TOTAL EQUITY AND LIABILITIES		7,156	6,754

Metso Oyj – Board of Directors’ report and financial statements 2023 40

Consolidated statement of changes in shareholders’ equity


EUR million	Share capital	Share premium fund	Cumulative translation adjustments	Fair value and other reserves	Retained earnings	Equity attributable to share- holders	Non- controlling interests	Total equity
Jan 1, 2023	107	20	-150	1,122	1,243	2,342	7	2,350

Profit for the year	–	–	–	–	543	543	2	546

Other comprehensive income
Cash flow hedges, net of tax	–	–	–	-2	–	-2	–	-2
Currency translation on subsidiary net investments	–	–	-27	–	–	-27	–	-27
Defined benefit plan actuarial gains (+) / losses (-), net of tax	–	–	–	–	-4	-4	–	-4
Total comprehensive income	–	–	-27	-2	539	510	2	513

Dividends	–	–	–	–	-248	-248	–	-248
Share-based payments, net of tax	–	–	–	11	-7	4	–	4
Other items	–	–	–	0	0	0	0	-1
Dec 31, 2023	107	20	-177	1,131	1,527	2,608	10	2,618

For more information, please see note 4.4 Equity.

Metso Oyj – Board of Directors’ report and financial statements 2023 41


EUR million	Share capital	Share premium fund	Cumulative translation adjustments	Fair value and other reserves	Retained earnings	Equity attributable to share- holders	Non- controlling interests	Total equity
Jan 1, 2022	107	20	-164	1,130	1,156	2,250	1	2,251

Profit for the year	–	–	–	–	301	301	0	301

Other comprehensive income
Cash flow hedges, net of tax	–	–	–	3	–	3	–	3
Currency translation on subsidiary net investments	–	–	13	–	–	13	–	13
Defined benefit plan actuarial gains (+) / losses (-), net of tax	–	–	–	–	2	2	–	2
Total comprehensive income	–	–	13	3	303	319	0	319

Dividends	–	–	–	–	-199	-199	–	-199
Redemption of own shares	–	–	–	-25	–	-25	–	-25
Share-based payments, net of tax	–	–	–	14	-3	11	–	11
Other items	–	–	–	0	-6	-6	–	-6
Changes in non- controlling interests	–	–	–	–	-9	-9	7	-2
Dec 31, 2022	107	20	-150	1,122	1,243	2,342	7	2,350

Metso Oyj – Board of Directors’ report and financial statements 2023 42

Consolidated statement of cash flows


EUR million	Note	2023	2022
Operating activities
Profit for the period, continuing operations		537	318
Profit for the period, discontinued operations		8	-18
Adjustments
Depreciation and amortization	3.4	158	156
Finance expenses, net	1.7	80	63
Income taxes	1.8	199	113
Other items		15	65
Change in net working capital	2.1	-449	-377
Net cash flow from operating activities before financial items and taxes		550	322
Interests paid		-53	-27
Interests received		10	3
Other financing items, net		26	-49
Finance income and expenses paid, net		-17	-73
Income taxes paid	1.8	-231	-121
Net cash flow from operating activities		302	127

Investing activities
Capital expenditures on intangible assets and property, plant, and equipment	3.1, 3.2	-170	-114
Proceeds from sale of intangible assets and property, plant, and equipment	3.1, 3.2	16	10
Proceeds from financial assets	4.6	–	2
Business acquisitions, net of cash acquired	5.4	-28	-21
Proceeds from sale of businesses, net of cash sold	5.4, 5.5	–	-9
Cash received from liquidation of associated companies	5.3	4	–
Increase in loan receivables	4.6	-3	0
Decrease in loan receivables	4.6	3	1
Net cash flow from investing activities		-178	-132

Financing activities
Dividends paid		-248	-198
Proceeds from increases in non-current debt	4.6	347	499
Repayment of non-current debt	4.6	–	-253
Proceeds from and repayment of current debt, net	4.6	-139	140
Repayment of lease liabilities	4.6	-37	-35
Purchase of treasury shares	4.4	–	-25
Net cash flow from financing activities		-76	127

Net change in liquid funds		47	122
Effect from changes in exchange rates		-10	5
Liquid funds equivalents at beginning of year	4.3, 4.6	601	473
Liquid funds at end of year	4.3, 4.6	638	601

Metso Oyj – Board of Directors’ report and financial statements 2023 43

Notes to the Consolidated financial statements

Basic information

Metso Corporation (the “Parent company”) with its subsidiaries (“Metso” or the “Group”) is a leading global supplier of

sustainable technologies, end-to-end solutions and services for the aggregates, minerals processing, and metals refining

industries. The Group has two reporting segments, Aggregates and Minerals. More information about the segments is

presented in note 1.1.

Metso Corporation is a publicly quoted company with its shares listed on Nasdaq Helsinki under the trading symbol METSO.

Metso Corporation is domiciled in Helsinki, Finland, and the address of the Group Head Office is Rauhalanpuisto 9, 02230

Espoo, Finland.

The Annual General Meeting resolved to change the company's business to "Metso" from "Metso Outotec" by amending

Article 1 of the Articles of Association in accordance with the proposal of the Board of Directors.

Metso’s Consolidated financial statements were authorized for issue by Metso Corporation’s Board of Directors on February

15, 2024, after which, in accordance with Finnish Companies Act, the financial statements are either approved, amended or

rejected at the next Annual General Meeting.

Basis of preparation

Consolidated financial statements have been prepared in accordance with International Financial Reporting Standards

(IFRS) and IFRIC Interpretations as adopted by the European Union. The Consolidated financial statements have been

prepared on a historical cost basis, except for financial assets and liabilities classified as at fair value through profit and loss

accounts.

Metso has classified certain businesses to be as held for sale. On March 29, 2023, Metso announced its decision to initiate

the divestment of the Metals & Chemical Processing and Ferrous & Heat Transfer businesses, and these have been

classified as discontinued operations. Consequently, the figures for 2023 related to the consolidated statement of income are

presented separately from the continuing operations and comparative figures for 2022 have been restated accordingly. The

assets and liabilities held for sale have been transferred to separate lines in the consolidated balance sheet on December

31, 2023. The comparative figures for 2022 related to the consolidated balance sheet have not been restated. More

information is disclosed under note 5.5 Discontinued operations.

The financial statements are presented in euros, which is the Parent company’s functional currency and Metso’s presentation

currency. The figures presented have been rounded; consequently, the sum of individual figures might differ from the

presented total figure.

With the amendments to IAS 1 and IFRS 2 Practice Statement 2, Metso has applied materiality assessments when

presenting the preparation principles in these consolidated financial statements. These changes have had no effect on the

valuation, recording or presentation of the items in the consolidated financial statements. The change only concerns the

presentation of accounting principles, and the change has aimed to provide more useful and company-specific information.

More information about changes in accounting standards is presented in note 5.6 New accounting standards.

The detailed Metso’s accounting policies are disclosed under each relevant note of the Consolidated financial statements.

Metso Oyj – Board of Directors’ report and financial statements 2023 44

Critical accounting estimates and judgments by Management

The preparation of financial statements, in conformity with the IFRS, requires management to make estimates and

assumptions and to exercise its judgment in the process of applying the Group’s accounting policies. These affect the

reported amounts of balance sheet items, the presentation of contingent assets and liabilities, and the income and expenses

for the financial year. Actual results may differ from the estimates made. The assets and liabilities involving a higher degree

of judgment or complexity, or areas where the assumptions and estimates are significant to Metso’s Consolidated financial

statements, are disclosed in the following notes:

Note 1.2 Sales Note 2.7 Post-employment obligations

Note 1.6 Share-based payments Note 3.1 Goodwill and intangible assets

Note 1.8 Income taxes Note 3.2 Property, plant, and equipment

Note 2.2 Trade receivables Note 3.3 Right-of-use assets

Note 2.3 Other receivables Note 5.4 Acquisitions and business disposals

Note 2.4 Inventory Note 5.5 Discontinued operations

Note 2.6 Provisions

Metso has reviewed the estimates and assumptions used in the preparation of the Consolidated financial statements for the

possible impacts of climate change. During the reporting period Metso issued Sustainability Linked Bond for EUR 300 million

(Note 4.1 Financial risk management). Furthermore Metso has performance share plans which have an earning criteria

based on sustainable development (Note 1.6 Share-based payments).

Metso Oyj – Board of Directors’ report and financial statements 2023 45

Abbreviations used in the Board of Directors' report and financial statements

AGMAnnual General Meeting

EGMExtraordinary General Meeting

Capex Capital expenditure

CGUCash generating unit

DNSH Does not significantly harm

EBITEarnings before finance expenses, net and taxes (operating profit)

EBITAEarnings before finance expenses net, taxes and amortization

EBITDAEarnings before finance expenses net, taxes, amortization, and depreciation

EMTN Euro Medium Term Note program

eNPS Employee net promoter score

EPS Earnings per share

FASFinnish accounting standards

GHG Greenhouse gases

GRI Global reporting initiative

HSEHealth, safety, and environment

IFRICInterpretations of International financial reporting standards

IFRS/IASInternational financial reporting standards

KPIKey performance indicator

LTIFRLost time injury frequency rate

NWCNet working capital

OCIOther comprehensive income

OpEx Operating expenditure

OTCOver the counter

P/EPrice/earnings ratio

PPEProperty, plant, and equipment

PSPPerformance share incentive plan

QEHS Quality, environment, health, and safety

R&DResearch and development

RFRRelief from royalty method

ROCE Return on capital employed

ROEReturn on equity

RSPRestricted share incentive plan

SASB Sustainability Accounting Standards Board

SBT Science-based target

TCFD Task Force on Climate-related Financial Disclosures

TRIFR Total recordable injury frequency rate

TSR Total shareholder return

WACCWeighted average cost of capital

Metso Oyj – Board of Directors’ report and financial statements 2023 46

1. Group performance

1.1. Reporting segments

Material accounting policies

Reportable segments of Metso are based on end customer groups, which are differentiated by both offering and business

model: Aggregates and Minerals. The segments are reported in a manner consistent with the internal reporting provided to

the Board of Directors, Metso’s chief operating decision-maker responsible for allocating resources and assessing the

performance of the segments, deciding on strategy, selecting key employees, as well as deciding on major development

projects, business acquisitions, investments, organizational structure and financing. The accounting principles applied to

segment reporting are the same as those used in preparing the Consolidated financial statements.

Segment performance is measured with operating profit/loss (EBIT). In addition, Metso uses alternative performance

measures to reflect the underlying business performance and to improve comparability between financial periods: earnings

before interest, tax and amortization (EBITA), adjusted and net working capital. Adjustment items comprise capacity

adjustment costs, acquisition costs, gains and losses on business transactions as well as Metso transaction and integration

costs. Their nature and net effect on cost of goods sold, selling, general and administrative expenses, as well as other

income and expenses are presented in the segment information. Alternative performance measures, however, should not be

considered as a substitute for measures of performance in accordance with the IFRS.

Corporate structure

Metso's business

Metso's extensive equipment and aftermarket offering covers a wide range of equipment, parts and services to effectively

meet the needs of our customers all over the world. Metso drives profitable growth and sustainable operations across its

customer industries, in line with its 1.5-degree climate commitment, to create value for its customers, shareholders and other

stakeholders. Metso focuses on supporting the electrification and decarbonization of the mining and aggregates industries,

while ensuring rapid increase in the production of energy transition minerals. This can be achieved through its extensive

equipment and aftermarket offering for its customers. Metso’s offering helps its customers to maintain and increase

production, improve productivity, and reduce operating costs, risks and environmental footprint. Metso continuously develops

its portfolio to meet its customers’ growing needs for energy and emissions reductions, water resources management,

resource efficiency, circularity and safety.

Reportable segments of Metso are Aggregates and Minerals.

Aggregates, serving quarry and contractor customers by offering crushing and screening equipment to produce aggregates

needed in construction and infrastructure projects.

Minerals, serving mining industry customers by providing equipment, process islands and plants for minerals processing,

and hydrometallurgical and pyrometallurgical solutions for the recovery of metals.

Group Head Office and other is comprised of the Parent company with centralized group functions, such as treasury, tax,

legal and compliance, as well as the global business services and holding companies.

Finance income and expenses as well as income taxes are not allocated to segments but included in the income statement of

Group Head Office and other. The treasury activities of Metso are centralized into the Group Treasury to benefit from cost

efficiency obtained from pooling arrangements, financial risk management, bargaining power, cash management, and other

measures. Metso has a centralized Group tax management function. The objective of Group tax management is to ensure tax

compliance and an optimized and predictable overall tax cost for Metso.

Segment net working capital assets comprises inventories and non-interest-bearing operating assets and receivables.

Segment net working capital liabilities comprise non-interest-bearing operating liabilities.

Non-cash write-downs include write-offs made to the value of receivables and inventories, and impairment and other write-offs

recognized to reduce the value of intangible assets or property, plant, and equipment and other assets.

Gross capital expenditure comprises investments in intangible assets as well as property, plant, and equipment, associated

companies, and joint ventures.

Intra-group transactions are made on an arm’s length basis.

Metso Oyj – Board of Directors’ report and financial statements 2023 47

Changes in corporate structure in year 2023

Metso revised its segment reporting as of September 30, 2023, by transitioning from three segments to two: Aggregates and

Minerals. The Smelting business, previously reported under the Metals segment, was moved to the Minerals segment, and

Metals & Chemical Processing and Ferrous & Heat Transfer businesses from Metals segment were classified as discontinued

operations. Consequently, the figures for 2023 related to the consolidated statement of income are presented separately from

the continuing operations and comparative figures for 2022 have been restated accordingly. The assets and liabilities held for

sale have been transferred to separate lines in the consolidated balance sheet on December 31, 2023. The comparative

figures for 2022 related to the consolidated balance sheet have not been restated. More information is disclosed under note

5.5 Discontinued operations.

Segment information


2023
EUR million	Aggregates	Minerals	Group Head Office and Other	Total
Sales, external	1,346	4,044	0	5,390
Sales, intra-group	–	–	–	–
Sales, total	1,346	4,044	0	5,390

Earnings before interest, tax and amortization (EBITA)	228	675	-34	869
% of sales	17.0	16.7	–	16.1

Adjusted EBITA	232	707	-52	887
% of sales	17.2	17.5	–	16.5

Adjustment items and amortization of intangible assets
Adjustment items total	-4	-32	17	-18
Amortization of other intangible assets total	-15	-48	-2	-65

Operating profit / loss	214	627	-36	805
% of sales	15.9	15.5	–	14.9

Finance income and expenses, total	–	–	-80	-80

Income before taxes	214	627	-116	724

Inventories	674	1,277	–	1,951
Trade receivables	230	624	1	855
Other non-interest bearing receivables	63	203	74	340
Customer contract assets and liabilities, net	2	-15	–	-14
Trade payables	-161	-494	-20	-675
Advances received	-63	-262	–	-325
Other non-interest-bearing liabilities	-169	-798	-175	-1,143
Net working capital	576	535	-121	990

Metso Oyj – Board of Directors’ report and financial statements 2023 48

Adjustment items by category


EUR million	2023	2022
Capacity adjustment costs	-27	-12
Acquisition costs	-2	0
Profits on disposals, net	1	0
Wind down of Russian business	9	-150
Adjustments items, total	-18	-163

1) More information available on note 2.6 Provisions.

Segment information

Income statement comparison data for year 2022 has been restated to reflect the segment structure changes in 2023 as well

as to present the continuing operations. The balance sheet items for year 2022 has not been restated.


2022
EUR million	Aggregates	Minerals	Group Head Office and Other	Total
Sales, external	1,446	3,523	0	4,970
Sales, intra-group	–	–	–	–
Sales, total	1,446	3,523	0	4,970

Earnings before interest, tax and amortization (EBITA)	211	451	-109	553
% of sales	14.6	12.8		11.1

Adjusted EBITA	213	538	-37	715
% of sales	14.8	15.3		14.4

Adjustment items and amortization of intangible assets
Adjustment items total	-2	-87	-73	-163
Amortization of other intangible assets total	-16	-45	-2	-63

Operating profit (-loss)	195	406	-112	490
% of sales	13.5	11.5		9.9

Financial income and expenses, total	–	–	-63	-63

Income before taxes	195	406	-175	426


2022
EUR million	Aggregates	Minerals	Metals	Group Head Office and Other	Total
Inventories	652	1,109	85	–	1,846
Trade receivables	238	516	29	16	799
Other non-interest-bearing receivables	52	135	35	149	371
Customer contract assets and liabilities, net	3	-189	65	–	-121
Trade payables	-242	-464	-55	-26	-787
Advances received	-76	-202	-3	–	-281
Other non-interest-bearing liabilities	-153	-590	-257	-231	-1,231
Net working capital	473	315	-101	-91	596

Metso Oyj – Board of Directors’ report and financial statements 2023 49

Geographical information

Material accounting policies

Metso presents the geographical distribution of the segments’ sales by location of customers. Non-current assets and gross

capital expenditure are presented by location of assets.

Metso's businesses are present in more than 50 countries, providing strong diversification. The main market areas are

Europe, North and Central America as well as Asia-Pacific, accounting for over 60 percent of sales. Metso has a global

network of production units located in key continents.

Income statement comparison data for year 2022 has been restated to present the continuing operations. The balance sheet

items (non-current assets and gross capital expenditure) for year 2022 has not been restated.

Sales to unaffiliated customers by destination


EUR million	2023	2022
Finland	122	76
Europe	939	1,025
North and Central America	1,260	1,201
South America	1,142	913
APAC	1,086	1,098
Africa, Middle East & India	840	657
Sales	5,390	4,970

Metso's exports from Finland by destination, including intra-group sales


EUR million	2023	2022
Europe	566	441
North and Central America	357	394
South America	223	161
APAC	485	502
Africa, Middle East & India	382	315
Total	2,014	1,813

Non-current assets by location


EUR million	2023	2022
Finland	173	173
Europe	118	123
North and Central America	115	113
South America	97	79
APAC	127	104
Africa, Middle East & India	205	192
Non-allocated	1,665	1,740
Total	2,500	2,523

Non-current assets presented in the previous table comprise intangible assets and property, plant and equipment, investments

in associated companies, joint ventures, equity investments and other non-interest-bearing non-current assets. Non-allocated

assets include mainly goodwill and other assets arising from business acquisitions that have not been recorded in the

subsidiaries’ financial statements.

Metso Oyj – Board of Directors’ report and financial statements 2023 50

Gross capital expenditure by location


EUR million	2023	2022
Finland	36	29
Europe	16	18
North and Central America	19	21
South America	33	18
APAC	37	10
Africa, Middle East & India	29	18
Total	169	114

Gross capital expenditure comprises investments in intangible assets and property, plant, and equipment, associated

companies, and joint ventures. Right-of-use assets are not included in the gross capital expenditure calculation.

1.2. Sales

Material accounting policies

Metso applies IFRS 15 Revenue from Contracts with Customers. The principle is that sales are recognized at an amount that

reflects the consideration which Metso expects to receive in exchange for transferring goods or services to a customer. Sales

are recognized when the control of goods or services is transferred to a customer. Control is transferred either at a point in

time or over time.

When Metso provides standardized equipment and wear or spare parts to customers, sales are recognized at a point in time

when control for the goods is transferred, typically at the delivery of the goods or after commissioning. Sales to distributors

are recognized at delivery, when the distributor is not acting as an agent. If the distributor is acting as an agent, sales are

recognized only when delivered to an ultimate client.

When Metso provides customized engineered system deliveries, where the asset produced does not have alternative use

and Metso has enforceable right to payment for the performance completed to date, sales are recognized over time. Sales

recognition is based on estimated sales, costs and profit. Metso measures the progress using the cost-to-cost method,

where sales and profits are recorded after considering the ratio of accumulated costs to estimated total costs to complete

each contract. This method is considered to best reflect the satisfaction of the performance obligation. The estimated sales,

costs and profit, together with the planned delivery schedule of the contract are subject to regular revisions as the contract

progresses to completion. Revisions in profit estimates as well as any projected potential loss on contract are charged

through the profit and loss account in the period in which they become known.

Sales from providing services are recognized when the performance obligation is satisfied. For long-term fixed price service

contracts, sales are recognized over time, because the customer simultaneously receives and consumes the services

provided by Metso. The measure of the progress is based on costs of actual services provided as a proportion of the costs of

total services to be rendered. The estimated sales, costs and profit, together with the planned delivery schedule of the

contract are subject to regular revisions as the contract progresses to completion. Revisions in contract estimates as well as

any projected potential loss on contract are charged through the profit and loss account in the period in which they become

known.

For short-term service contracts with hourly fee based on valid price list, sales are recognized to the extent Metso has the

right to invoice the customer, and for service contracts with fixed hourly fee agreed in the contract, sales are recognized

based on invoicing.

Customer contracts may include promises such as volume-based rebates and liquidated damages attributable to, for

instance, delayed delivery or non-performance. The impact of these promises on the final consideration will be estimated

when recognition is started and systematically during the contract period. Sales will be recognized to the extent that Metso is

entitled to the consideration. Also, creditworthiness of the client and collectability of the consideration is assessed throughout

the contract period. Extended warranties are treated as a separate performance obligation and an appropriate transaction

price is allocated to them and recognized in sales when occurred.

Metso often requires advance payments from customers. Applying IFRS 15, advances received do not include a financing

component, because the payment schedule of them follows closely the timing of performance obligations to be satisfied.

Metso Oyj – Board of Directors’ report and financial statements 2023 51

Estimates and assessments by Management

Sales recognized at a point in time may require judgement on facts and circumstances when the control is considered to

have passed to the client, affecting on timing of sales to be recognized. Transfer of the control is assessed mainly based on

terms of delivery in the contract and local legislation. Customer contracts including clauses on rebates, late delivery

penalties, right to return promises or extended warranties requires management judgement on the probability of such

clauses to have an effect on contracts sales. Judgements are based on earlier experience and market practice when

available.

Sales recognized over time is based on cost-to-cost method, which requires management to be able to estimate total sales,

costs, margin, and cash flow to complete the project. The assessment of the progress and margin to be recognized as well

as the total costs estimated to complete the contracts requires judgments by management throughout the contract period.

The most critical judgments are needed in case of a loss-making contract when estimating the performance needed to be

able to satisfy the contract. Changes in general market conditions and the possible impact on the contracts needs to be

predicted as well. The credit worthiness of the customer is verified, and collectability of the consideration assessed before

entering a contract. However, a risk of non-payment might arise afterwards, and it requires management judgement on the

impact on final sales recognition.

Hedging of foreign currency denominated firm commitments

Metso hedging policy requires business units to hedge their foreign currency risk when they become engaged in a firm

commitment denominated in a currency other than their functional currency. Treasury Policy specifies certain currencies and

certain legal units, where the open exposures are left unhedged. Similarly open exposures below certain euro nominated

amount are left unhedged. When a firm commitment qualifies for over time recognition, the business unit applies hedge

accounting and recognizes the effect of the hedging instruments in other comprehensive income (OCI) until the commitment

is recognized. Though Metso has defined the characteristics triggering a firm commitment, the final realization of the

unrecognized commitment depends also on factors beyond management control, which cannot be foreseen when initiating

the hedging relationship. Such factors can be a change in the market environment causing the other party to postpone or

cancel the commitment. To the extent possible, management strives to include clauses in its contracts that reduce the impact

of such adverse events on its results.

Disaggregation of sales

Income statement comparison data for year 2022 has been restated to reflect the segment structure changes in 2023 as well

as to present the continuing operations. The balance sheet items (contract balances) for year 2022 has not been restated.

More information on note 1.1 Reporting segments.

External sales by category


2023
EUR million	Aggregates	Minerals	Total
Sales of services	434	2,458	2,891
Sales of projects, equipment and goods	913	1,586	2,499
Sales total	1,346	4,044	5,390

2022
EUR million	Aggregates	Minerals	Total
Sales of services	477	2,081	2,558
Sales of projects, equipment and goods	970	1,443	2,412
Sales total	1,446	3,523	4,970

Metso's Planet Positive offering is central to Metso’s sustainability agenda and the 1.5 °C journey. Planet Positive portfolio

includes solutions that offer significant improvements in reducing energy and carbon intensity, water use, pollution, and

embedded carbon compared to an industry baseline or benchmark technology. Planet Positive sales in 2023 were EUR 1,447

million (EUR 1,225 million in 2022).

Metso Oyj – Board of Directors’ report and financial statements 2023 52

External sales by timing of sales recognition


2023
EUR million	Aggregates	Minerals	Total
At a point in time	1,317	2,990	4,306
Over time	30	1,054	1,084
Sales total	1,346	4,044	5,390

2022
EUR million	Aggregates	Minerals	Total
At a point in time	1,425	2,276	3,701
Over time	21	1,248	1,269
Sales total	1,446	3,523	4,970

External sales by destination


2023
EUR million	Aggregates	Minerals	Total
Finland	14	108	122
Europe	381	558	939
North and Central America	539	721	1,260
South America	83	1,060	1,142
APAC	174	912	1,086
Africa, Middle East & India	156	684	840
Sales total	1,346	4,044	5,390

2022
EUR million	Aggregates	Minerals	Total
Finland	31	45	76
Europe	446	579	1,025
North and Central America	597	604	1,201
South America	66	847	913
APAC	164	934	1,098
Africa, Middle East & India	142	515	657
Sales total	1,446	3,523	4,970

Contract balances


EUR million	2023	2022
Trade receivables	855	799
Customer contract assets	308	354
Customer contract liabilities	322	474
Advances received	325	281

Customer contract liabilities and advances received are annually recognized as sales mainly during the following year.

When providing standardized equipment as well as wear and spare parts, invoicing takes place in general at the delivery or

after commissioning. In engineered system deliveries, and long-term service contracts invoicing is based on the client

contracts. Short-term service contracts are invoiced when service is rendered.

Trade receivables are based on the invoicing to customers and are generally on terms of 30–90 days. Information about

provision for expected credit losses on trade receivables is presented in note 2.2.

Engineered system, and long-term service contracts are mainly fixed priced contracts, where customers are invoiced with

fixed amounts based on contract schedule. In case the performance obligation satisfied exceeds the invoiced payment from

Metso Oyj – Board of Directors’ report and financial statements 2023 53

the customer, a contract asset is recognized. In case the invoiced payment from the customer exceeds the performance

obligation satisfied, a contract liability is recognized.

Advances received is the amount paid in advance to Metso by customers. Typically, Metso receives advance payments in

customized large scale engineered system and equipment delivery projects.

Changes in receivables from customers or liabilities to customers and advances received is typically the result of changes in

business volume in the current year compared to the previous year.

Unsatisfied performance obligations

The order backlog, amounting to EUR 3,238 million on December 31, 2023, corresponds to the aggregate amount of the

transaction price allocated to the performance obligations that are fully or partly unsatisfied at the end of the reporting period.

These performance obligations are expected to be materially satisfied in two years.

Performance obligations

Metso’s sales consist of the sale of standardized equipment deliveries and services with wear or spare parts, customized

large-scale engineered system and/or equipment deliveries. Metso’s performance obligations are described below.

Equipment, wear and spare parts deliveries

When Metso provides standardized equipment and wear or spare parts to customers, revenue will be recognized at a point in

time, when control of the goods is transferred, typically at the delivery of the goods or after commissioning. These contracts

may include promises, such as volume-based rebates and late delivery penalties. The impact of these promises on the final

consideration will be estimated and sales will be recognized to the extent that Metso is entitled. Extended warranties are

treated as a separate performance obligation, and an appropriate transaction price is allocated to them and recognized in

sales when occurred.

Metso cooperates with distributors especially in the aggregates business. Based on the current distributor contracts, Metso

recognizes sales at the delivery to a distributor. Promises on volume-based rebates and the right to return goods are assessed

and sales will be recognized to the extent that Metso is entitled.

Engineered system and equipment deliveries

With customized large-scale engineered system and equipment deliveries, where assets produced do not have an alternative

use for another client, and Metso has the right to payment for the performance completed, revenue will be recognized over

time. Each large-scale engineered system and equipment delivery contract is assessed separately. These contracts usually

have a customer-specific, one total performance obligation agreed with the client.

These contracts may include promises, such as late delivery penalties, performance guarantees, and extended warranties.

The impact of these promises on the final consideration will be estimated and sales will be recognized to the extent that Metso

is entitled. Metso typically requires advance payments from clients, which in general, do not include a financing component,

because the payment schedule of advances follows closely the timing of performance obligations to be satisfied.

Service contracts

Sales from providing services are recognized when the services are rendered. For long-term-fixed price contracts, sales are

recognized over time. The measure of the progress is based on the costs of actual services provided as a proportion of the

costs of total services to be rendered. For short-term service contracts with an hourly fee based on a valid price list, revenue is

recognized to the extent Metso has right to invoice the customer, and for service contracts with a fixed hourly fee agreed in the

contract, revenue is recognized based on invoicing. Typical promises in service contacts are late delivery penalties and

performance guarantees.

Major customers

In 2023 nor in 2022, Metso did not have any single customer whose sales would have exceeded 10 percent of consolidated

sales.

Metso Oyj – Board of Directors’ report and financial statements 2023 54

1.3. Selling, general, and administrative expenses

Material accounting policies

Costs and expenses of different income statement items are assigned by the nature and relationship of the cost incurred.

Cost of goods sold are either directly or indirectly linked to recognized or expected sales. Direct cost includes e.g. materials,

subcontracted engineering and logistics related to specific customer contracts. Indirect cost carries the capacity cost of

delivery resources as well as manufacturing units.

Marketing and selling expenses consist of cost related to activity of generating new sales and marketing of the company and

its product portfolio. As an example cost of regional sales organizations are reported under this item.

Research and development expenses arise from research and development activities related to new products and

technologies. Research and development expenses comprise salaries, administration costs, digital investments, and

depreciation and amortization of property, plant, and equipment and intangible assets and are mainly recognized as incurred.

Grants received are netted from the costs. When material development costs meet certain capitalization criteria under IAS

38, they are capitalized and amortized over the expected useful life of the underlying technology.

Administrative expenses cover cost of company’s administrative activities such as general management as well as support

and group functions.

Year 2023 figures comprise continuing operations and year 2022 has been restated accordingly.


EUR million	2023	2022
Marketing and selling expenses	-438	-426
Research and development expenses, net	-66	-55
Administrative expenses	-372	-315
Selling, general and administrative expenses	-875	-796

Research and development expenses


EUR million	2023	2022
Research and development expenses, total	-62	-46
Capital expenditure	8	5
Grants received	2	4
Depreciation and amortization	-13	-18
Research and development expenses, net	-66	-55

1.4. Other operating income and expenses

Material accounting policies

Other operating income and expenses comprise income and expenses that do not directly relate to the operating activity of

businesses within Metso, or which arise from unrealized and realized changes in fair value of foreign currency denominated

financial instruments related to operations, including forward exchange contracts. Such items include costs related to

significant restructuring programs, gains and losses on disposal of assets, and foreign exchange gains and losses, excluding

those qualifying for hedge accounting and those, which are reported under finance income and expenses, net. Additionally,

non-recoverable foreign taxes, which are not based on taxable profits, are reported in other operating income and expenses,

net. In particular, these include foreign taxes and such like payments not based on Double Taxation Treaties in force.

Year 2023 figures comprise continuing operations and year 2022 has been restated accordingly.

Metso Oyj – Board of Directors’ report and financial statements 2023 55


EUR million	2023	2022
Other operating income
Gain on sale of intangible and tangible assets	7	5
Rental income	1	1
Foreign exchange gains 1)	264	150
Other income	10	20
Other operating income total	282	176

Other operating expenses
Loss on disposed businesses	-2	-2
Loss on sale of intangible and tangible assets	-2	-1
Impairment of intangible and tangible assets	-4	-2
Foreign exchange losses 1)	-278	-195
Other expenses	-20	-16
Other operating expenses total	-306	-216

Other operating income and expenses, net	-25	-40

1) Includes foreign exchange gains and losses resulting from trade receivables and payables and related derivatives.

1.5. Personnel expenses and number of personnel

Personnel expenses

Year 2023 personnel expenses comprise continuing operations and year 2022 has been restated accordingly.


EUR million	2023	2022
Salaries and wages	-894	-845
Pension costs, defined contribution plans	-38	-37
Pension costs, defined benefit plans 1)	-9	-6
Other post-employment benefits 1)	-1	-1
Share-based payments 2)	-13	-10
Other indirect employee costs	-120	-112
Total	-1,075	-1,012

1) For more information on pension costs, see note 2.7.

2) For more information on share-based payments, see note 1.6.

Number of personnel


	2023	2022
Personnel at end of the year	17,134	16,705
Average number of personnel during the year	16,960	16,079

Metso Oyj – Board of Directors’ report and financial statements 2023 56

Board remuneration


EUR thousand	2023	2022
Serving Board members December 31, 2023
Kari Stadigh	-185	-182
Klaus Cawén	-109	-107
Brian Beamish	-90	-87
Terhi Koipijärvi	-93	-88
Niko Pakalén 1)	-82	–
Ian W. Pearce	-105	-109
Reima Rytsölä 1)	-91	–
Emanuela Speranza	-96	-99
Arja Talma	-107	-106

Former Board members
Christer Gardell 2)	-4	-87
Antti Mäkinen 2)	-4	-94

Total	-966	-959

1) Metso Board member since May 3, 2023.

2) Metso Board member until May 3, 2023.

According to the resolution of the 2023 Annual General Meeting, the fixed annual fees paid to the Board members is as

follows: Chair of the Board EUR 164,000, Vice Chair of the Board EUR 85,000, and other Board members EUR 69,000. An

additional annual remuneration is paid to the member of the Board elected in the position of Chair of the Audit and Risk

Committee EUR 24,500, members of the Audit and Risk Committee EUR 10,500, Chair of the Remuneration and HR

Committee EUR 12,650, and members of the Remuneration and HR Committee EUR 5,250.

In addition, the Annual General Meeting resolved to approve the following meeting fees for each Board and committee

meeting: EUR 900 for meetings requiring travel within the Nordic countries, EUR 1,800 for meetings requiring travel within a

continent, EUR 3,000 for meetings requiring intercontinental travel, and EUR 900 for meetings with remote attendance.

Remuneration paid to Chief Executive Officer and other Leadership Team members


2023
EUR	Salary	Fringe benefits	Performance bonus paid	Share-based payment	Total
President and CEO Pekka Vauramo	897,468	3,417	773,107	2,829,126	4,503,118
Other Executive Team members	2,681,897	69,264	1,561,335	4,398,002	8,710,498
Total	3,579,365	72,681	2,334,442	7,227,128	13,213,616


2022
EUR	Salary	Fringe benefits	Performance bonus paid	Share-based payment	Total
President and CEO Pekka Vauramo	858,768	3,135	791,484	2,499,528	4,152,915
Other Executive Team members	2,613,926	68,736	1,211,736	4,307,306	8,201,704
Total	3,472,694	71,871	2,003,220	6,806,834	12,354,619

Remuneration paid to President and CEO Pekka Vauramo in 2023 is presented in the table above. Vauramo participates in

remuneration programs according to respective terms and conditions decided by the Board. For more information on share-

based payments, see note 1.6.

It has been agreed that Pekka Vauramo will continue as the President and CEO of Metso until the end of 2024. The President

and CEO is entitled to participate in a supplementary defined contribution pension plan. The supplementary pension

contribution is equivalent to 25% of the annual salary. For years ended December 31, 2023, and December 31, 2022, these

pension premium payments for the supplementary defined contribution pension plan totaled approximately EUR 224 thousand

Metso Oyj – Board of Directors’ report and financial statements 2023 57

and EUR 215 thousand respectively. The notice period for both parties is six months. Severance pay is full monthly salary

multiplied by twelve (12) if the agreement is terminated by the company.

Metso has a subscribed supplementary pension plan for other Metso Leadership Team members in Finland. For the years

ended December 31, 2023, and December 31, 2022, these pension premium payments totaled EUR 548 thousand and

EUR 581 thousand, respectively.

Board share ownership in Metso


Shares (pcs)	2023
Kari Stadigh	74,671
Klaus Cawén	41,266
Brian Beamish	3,130
Terhi Koipijärvi	6,706
Niko Pakalén	1,392
Ian W. Pearce	29,481
Reima Rytsölä	3,061
Emanuela Speranza	6,690
Arja Talma	33,932
Total	200,329

Leadership Team share ownership in Metso


Shares (pcs)	2023
Pekka Vauramo	367,495
Markku Simula	91,851
Markku Teräsvasara	127,490
Piia Karhu	23,029
Sami Takaluoma	99,220
Heikki Metsälä	4,279
Eeva Sipilä	216,044
Nina Kiviranta	53,724
Carita Himberg	20,416
Total	1,003,548

1.6. Share-based payments

Material accounting policies

Metso has share-based incentive plans for its key personnel.

The equity-settled share awards are valued based on the market price of the Metso share on the grant date and recognized

as an employee benefit expense over the vesting period with a corresponding entry in other reserves of the equity. The

historical development of the Metso shares, and the expected dividends have been taken into account when calculating the

fair value. The entire share incentive, including the cash-for-taxes portion, is recognized in equity. Also the value of the cash

portion is based on the grant date value. As a market condition, total shareholder return of the Performance Share Plans will

be taken into account when determining the fair value at grant, and it will not be changed during the plan. The fair value of

the cost estimate of the Performance Share Plans will only be changed when service or non-market conditions are

concerned.

At each balance sheet date, Metso revises its estimates on the amount of share-based payments that are expected to vest.

The impact of a revision to a previous estimate is accrued as an employee benefit expense with a corresponding entry to

equity. The historical development of Metso share price and the expected dividends have been taken into account when

calculating the fair value.

Estimates and assessments by Management

At each balance sheet date, management reviews its estimates for the number of shares that are expected to vest. As part of

this evaluation, Metso takes into account changes in the forecasted performance of the Group and its reporting segments,

expected turnover of the personnel benefiting from the incentive plan, and other pertinent information impacting the number

of shares to be vested.

Metso Oyj – Board of Directors’ report and financial statements 2023 58

Current plans

Metso Performance and Restricted Share Plans

In June 2020, Metso's Board decided on long-term share-based incentive plans: Performance Share Plan (PSP) and

Restricted Share Plan (RSP). The commencement of each new PSP and RSP and the earnings criteria for each new PSP

plan will be subject to a separate decision by the Board. The PSP consists of an annually commencing plan, each with a

three-year earning period, and the complementary RSP consists of an annually commencing plan, each with a three-year

vesting period. The possible rewards are paid partly in Metso’s shares and partly in cash.

If the participant’s employment or service ends for reasons relating to the participant before the reward payment, no reward

will be paid from the long-term incentive plans.

Performance Share Plan 2023–2025

The earning criteria for the PSP 2023–2025 is based on the total shareholder return of Metso's share, earnings per share and

an ESG measure linked to sales growth of Planet Positive portfolio. At the end of 2023, there were 188 participants in the plan,

and the potential reward corresponds to a maximum of 2,000,500 Metso shares, out of which the Metso Leadership Team can

receive a maximum reward of 592,000 shares. The potential reward will be paid in 2026.

Performance Share Plan 2022–2024

The earning criteria for the PSP 2022–2024 is based on the total shareholder return of Metso's share, earnings per share and

an ESG measure linked to sales growth of Planet Positive portfolio. At the end of 2023, there were 177 participants in the plan,

and the potential reward corresponds to a maximum of 1,628,094 Metso shares, out of which the Metso Leadership Team can

receive a maximum reward of 490,000 shares. The potential reward will be paid in 2025.

Restricted Share Plan 2022–2024

At the end of 2023, there were 19 participants in the RSP plan, and the potential reward corresponds to a 79,000 Metso

shares. The potential reward will be paid in 2025.

Performance Share Plan 2021–2023

The earning criteria for the PSP 2021–2023 is based on the total shareholder return of Metso's share, earnings per share and

an ESG measure linked to sustainable development. At the end of 2023, there were 163 participants in the plan, and the

potential reward corresponds to a maximum of 2,374,374 Metso shares, out of which the Metso Leadership Team can receive

a maximum reward of 756,100 shares. The potential reward will be paid in 2024.

Restricted Share Plan 2021–2023

At the end of 2023, there were 19 participants in the RSP plan, and the potential reward corresponds to a 106,420 Metso

shares. The potential reward will be paid in 2024.

Completed plans

Metso Deferred Share Plan

The Deferred Share Plan (DSP) is a long-term incentive plan that aligns and rewards the employee’s performance and Metso

share value development during a performance period.

Deferred Share Plan 2020–2022

For 124 participants a total of 347,141 Metso treasury shares were paid, out of which one Metso Leadership Team member

received a net reward of 2,965 shares. The reward was paid in March 2023.

Metso Performance and Restricted Share Plans

The PSP consists of an annually commencing plan, each with a three-year earning period, and the complementary RSP

consists of an annually commencing plan, each with a three-year vesting period.

Metso Oyj – Board of Directors’ report and financial statements 2023 59

Performance Share Plan 2020–2022

The earning criteria for the PSP 2020–2022 was based on total shareholder return of Metso's share and the achievement of

the synergy targets set in connection with the combination of the businesses. A total of 345,115 Metso treasury shares were

paid to 8 Metso Leadership Team members. The reward was paid in March 2023.

Performance Share Plan 2019–2021

The earning criteria for the PSP 2019–2021 was based on total shareholder return of Metso’s share during 2019–2021. Plan

performance was evaluated in June 2020. For 7 participants a total of 272,089 Metso treasury shares were paid, out of which

Metso Leadership Team members received a net reward of 242,834 shares. The reward was paid in February 2022.

Restricted Share Plan 2019–2021

A total of 56,542 Metso treasury shares were used to pay reward to two participants belonging to Metso Leadership Team in

February 2022.

Deferred Share Unit Plan

The Deferred Share Unit Plan (DSUP) is a long-term share value-based incentive plan that aligns and rewards the employee’s

performance and Metso share value development during a performance period. Metso Executive Team members aren't

eligible to participate in the DSUP.

Deferred Share Unit Plan 2019–2021

DSUP 2019-2021 plan was paid in cash to 84 employees in June 2022.

Outotec Performance Share Plan

The earning criteria for the Outotec Performance Share Plan 2019–2021 was based on operating result (EBIT) and free cash

flow. A total of 260,547 Metso treasury shares were paid to 58 participants, out of which Metso Leadership Team members

received a net reward of 58,484 shares. The reward was paid in February 2022.

Matching Share Plan

Metso had one active Matching Share Plan for President and CEO Pekka Vauramo. The plan required a personal investment

in Metso shares. The potential reward corresponded to a maximum of 117,075 gross Metso shares to be delivered in three

installments subject to fulfilling the performance criterion of adjusted EBITA for each installment.

For the first installment, net amount of 20,742 Metso treasury shares were used to pay reward in February 2021. For the

second and third installments, net amount of 17,669 each, were paid respectively in February 2022 and June 2022. There are

no undue payments from the CEO's Matching Share Plan.

Beneficiaries of and granted shares under the share ownership plan


December 31, 2023	Beneficiaries total	Shares total
Plan PSP 2020-2022
Granted 2023	8	345,115

Plan DSP 2020-2022
Granted 2023	124	347,141

Metso Oyj – Board of Directors’ report and financial statements 2023 60

Costs recognized for the share ownership plans


EUR thousand	2023	2022
Plan PSP, DSUP and RSP 2019–2021	–	-201
Plan PSP and DSP 2020–2022	-874	-3,926
Outotec LTIP 2019	–	-286
Plan PSP and RSP 2021–2023	-5,771	-4,472
Plan PSP and RSP 2022–2024	-3,431	-1,628
Plan PSP 2023–2025	-3,319	–
Metso total	-13,395	-10,513

1.7. Finance income and expenses

Year 2023 figures comprise continuing operations and year 2022 has been restated accordingly.


EUR million	2023	2022
Finance income
Dividends received	0	0
Interest income	11	3
Other finance income	6	11
Finance income	17	14

Foreign exchange gains/losses	4	-14

Finance expenses
Interest expenses from financial liabilities at amortized cost	-72	-39
Interest expenses on lease liabilities	-5	-5
Other finance expenses	-25	-19
Finance expenses	-101	-63

Finance income and expenses, net	-80	-63

Metso Oyj – Board of Directors’ report and financial statements 2023 61

1.8. Income taxes

Corporate income taxes

Material accounting policies

Income taxes in the consolidated income statement includes taxes of subsidiaries and the parent company based on taxable

income for the current period, tax adjustments for previous periods, and the changes in deferred taxes. The other

comprehensive income statement (OCI) includes taxes on items presented in the OCI. Deferred taxes are determined for

temporary differences arising between the tax base of assets and liabilities and their financial statement carrying amounts,

measured using substantially enacted tax rates.

Estimates and assessments by Management

Metso is subject to income tax in its operating countries. Metso’s management is required to make certain assumptions and

estimates in preparing the annual tax calculations for which the ultimate tax consequence is uncertain. Annually, Metso has

tax audits ongoing in several subsidiaries and recognizes tax liabilities for anticipated tax audit issues based on an estimate

of whether additional taxes will be due. Where the final outcome of these issues is different from the estimated amounts, the

difference will impact the income tax in the period in which such determination is made.

Year 2023 income statement figures comprise continuing operations and year 2022 has been restated accordingly. The

balance sheet items for year 2022 has not been restated.

Components of income taxes


EUR million	2023	2022
Income taxes for current year	-218	-179
Income taxes for prior years	-2	6
Change in deferred tax asset and liability	33	65
Income taxes	-187	-108

Differences between income tax expense computed at the Finnish statutory rate and income tax expense provided on

earnings


EUR million	2023	2022
Profit before taxes	724	426

Income tax at Finnish statutory tax rate of 20.0%	-145	-85
Effect of different tax rates in foreign subsidiaries	-27	-24
Non-deductible expenses	-15	-14
Tax exempt income or tax incentives	11	8
Foreign non-creditable withholding taxes	-13	-7
Deferred tax liability on undistributed earnings	-3	2
Income tax for prior years	-2	6
Other	7	6
Income taxes	-187	-108

Metso Oyj – Board of Directors’ report and financial statements 2023 62

Tax effects of components in other comprehensive income


	2023			2022
EUR million	Before taxes	Deferred taxes	After taxes	Before taxes	Deferred taxes	After taxes
Cash flow hedges	-3	1	-2	3	1	3
Defined benefit plan actuarial gains (+) / losses (-)	-5	1	-4	9	-7	2
Currency translation on subsidiary net investments	-27	–	-27	13	–	13
Total comprehensive income (+) / expense (‑)	-36	2	-33	25	-7	18

Pillar 2 legislation effects

Pillar 2 legislation has been enacted or substantively enacted in certain jurisdictions Metso operates. The legislation will be

effective for Metso’s financial year beginning 1 January 2024. Metso is in the scope of the enacted or substantively enacted

legislation and has performed a high-level impact assessment of the possible exposure to Pillar 2 income taxes. The impact

assessment of the potential exposure to Pillar 2 income taxes is based on country-by-country reporting and financial

statements of the Group entities.

Based on the impact assessment, the Pillar 2 effective tax rates in most of the jurisdictions in which Metso operates are above

15%. There are a limited number of jurisdictions where the transitional safe harbor relief may not apply and the Pillar 2

effective tax rate may be below or close to 15%. However, Metso does not expect a material exposure to Pillar 2 income taxes

in those jurisdictions.

Considering the complexity of the Pillar 2 legislation and the fact that all jurisdictions have not yet enacted the legislation,

Metso will continue assessing the impact of Pillar 2 during financial year 2024.

Metso has applied the mandatory exception in IAS 12 related to recognizing and disclosing deferred tax assets and liabilities

arising from Pillar 2 income taxes.

Deferred taxes

Material accounting policies

The deferred tax asset or liability is determined for temporary differences arising between the tax bases of assets and

liabilities and their financial statement carrying amounts using the substantially enacted tax rates expected to apply in future

years. Typical temporary differences arise from provisions, depreciation and amortization expense, inter-company inventory

margins, defined benefit plans, and tax loss carry-forwards. Deferred tax liabilities are recognized in the balance sheet in full,

and the deferred tax assets are only recognized if it is probable there will be taxable income in the future against which

deferred tax assets can be used. Deferred tax assets are offset against deferred tax liabilities if they relate to taxes levied by

the same taxation authority on the same taxable entity.

Estimates and assessments by Management

In determining deferred tax assets and liabilities, Metso is required to make certain assumptions and estimates on, in

particular, future operating performance and the taxable income of subsidiaries, recoverability of tax loss carry-forwards and

potential changes in tax laws in jurisdictions where Metso operates. A deferred tax liability based on foreign subsidiaries’

undistributed earnings has been provided only where Metso’s management has elected to distribute such earnings in the

coming years and the distribution is subject to taxation. Because tax consequences are difficult to predict, deferred tax

assets and liabilities may need to be adjusted in future financial years, which may have an impact in the period in which such

determination is made.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable to be utilized against the future

taxable profit. Significant management judgement is required to determine the amount of deferred tax assets that can be

recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.

In certain cases, the losses are related to subsidiaries that have losses which may neither expire nor may be used to offset

taxable income elsewhere in the Group. The subsidiaries neither have any taxable temporary difference nor any tax planning

opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, in certain

jurisdictions the Group has determined that it cannot recognize deferred tax assets on the tax losses carried forward.

Deferred tax liability on undistributed retained earnings in subsidiaries will be recognized when the dividend distribution is

probable in the future, and it will cause a tax impact. At the end of year 2023 and 2022 there were no substantial undistributed

earnings in subsidiaries from which a deferred tax liability is not booked.

Metso Oyj – Board of Directors’ report and financial statements 2023 63

Year 2023 income statement figures comprise continuing operations and year 2022 has been restated accordingly. The

balance sheet items for year 2022 has not been restated.

Reconciliation of deferred tax balances


2023
EUR million	Jan 1	Charged to income statement	Charged to shareholders’ equity	Acquisitions and disposals	Translation differences and Group items	Dec 31
Deferred tax assets
Tax losses carried forward	2	2	0	0	1	7
Intangible assets and property, plant and equipment	31	-11	–	–	0	20
Inventory	79	12	–	–	0	91
Provisions	61	-3	–	0	0	59
Accruals	32	18	–	–	-1	49
Pension related items	6	-1	1	–	0	6
Right-of-use assets	27	0	–	0	–	28
Other	5	14	1	0	-1	18
Total deferred tax assets	244	32	3	1	-2	276
Offset against deferred tax liabilities	-19	–	–	–	-10	-28
Assets held for sale	–	3	–	–	-17	-14
Net deferred tax assets	225	35	3	1	-29	234

Deferred tax liabilities
Purchase price allocations	166	-11	–	6	–	160
Intangible assets and property, plant and equipment	15	0	–	0	-1	16
Right-of-use assets	28	0	–	0	–	29
Other	3	28	0	0	-1	30
Total deferred tax liabilities	212	17	0	6	-1	234
Offset against deferred tax assets	-19	–	–	–	-10	-28
Liabilities held for sale	–	-15	–	–	-8	-24
Net deferred tax liabilities	193	2	0	6	-19	182

Deferred tax assets, net	31	33	3	-6	-10	51

Metso Oyj – Board of Directors’ report and financial statements 2023 64

Reconciliation of deferred tax balances, comparison period


2022
EUR million	Jan 1	Charged to income statement	Charged to shareholders’ equity	Acquisitions and disposals	Translation differences and Group items	Dec 31
Deferred tax assets
Tax losses carried forward	–	2	–	1	0	2
Intangible assets and property, plant and equipment	37	-6	–	0	1	31
Inventory	60	19	–	–	0	79
Provisions	31	30	–	–	1	61
Accruals	23	9	0	–	0	32
Pension related items	8	4	-7	–	0	6
Other	49	-22	0	–	5	31
Total deferred tax assets	209	35	-7	1	6	244
Offset against deferred tax liabilities	-31	–	–	–	12	-19
Net deferred tax assets	178	35	-7	1	19	225

Deferred tax liabilities
Purchase price allocations	178	-14	–	1	–	166
Intangible assets and property, plant and equipment	12	4	–	–	0	15
Other	51	-20	1	–	0	31
Total deferred tax liabilities	240	-30	1	1	0	212
Offset against deferred tax assets	-31	–	–	–	12	-19
Net deferred tax liabilities	209	-30	1	1	12	193

Deferred tax assets, net	-32	65	-8	0	6	31

1.9. Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to shareholders of the company by the weighted

average number of shares issued and outstanding for the year, excluding own shares held by the Parent company.

Earnings per share


	2023	2022
Profit attributable to shareholders of the company, EUR million	543	301
Weighted average number of shares issued and outstanding (in thousands)	826,216	827,414
Earnings per share, basic, EUR	0.66	0.36

Earnings per share, continuing operations


	2023	2022
Profit attributable to shareholders of the company, continuing operations, EUR million	535	319
Weighted average number of shares issued and outstanding (in thousands)	826,216	827,414
Earnings per share, basic, EUR	0.65	0.39

Metso Oyj – Board of Directors’ report and financial statements 2023 65

Diluted

Shares to be potentially issued in the future are treated as outstanding shares when calculating the diluted earnings per share

if they have a dilutive effect. Own shares held by Metso are reissued within the terms of the share ownership plans to key

personnel, if the targets defined in the plans are met. Diluted earnings per share are calculated by increasing the weighted

average number of outstanding shares by the number of shares that, would be distributed to the beneficiaries based on the

results achieved, if the conditional earnings period ended at the end of the financial period in question. On December 31,

2023, Metso held 2,644,249 own shares to be used as consideration under share ownership plans.

Earnings per share, diluted


	2023	2022
Profit attributable to shareholders of the company, EUR million	543	301
Weighted average number of shares issued and outstanding (in thousands)	826,216	827,414
Adjustment for potential shares distributed (in thousands)	929	659
Weighted average number of diluted shares issued and outstanding (in thousands)	827,145	828,073
Earnings per share, basic, diluted, EUR	0.66	0.36

Metso Oyj – Board of Directors’ report and financial statements 2023 66

2. Operational assets and liabilities

2.1. Net working capital and capital employed

Balance sheet values for year 2023 present continuing operations, and the comparison year 2022 has not been restated.

Net working capital


	Balance sheet value		Cash flow effect
EUR million	2023	2022	2023	2022
Inventories	1,951	1,846	-192	-600
Trade receivables	855	799	-90	-126
Other non-interest-bearing receivables	340	372	-20	-18
Customer contract assets and liabilities, net	-14	-121	-129	73
Trade payables	-675	-787	-72	85
Advances received	-325	-281	57	32
Other non-interest-bearing liabilities	-1,143	-1,231	-3	178
Net working capital	990	596	-449	-377

Capital employed


EUR million	2023	2022
Net working capital	990	596
Intangible assets	1,886	1,972
Property, plant and equipment	472	407
Right-of-use assets	114	115
Non-current investments	5	8
Interest bearing receivables	6	8
Liquid funds	638	601
Tax payables and receivables, net	-27	-59
Interest payables, net	-7	-5
Capital employed	4,078	3,643

Metso Oyj – Board of Directors’ report and financial statements 2023 67

2.2. Trade receivables

Material accounting policies

Trade receivables are invoiced receivables from customers related to Metso’s ordinary business transactions. General

payment terms are typically from 30 days to 90 days, and they are non-interest-bearing receivables. Trade receivables are

initially recognized at transaction price and subsequently valued at amortized cost. If, exceptionally an over 360 day payment

term was offered to a client, the invoiced amount is discounted to its fair value.

In measuring expected credit losses, Metso applies the IFRS 9 simplified approach, which uses a lifetime expected loss

allowance to be assessed and recognized regularly. Credit loss risk related to customer contract assets is covered mainly by

the advance payments received from the clients.

Based on an analysis of the previous year’s credit losses by ageing category and nature, as well as the macroeconomic

outlook in the near future, Metso recognizes a credit loss allowance from 0.1% to 5% on trade receivables undue or less than

180 days overdue. For trade receivables more than 180 days overdue, the impairment is assessed individually, but without

any credit guarantee, collateral, or similar assurance on the recoverability, a minimum credit loss provision of 25% (over 180

days overdue) and 100% (over 360 days overdue) will be recognized. Trade receivables are written off when there is no

reasonable expectation of recovery. Probability of bankruptcy, other financial reorganization, or a similar situation indicating

insolvency of the client triggers a final write off.

Estimates and assessments by Management

Estimates on expected credit losses and credit loss provisions to be recognized are based on management’s best judgment.

The judgment is based on experience with past years’ credit losses, current economic outlook and client segment, and

location information. Trade receivables are collected actively, and possible impairment analyzed regularly by the businesses

and Metso legal units, and the necessary actions to secure receivables are made by management. When a credit loss

provision of a trade receivable is assessed individually, collateral, credit guarantees, financial position of the client, and

earlier payment behavior are taken into consideration.


EUR million	2023	2022
Trade receivables	845	796
Trade receivables for sale	10	2
Trade receivables	855	799

Classified as held for sale	15	–
Metso total	870	799

Provision on trade receivables by aging category


	2023		2022
EUR million	Trade receivables, gross	of which provided	Trade receivables, gross	of which provided
Undue	616	3	566	1
Overdue 1–30 days	98	0	96	0
Overdue 31–180 days	134	3	113	4
Overdue 181–360 days	23	6	24	6
Overdue over 360 days	50	39	99	88
Total, gross	921	52	898	100
Total, net	870		799

Realized write-offs amounted to EUR 49 million in 2023 (EUR 2 million in 2022).

Metso Oyj – Board of Directors’ report and financial statements 2023 68

Provision for impairment of trade receivables


EUR million	2023	2022
Accumulated provision, January 1	100	90
Impact of exchange rates	-2	0
Additions to reserve	2	9
Used reserve and other changes	-47	0
Accumulated provision, December 31	52	100

2.3. Other receivables

Material accounting policies

Other non-interest-bearing receivables are recognized in the balance sheet at original fair value which can be subsequently

written down due to impairment. The impairment is expensed under selling, general and administrative expenses.

Estimates and assessments by Management

The group policy is to calculate an impairment loss based on the best estimate of the amounts that are potentially

uncollectable at the balance sheet date. Metso management actively monitors the amount of receivables past due globally

and initiates action as necessary.

Balance sheet value for year 2023 present continuing operations, and the comparison year 2022 has not been restated.

Non-interest-bearing receivables


	2023			2022
EUR million	Non- current	Current	Total	Non- current	Current	Total
Derivative instruments	10	36	46	3	86	88
Deferred tax assets	234	–	234	225	–	225
Income tax receivables	–	107	107	–	48	48

Other receivables
Prepaid expenses and accrued income	–	69	69	–	69	69
VAT, payroll tax and social charge receivables	–	174	174	–	152	152
Pension assets	3	–	3	2	–	2
Other receivables	20	31	50	19	42	61
Other receivables total	22	273	295	20	263	283

Non-interest-bearing receivables total	266	417	682	248	396	644

Other non-interest-bearing receivables included EUR 19 million in 2023 (EUR 17 million in 2022) of Brazilian tax credits

arising from delivery of goods and transfer of services (ICMS) recognized by local subsidiaries. Of that amount EUR 3 million

in 2023 (EUR 2 million in 2022) was classified as long-term.

Metso Oyj – Board of Directors’ report and financial statements 2023 69

2.4. Inventory

Material accounting policies

Inventories are valued at the lower of historical cost calculated or net realizable value. Costs are measured on a weighted

average cost basis and include purchase costs as well as transportation and processing costs. The costs of finished goods

include direct materials, wages, and salaries plus employer social contributions, subcontracting and other direct costs, as

well as a portion of production and project administration overheads. Net realizable value is the estimated amount that can

be realized from the sale of the asset in the normal course of business less costs to sell.

Inventories are shown net of a provision for obsolete and slow-moving inventories. Metso's policy is to maintain a provision

for slow-moving and obsolete inventory based on the best estimate of such amounts at the balance sheet date. An

obsolescence provision is charged to income statement in the period in which the obsolescence is determined. Estimates are

based on a systematic, on-going review and evaluation of inventory balance.

Estimates and assessments by Management

Inventory valuation requires management to make estimates and judgments particularly relating to obsolescence and

expected selling prices and sales costs in different market conditions. It also entails management's assessment of the

general market trends in global markets.


EUR million	2023	2022
Materials and supplies	294	288
Work in process	615	600
Finished products	1,095	958
Metso total	2,004	1,846
Classified as held for sale	-53	–
Inventories	1,951	1,846

The cost of inventories recognized as expense for continuing operations amounted to EUR 3,599 million in 2023 (EUR 3,822

million in 2022).

Changes in provision for inventory obsolescence


EUR million	2023	2022
Balance at beginning of year	99	55
Impact of exchange rates	-2	4
Additions charged to expense	26	61
Used reserve	-2	0
Deductions / other additions	-27	-21
Classified as held for sale	0	–
Balance at end of year	93	99

Metso Oyj – Board of Directors’ report and financial statements 2023 70

2.5. Trade and other payables

Material accounting policies

The fair values and carrying amounts of trade and other payables are considered to be the same, due to the short-term

maturities. The maturities of the current non-interest-bearing liabilities rarely exceed six months. The maturities of trade

payables are largely determined by trade practices and individual agreements between Metso and its suppliers.

Accrued personnel costs, including holiday pay, are settled in accordance with local laws and regulations.


	2023			2022
EUR million	Non-current	Current	Total	Non-current	Current	Total
Trade payables	–	675	675	–	787	787
Classified as held for sale	–	29	29	–	–	–
Metso total	–	704	704	–	787	787

Derivative instruments	18	28	45	33	47	80

Other payables
Accrued interests	–	8	8	–	6	6
Accrued personnel costs	–	207	207	–	203	203
Accrued project costs	–	298	298	–	358	358
VAT, payroll tax and social charge payables	–	89	89	–	64	64
Other payables	7	109	116	2	121	123
Other payables	7	711	717	2	752	754
Classified as held for sale	–	54	54	–	–	–
Metso total	7	764	771	2	752	754

Supply chain finance program

Metso has a supply chain financing program where supplier utilizes the buyer's credit rating when selling its receivables to

bank on non-recourse basis. Open purchase invoices amount under the program on December 31, 2023, was 108 million

euros and is reported as trade payables on the Consolidated balance sheet.

Metso Oyj – Board of Directors’ report and financial statements 2023 71

2.6. Provisions

Material accounting policies

Provisions are recognized when the Group has a legal or constructive obligation as a result of a past event, and it is probable

that financial benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be

made.

Provisions, for which settlement is expected to occur more than one year after the initial recognition, are discounted to their

present value and adjusted in subsequent closings for the time effect.

Warranty and guarantee provisions

Metso issues various types of contractual product warranties under which it generally guarantees the performance levels

agreed in the sales contract, the performance of products delivered during an agreed warranty period and services rendered

for a certain period or term. The provision for estimated warranty costs is based on historical realized warranty costs for

deliveries of standard products and services in the past. The typical warranty period is 12 months from the accepted delivery.

The adequacy of provisions is assessed periodically on a case by case basis.

Restructuring and capacity adjustment costs

A provision for restructuring and capacity adjustment costs is recognized only after management has approved, committed to

and started to implement a formal plan. Employee termination benefits are recognized after the representatives of employees

or individual employees have been informed of the intended measures in detail and the related compensation packages can

be reliably measured. The costs included in a provision for capacity adjustment are those costs that are either incremental or

incurred as a direct result of the plan or as the result of a continuing contractual obligation with no continuing economic

benefit to Metso or a penalty incurred to cancel the contractual obligation. Restructuring and capacity adjustment expenses

are recognized in either cost of goods sold or in selling, general and administrative expenses depending on the nature of the

restructuring expenses. Restructuring costs can also include other costs, which are recorded under other operating income

and expenses, net, incurred as a result of the plan, such as asset write-downs.

Environmental remediation costs

Metso recognizes provisions associated with environmental remediation obligations when there is a present obligation as a

result of past events, an outflow of resources is considered probable, and the obligation can be estimated reliably. Such

provisions are adjusted as further information develops or circumstances change. Recoveries of environmental remediation

costs from other parties are recorded as assets when their receipt is deemed virtually certain.

Provision for loss making projects

A provision for loss making projects is booked when the costs needed to settle the performance obligations of the contract

exceed the consideration to be received. Such a provision for the unrecognized portion of the loss is recognized immediately

when these conditions have been met and is revised according to the progress of the project.

Estimates and assessments by Management

Provisions booked require management to estimate the future costs needed to settle the obligations and to estimate the

possible outcomes of claims or lawsuits. The outcome depends on future development and events, so the final costs needed

and the timing to settle the obligation may differ from the initial provision estimated.

For larger and long-term delivery projects and sales involving new technology, additional warranty provisions can be

established on a case by case basis to take into account the potentially increased risk.

Metso Oyj – Board of Directors’ report and financial statements 2023 72

Balance sheet value for year 2023 present continuing operations, and the comparison year 2022 has not been restated.

Provisions


	2023			2022
EUR million	Non-current	Current	Total	Non-current	Current	Total
Warranty and guarantee provision	0	97	98	0	90	90
Project loss provisions 1)	27	67	94	27	84	112
Restructuring provision	1	8	9	1	3	4
Environmental remedial provision	0	1	1	0	1	1
Russia wind-down provision	–	32	32	–	46	46
Other provisions 2)	34	30	64	31	24	55
Total	63	235	298	59	248	307

1) Including EUR 13 million project loss provision related to the Russian wind down.

2) Includes provisions related to lawsuits and personnel liabilities.

Because of the Russia’s military offensive against Ukraine, Metso has not taken any new orders for deliveries to Russia and

undertook to wind-down orders taken before the start of the war. To cover the costs of the wind-down process, the company

booked a non-recurring charge of EUR 150 million in year 2022. The wind-down was concluded in 2023. EUR 45 million of the

charge remained unused at the end of December. Wind-down is mostly related to Minerals segment. Metso continues to fully

comply with all applicable sanctions against Russia.

Changes in provisions


2023
EUR million	Warranty and guarantee provision	Project loss provisions	Restructuring provision	Environmental remediation provision	Russia wind- down provision	Total
Carrying value at January 1	90	112	4	1	46	252
Impact of exchange rates	-1	0	0	0	–	-1
Addition charged to expense	51	76	8	0	–	135
Used reserve	-29	-81	-3	0	-5	-118
Reversal of reserve / other changes	-8	-9	0	0	-9	-26
Classified as held for sale	-5	-3	–	–	–	-9
Carrying value at December 31	98	94	9	1	32	234

Metso Oyj – Board of Directors’ report and financial statements 2023 73

2.7. Post-employment obligations

Material accounting policies

Metso has several different pension schemes in accordance with local regulations and practices in countries where it

operates. In certain countries, the pension schemes are defined benefit plans with retirement, disability, death, and other

post-retirement benefits, such as health services, and termination income benefits. The retirement benefits are usually based

on the number of service years and the salary levels of the final service years. Metso has both defined contribution and

defined benefit schemes. The schemes are generally funded through payments to insurance companies or to trustee-

administered funds. Other arrangements are unfunded with benefits being paid directly by Metso as they fall due. All

arrangements are subject to local tax and legal restrictions in their respective jurisdictions.

In the case of defined benefit plans, the liability recognized from the plan is the present value of the defined benefit obligation

as of the balance sheet date less the fair value of the plan assets. Independent actuaries calculate the defined benefit

obligation by applying the projected unit credit method under. The present value of the defined benefit obligation is

determined by discounting the estimated future cash flows using the interest rates of high-quality corporate bonds that are

denominated in the currency in which the benefits will be paid and having maturity approximating to the terms of the related

pension obligation. The cost of providing retirement and other post-retirement benefits to personnel is charged to profit and

loss concurrently with the service rendered by personnel. Net interest is recorded through finance income and expenses in

the income statement. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions

are recognized through OCI in shareholders' equity in the period in which they arise. Past service costs, gains and losses on

curtailments or settlements are recognized immediately in the income statement.

The contributions to defined contribution plans and multi-employer and insured plans are charged to profit and loss

concurrently with the payment obligations.

Estimates and assessments by Management

The present value of the pension obligations is based on annual actuarial calculations, which use several assumptions such

as the discount rate and expected return on assets, salary and pension increases and other actuarial factors. As a result, the

liability recorded on Metso's balance sheet and cash contributions to funded arrangements are sensitive to changes. Where

the actuarial experience differs from those assumptions gains and losses result, which are recognized in OCI. Sensitivity

analyses on the present value of the defined benefit obligation have been presented in the tables. Assets of Metso's funded

arrangements are managed by external fund managers. The allocation of assets is reviewed regularly by those responsible

for managing Metso’s arrangements based on local legislation, professional advice and consultation with Metso, based on

acceptable risk tolerances.

Metso’s pension and other post-employment plans

Pension arrangements in Germany, the US, the UK and Canada together represent 82% of Metso’s Defined Benefit Obligation

and 75% of its pension assets. These arrangements provide retirement income, which is substantially based on salary and

service at or near retirement.

The German plans are unfunded with benefits paid directly by the company as they fall due. In the US and Canada, annual

valuations are carried out to determine whether cash funding contributions are required in accordance with local legislation. In

the UK, Metso’s defined benefit pension arrangement is closed for future accrual. Plan assets are held by a separate pension

fund and are administered by a Board of Trustees. Cash contributions are determined on a triennial basis in accordance with

local funding legislation, with the level of cash payments being agreed between the trustees and Metso.

Assets of Metso's funded arrangements are managed by external fund managers. The allocation of assets is reviewed

regularly by those responsible for managing Metso’s arrangements based on local legislation, professional advice and

consultation with Metso, based on acceptable risk tolerances.

The expected contributions to plans in 2024 are EUR 9 million. Metso paid contributions of EUR 11 million to defined benefit

plans in 2023.

Figures presented in this disclosure include both continuing and discontinued operations.

Metso Oyj – Board of Directors’ report and financial statements 2023 74

Amounts recognized as of December 31 in the balance sheet


	2023			2022
EUR million	Pension benefits	Other post- employment benefits	Total	Pension benefits	Other post- employment benefits	Total
Present value of funded obligations	89	–	89	88	–	88
Fair value of plan assets	-90	–	-90	-89	–	-89
Total	0	–	0	-1	–	-1

Present value of unfunded obligations	68	30	98	66	29	95
Unrecognized asset	0	–	0	1	–	1
Total	68	30	98	67	29	96

Amounts in the balance sheet
Liabilities	70	30	100	67	29	97
Assets	-2	–	-2	-1	–	-1
Net liability	68	30	98	67	29	96

Movements in the net liability recognized in the balance sheet (total)


EUR million	2023	2022
Net liability at beginning of year	96	107
Reclassification	–	1
Net expense recognized in the income statement	9	6
Employer contributions	-11	-11
Gain (+) / loss (-) recognized through OCI	5	-9
Translation differences	-1	2
Net liability at end of year	98	96

Amounts recognized through the income statement


		2023			2022
EUR million	Pension benefits	Other post- employment benefits	Total	Pension benefits	Other post- employment benefits	Total
Employer's current service cost	1	3	4	2	2	3
Net interest on net surplus (+) / deficit (-)	2	1	4	0	1	2
Settlements	–	–	–	0	–	0
Gain (-) / loss (+) recognized in income statement	1	0	0	0	0	0
Administration costs paid by the scheme	1	–	1	1	–	1
Expense (+) / income (-) recognized in income statement	5	4	9	3	3	6

Metso Oyj – Board of Directors’ report and financial statements 2023 75

Amounts recognized through OCI


		2023			2022
EUR million	Pension benefits	Other post- employment benefits	Total	Pension benefits	Other post- employment benefits	Total
Return on plan assets, excluding amounts included in interest expense (+) / income (-)	0	–	0	43	–	43
Actuarial gain (-) / loss (+) on liabilities due to change in financial assumptions	3	1	4	-58	-5	-63
Actuarial gain (-) / loss (+) on liabilities due to change in demographic assumptions	-2	–	-2	0	0	0
Actuarial gain (-) / loss (+) on liabilities due to experience	4	0	4	9	2	11
Gain (-) / loss (+) as result of asset ceiling	-1	–	-1	0	–	0
Total gain (-) / loss (+) recognized through OCI	4	1	5	-5	-4	-9

Changes in the value of the defined benefit obligation


		2023			2022
EUR million	Pension benefits	Other post- employment benefits	Total	Pension benefits	Other post- employment benefits	Total
Defined benefit obligation at beginning of year	154	29	183	214	35	249
Other adjustment to present value	–	–	–	1	–	1
Employer's current service cost	1	3	4	2	2	3
Interest cost	6	1	7	3	1	4
Business combinations	–	–	–	-1	0	-1
Past service cost (+) / credit (-)	–	–	–	–	0	0
Actuarial gain (-) / loss (+) due to change in financial assumptions	3	1	4	-58	-5	-63
Actuarial gain (-) / loss (+) on liabilities due to change in demographic assumptions	-2	–	-2	0	0	0
Actuarial gain (-) / loss (+) due to experience	4	–	4	9	1	10
Settlements gain (-) / loss (+)	0	–	0	-2	–	-2
Benefits paid from the arrangement	-6	–	-6	-6	–	-6
Benefits paid direct by employer	-4	-4	-8	-4	-5	-9
Translation differences	1	0	1	-5	2	-4
Defined benefit obligation at end of year	158	30	187	154	30	183

Metso Oyj – Board of Directors’ report and financial statements 2023 76

Changes in the fair value of the plan assets during the year


	2023	2022
EUR million	Pension and other post-employment benefits total
Fair value of assets at beginning of year	89	143
Interest income on assets	4	3
Return on plan assets excluding interest income	0	-43
Assets distributed on settlements	0	-2
Business combinations	–	-1
Employer contributions	11	5
Benefits paid from the arrangements	-6	-6
Benefits paid direct by employer	-8	-4
Administration expenses paid from the scheme	-1	-1
Translation differences	1	-6
Fair value of assets at end of year	90	89

Major categories of plan assets as a percentage of total plan assets as of December 31


		2023			2022
	Quoted	Unquoted	Total	Quoted	Unquoted	Total
Equity securities	5%	0%	5%	6%	0%	6%
Bonds	4%	0%	4%	2%	0%	2%
Cash	6%	0%	6%	6%	0%	6%
Insurance contracts	0%	63%	63%	0%	63%	63%
Other	8%	15%	23%	8%	14%	22%
Total	23%	77%	100%	23%	77%	100%

As of December 31, 2023, there were no plan assets invested in affiliated or property occupied by affiliated companies.

Principal actuarial assumptions on December 31 expressed as weighted averages


%	2023	2022
Benefit obligation
Discount rate	4.09%	4.15%
Rate of salary increase	3.37%	3.18%
Rate of pension increase	2.49%	2.58%
Expense in income statement
Discount rate	4.15%	1.63%
Rate of salary increase	3.18%	2.79%
Rate of pension increase	2.58%	2.37%

The calculated life expectancy of persons covered by defined benefit plans is based on regularly updated local mortality

tables. These are shown in the table below.

Metso Oyj – Board of Directors’ report and financial statements 2023 77

Weighted average life expectancy used for the major defined benefit plans


	2023		2022
Life expectancy at age of 65 for a male member, who is	currently aged 65	currently aged 45	currently aged 65	currently aged 45
Germany	20.8	23.5	20.6	23.4
United States	20.7	22.2	20.7	22.2
United Kingdom	21.7	22.2	21.8	22.4
Canada	22.1	23.1	22.0	23.0

Life expectancy is allowed for in the assessment of the defined benefit obligation using mortality tables which are generally

based on experience within the country in which the arrangement is located with (in many cases) an allowance made for

anticipated future improvements in longevity.

Sensitivity analyses on present value of defined benefit obligation in the next table presents the present value of the defined

benefit obligation when major assumptions are changed while others held constant.

Sensitivity analyses


	2023			2022
%	Pension	Other	Total	Pension	Other	Total
Discount rate
Increase of 0.25%	-4.5	-0.6	-5.1	-4.3	-0.6	-4.9
Decrease of 0.25%	4.7	0.6	5.3	4.5	0.7	5.2

Salary increase rate
Increase of 0.25%	–	0.1	0.1	–	0.2	0.2
Decrease of 0.25%	–	-0.1	-0.1	–	-0.2	-0.2

Pension increase rate
Increase of 0.25%	1.5	n/a	1.5	1.4	n/a	1.4
Decrease of 0.25%	-1.5	n/a	-1.5	-1.3	n/a	-1.3

Medical cost trend
Increase of 1.00%	n/a	0.9	0.9	n/a	1.0	1.0
Decrease of 1.00%	n/a	-0.8	-0.8	n/a	-0.9	-0.9

Life expectancy
Increase of one year	6.3	0.9	7.2	6.9	0.9	7.8
Decrease of one year	-6.2	-0.9	-7.1	-6.6	-0.9	-7.5

Weighted average duration of defined benefit obligation expressed in years


	2023			2022
In years	Pension	Other	Total	Pension	Other	Total
On December 31	12.0	9.2	11.6	11.8	9.4	11.5

Metso Oyj – Board of Directors’ report and financial statements 2023 78

3. Intangible and tangible assets

3.1. Goodwill and intangible assets

Material accounting policies

Goodwill and intangible assets with an indefinite useful life

Goodwill represents the excess of acquisition costs over the fair value of net identified assets acquired and liabilities

assumed and the fair values of previously owned interests and non-controlling interests. Goodwill is allocated to cash

generating units (CGUs), which are the reportable segments Aggregates and Minerals. If Metso reorganizes its reporting

structure, goodwill is reallocated to the cash generating units affected based on their relative fair values at the time of the

reorganization. The carrying value of goodwill is tested with the CGU’s value in use or the CGU’s fair value less costs of

disposal, when appropriate. Previously recognized impairment losses on goodwill are not reversed.

Intangible assets with an indefinite useful life, such as brand values, are not amortized. Currently, such assets are tested for

impairment annually as part of the appropriate CGU tested for impairment. Previous losses on impairment are only reversed

to the extent that the new carrying amount of the assets does not exceed the carrying amount the asset would have had, if

the asset had not been impaired.

Intangible assets

Intangible assets with a definite useful life, mainly trademarks, patents, licenses, IT software, or acquired order backlog are

measured at costs less accumulated amortization and impairment losses.

Amortization of intangible assets

Amortization of intangible assets with a definite useful life is calculated on a straight-line basis over the useful life of the

assets as follows:

Patents and licenses 5–10 years

Computer software 3–5 years

Technology 3–20 years

Customer relationships 3–20 years

Other intangible assets < 1–20 years

The probable useful lives of assets are reviewed annually. If material deviations from previous estimates arise, the useful

lives are reassessed. The carrying value of intangible assets subject to amortization is reviewed for impairment whenever

events or circumstances indicate that the carrying amount of an asset may not be recoverable. A previously recognized

impairment loss may be reversed if there is a significant improvement of the circumstances having initially caused the

impairment, but not to a higher value than the carrying amount, that would have been recorded had there been no

impairment in prior years.

Research and development expenses comprise salaries, administration costs, depreciation, and amortization of property,

plant, and equipment and intangible assets, and they are mainly recognized as incurred. When material development costs

meet certain capitalization criteria under IAS 38, they are capitalized and amortized during the expected useful life of the

underlying technology.

Metso Oyj – Board of Directors’ report and financial statements 2023 79

Goodwill and intangible assets


2023
EUR million	Goodwill	Patents and licenses	Capitalized software	Other intangible assets	Goodwill and intangible assets total
Acquisition cost at beginning of year	1,128	102	16	1,079	2,326
Translation differences	-4	-2	0	-3	-9
Business acquisitions	14	–	–	23	37
Capital expenditure	–	4	12	16	32
Reclassifications	–	0	3	-3	0
Other changes	–	-2	-2	-4	-7
Acquisition cost at end of year	1,138	103	29	1,108	2,379

Accumulated depreciation at beginning of year	–	-79	-13	-261	-353
Translation differences	–	2	0	2	4
Other changes	–	0	2	1	3
Impairment losses	–	0	0	0	0
Amortization charges for the year	–	-4	-1	-60	-65
Accumulated depreciation at end of year	–	-81	-13	-317	-411

Classified as held for sale	-41	-3	0	-37	-81

Net book value at end of year	1,097	19	16	754	1,886

2022
EUR million	Goodwill	Patents and licenses	Capitalized software	Other intangible assets	Goodwill and intangible assets total
Acquisition cost at beginning of year	1,124	102	20	1,057	2,321
Translation differences	-1	2	0	3	4
Business acquisitions	5	1	–	7	13
Capital expenditure	–	5	1	15	21
Reclassifications	–	0	0	0	0
Other changes	–	-9	-6	-1	-16
Acquisition cost at end of year	1,128	102	16	1,079	2,326

Accumulated depreciation at beginning of year	–	-80	-17	-203	-300
Translation differences	–	-2	0	-1	-4
Business acquisitions	–	0	–	–	0
Other changes	–	7	6	3	16
Amortization charges for the year	–	-4	-2	-60	-66
Accumulated depreciation at end of year	–	-79	-13	-261	-353

Net book value at end of year	1,128	24	3	818	1,972

Metso Oyj – Board of Directors’ report and financial statements 2023 80

Impairment testing

Material accounting policies

Goodwill and other intangible assets with an indefinite useful life are tested for impairment annually. The testing of goodwill

and other intangible assets with an indefinite useful life is performed at the cash generating unit level. If the carrying value of

goodwill exceeds the recoverable value, an impairment is recognized in the income statement under depreciation and

amortization. Impairment losses on goodwill are not reversed. Currently, Metso’s management has defined two separate

CGUs: Aggregates and Minerals, to which goodwill has been allocated.

The recoverable amounts of CGUs are based on value in use calculations, where the estimated future cash flows of CGUs

are discounted to their present value. The cash flows are derived from the current year’s last-quarter estimate, the following

year’s budget, and the approved strategy for the next four years, beyond which cash flows are calculated using the terminal

value method. The terminal growth rate used is based on management’s judgment of average long-term growth. Cash flows

include only normal maintenance investments and exclude any potential investments that enhance the CGU’s performance

and acquisitions.

Estimates and assessments by Management

Value in use calculations are inherently judgmental and highly susceptible to change from period to period because they

require management to make assumptions about future supply and demand related to its individual business units, future

sales prices, profit margins, and achievable efficiency savings over time. The value of benefits and savings expected from

the efficiency improvement programs are inherently subjective. As part of the future business assessments, management

also evaluates business risks and the possible impact on future cash flows. The possible effects of climate change on

Metso’s business is assessed as part of this overall risk assessment. Due to impact of uncertainties related to impact

assessment, in the Board of Directors’ report the possible effects of climate change on the company’s operating environment

and business have been described in more detail with scenarios. Metso management estimates sales growth rate and

EBITDA development for the testing period as well as the discount factor used. The present value of the cash generating

units is discounted using the CGU’s weighted average cost of capital (WACC) calculated by Metso. WACC calculations

include judgments regarding, among other things, relevant beta factors, peer companies, and capital structure to use.

Metso performs impairment testing annually, or whenever there is an indication of impairment. Typical triggering events are

material deterioration in the global economy or political environment, observed significant under-performance relative to

projected future performance, and significant changes in Metso’s strategy.

Expected useful lives and remaining amortization periods for other intangible assets are reviewed annually by management.

Acquisitions, disposals, and restructuring actions typically generate a need for reassessment of recoverable amounts and

remaining useful lives of assets. When other intangible assets are measured at fair value, less costs of disposal, the selling

price, incremental costs, and selling costs need to be estimated by management. Metso assesses the effects of the climate

change to the future cash flows while performing the impairment calculations

Upon initial acquisition, Metso uses readily available market values to determine the fair values of acquired net assets to be

allocated. However, when this is not possible, the valuation is based on past performance of such an asset and expected

future cash generating capacity, which requires management to make estimates and assumptions of the future performance

and use of these assets. Any change in Metso’s future business priorities may affect the recoverable amounts.

Goodwill allocation to cash generating units


EUR million	2023	2022
Balance at the beginning of year	1,128	1,124
Translation differences	-4	-1
Allocation to discontinued operations	-41	–
Acquisitions and disposals	14	5
Balance at the end of year	1,097	1,128


EUR million	Minerals	Aggregates	Total
Balance at the end of year	884	212	1,097

Metso Oyj – Board of Directors’ report and financial statements 2023 81

Annual impairment test in 2023

On December 31, 2023, goodwill totaled EUR 1,097 million. In accordance with the Metso reporting structure, goodwill is

allocated to the reportable segments, Aggregates and Minerals. The cost of centralized Group services was allocated to the

CGUs based on their proportional share of sales volume.

Given that the recoverable amounts of both CGUs significantly exceeded the carrying value of goodwill and other tested

assets, no indication of impairment was found in 2023. The value in use calculations were derived from estimates, budgets,

and strategy figures reviewed by Metso’s management and approved by the Board of Directors.

The key assumptions used in assessing the recoverable amount are the profitability and growth rate in the estimate period,

long-term average growth in the terminal period and discount rate. The key values used were the following:


%	Minerals	Aggregates
Sales growth in four years estimate period	7.4%	11.3%
EBITDA % range in four years estimate period	17.9%–20.5%	16.1%–17.2%
Growth rate in the terminal period	2.0%	2.0%
WACC after tax	9.5%	9.5%
WACC before tax	11.9%	11.8%

Values assigned to key assumptions reflect past experience and the management’s expectations on the future sales and

production volumes, which are based on the current structure and production capacity of the CGUs. The seasonality and

current market situation of the cash generating units have been considered separately. In addition, data on growth, demand,

and price development, provided by various research institutions, have been utilized. The growth rate of 2.0% for the terminal

period is based on the long-term expectations on the growth in Metso’s market environment, considering the current interest

rate environment and overall financial market situation.

WACC before tax is used as a discount factor in the calculations. It takes into account the expected return on both debt and

equity and has been derived from the WACC on comparable peer industry betas, capital structure, and tax rates. CGU

WACCs are evaluated annually for testing, and CGU-specific risk is incorporated through individual beta factors from the

market data of the segment’s peer companies.

Sensitivity analysis

The sensitivity to impairment of the calculations of both cash generating units was tested in the following scenarios:

• Scenario 1: increasing WACC by 2.0 percentage points

• Scenario 2: reducing the terminal growth rate from 2.0% to 1.5%

Impact to the value in use of the CGUs in the sensitivity analysis


%	WACC increase by 2 p.p.	Terminal growth from 2% to 1.5%
Minerals	-22%	-5%
Aggregates	-23%	-5%

The sensitivity analysis also includes several cash projections on break-even levels of EBITDA %, WACC, and sales growth,

based on a reasonable change in the future performance of the CGU. However, the impact on the present value obtained is

limited, as long as there is no permanent weakening expected for the business, which would affect the terminal value. Based

on these sensitivity analyses, management believes that no reasonably possible change of the key assumptions used would

cause the carrying value of any CGU to exceed its recoverable amount. In 2023, the sensitivity analysis did not indicate risks

of impairment.

Metso Oyj – Board of Directors’ report and financial statements 2023 82

3.2. Property, plant, and equipment

Material accounting policies

Property, plant, and equipment (PPE) are stated at historical cost, less accumulated depreciation, and write-downs, if any.

The property, plant, and equipment of acquired subsidiaries are measured at their fair value at the acquisition date.

Depreciation is calculated on a straight-line basis over the expected useful lives of the assets as follows:

Buildings 15–40 years

Machinery and equipment3–20 years

Land and water areas are not depreciated.

Expected useful lives are reviewed at each balance sheet date and, if they differ significantly from previous estimates, the

remaining depreciation periods are adjusted accordingly.

Subsequent improvement costs related to an asset are included in the carrying value of such asset or recognized as a

separate asset, as appropriate, only when the future economic benefits associated with the costs are probable and the

related costs can be separated from normal maintenance costs.

Metso reviews tangible assets to be held and used by the company for impairment whenever events and changes in

circumstances indicate that the carrying amount of an asset may not be recoverable. Gains and losses on the disposal of

property, plant, and equipment and possible impairments are recognized in other operating income and expenses. A

previously recognized impairment loss may be reversed if there is a significant improvement in the circumstances having

initially caused the impairment, however not to a higher value than the carrying amount that, would have been recorded had

there been no impairment in prior years.

Metso reviews the climate change related matters which may affect the estimated residual value, expected useful lives of

assets and the possible reflected changes in the recognized amount of depreciation or amortization.

Capitalized interests

Interest expenses of self-constructed property, plant, and equipment are capitalized in Metso's financial statements. The

capitalized interest expense is amortized over the estimated useful life of the underlying asset.

Government

Government grants relating to additions to property, plant, and equipment are deducted from the acquisition cost of the asset

and they reduce the depreciation charge of the related asset. Other government grants are deferred and recognized as profit

and presented as a net of expenses concurrently with the costs they compensate.

Estimates and assessments by Management

Acquisitions, disposals and restructuring actions typically generate a need for reassessment of the recoverable values and

remaining useful lives of assets. When property, plant, and equipment are valued at fair value less costs of disposal, the

selling price, incremental costs and selling costs need to be estimated by management.

Metso Oyj – Board of Directors’ report and financial statements 2023 83

Property, plant, and equipment


2023
EUR million	Land and water areas	Buildings	Machinery and equipment	Assets under construction	PPE total
Acquisition cost at beginning of year	40	233	624	57	954
Translation differences	-1	-4	-8	0	-12
Business acquisitions	1	4	4	–	8
Business disposals	–	0	0	–	0
Capital expenditure	–	17	57	64	138
Reclassifications	–	9	19	-28	0
Divestments and other changes	-1	-7	-37	-2	-47
Acquisition cost at end of year	39	252	658	91	1,041

Accumulated depreciation at beginning of year	–	-116	-431	–	-547
Translation differences	–	2	5	–	7
Business acquisitions	–	–	-2	–	-2
Business disposals	–	–	0	–	0
Divestments and other changes	–	6	33	–	39
Write-downs	–	-3	-8	–	-11
Depreciation charges for the year	–	-9	-45	–	-54
Accumulated depreciation at end of year	–	-121	-447	–	-568

Classified as held for sale	0	0	0	–	-1

Net book value at end of year	39	131	211	91	472

2022
Acquisition cost at beginning of year	35	235	586	43	899
Translation differences	0	0	5	0	5
Business acquisitions	–	2	3	–	5
Business disposals	0	0	-5	0	-5
Capital expenditure	8	4	38	42	93
Reclassifications	1	2	23	-27	0
Divestments and other changes	-3	-11	-27	-1	-42
Acquisition cost at end of year	40	233	624	57	954

Accumulated depreciation at beginning of year	–	-113	-410	–	-523
Translation differences	–	0	-5	–	-5
Business acquisitions	–	-1	-1	–	-2
Business disposals	–	0	5	–	5
Divestments and other changes	–	7	25	–	32
Write-downs	–	0	-1	–	-1
Depreciation charges for the year	–	-9	-43	–	-52
Accumulated depreciation at end of year	–	-116	-431	–	-547

Net book value at end of year	40	117	193	57	407

Metso Oyj – Board of Directors’ report and financial statements 2023 84

3.3. Right-of-use assets

Material accounting policies

Metso recognizes a right-of-use asset in the balance sheet for lease agreements which give the right to use the asset during

the lease period and the lease liability based on the lease payment obligation. The right-of-use assets and corresponding

lease liabilities are recognized at present value. Lease liabilities include the following payments:

• fixed payments, less any lease incentives provided by the lessor;

• variable payments that depend on an index or a rate;

• expected payments under residual value guarantees;

• the exercise price of purchase options when exercise is estimated to be reasonably certain; and

• penalties for terminating the lease if the lease term reflects the exercise of a termination option.

Lease payments are discounted by using the implicit interest rate in the lease to the extent it can be readily determined.

Otherwise the currency specific incremental borrowing rate is used as the discount rate. Interest expenses are recognized in

the income statement as finance expense.

Right-of-use assets are measured at cost. The cost comprises the following:

• lease liability;

• lease payments made at or before the commencement of the lease, less lease incentives received;

• initial direct costs; and

• estimated dismantling and restoration costs.

Subsequently, right-of-use assets are measured at cost and depreciated over the shorter of estimated useful life and the

lease term. Metso’s right-of-use assets consist primarily of operative and office premises in the category of buildings, and

cars, operative machinery, and equipment in the category of machinery and equipment. The depreciation of right-of-use

assets are recognized in the in the income statement in cost of sales and selling and administrative expenses.

Metso uses practical expedients provided for leases. Lease payments for leases of low value assets and short-term leases

(shorter than twelve months) are expensed on a straight-line basis. Low value assets comprise IT equipment and other small

office items.

The lease payments are presented in the cash flow from financing activities, and the interest related to leases are presented

in the cash flow from operating activities. Lease payments related to short-term leases and low-value assets are presented in

the cash flow from operating activities.

Modifications to lease agreements may result in adjustments to existing right-of-use assets and lease liabilities. A gain or loss

arising from a modification, or a termination of a lease agreement is recognized as other operating income or other operating

expenses in the income statement.

A number of lease contracts include extension and termination options. Such options have been taken into account when

determining the lease term. A period covered by Metso’s option to extend the lease is included in the lease term if such

option is sufficiently likely to be exercised. Further, a period covered by Metso’s option to terminate the lease is included in

the lease term if it is reasonably certain that such option will not be exercised.

Estimates and assessments by Management

The most significant management judgment relates to lease agreements that include extension or early termination options

for Metso. For these contracts, management needs to assess the probability of exercising such option, which may

significantly affect the estimated length of the lease term, and consequently, the amounts of right-of-use asset and lease

liability, as well as the related depreciation and interest expense. Management judgment is also applied in defining the

incremental borrowing rate used to calculate the present value of the future lease payments.

Metso Oyj – Board of Directors’ report and financial statements 2023 85

Amounts recognized in balance sheet


2023
EUR million	Land and water areas	Buildings	Machinery and equipment	Right-of- Use assets total
Acquisition cost at beginning of year	5	167	27	199
Translation differences	0	-3	0	-3
Business acquisitions	–	2	0	2
Additions	0	25	17	41
Derecognition	0	-19	-8	-27
Acquisition cost at end of year	5	171	36	212

Accumulated depreciation at beginning of year	0	-70	-14	-84
Translation differences	–	1	0	2
Accumulated depreciation for derecognized contracts	0	15	7	22
Depreciation charges for the year	0	-28	-9	-37
Accumulated depreciation at end of year	0	-81	-15	-97

Classified as held for sale	–	-1	0	-1

Net book value at end of year	5	89	21	114


2022
EUR million	Land and water areas	Buildings	Machinery and equipment	Right-of- Use assets total
Acquisition cost at beginning of year	1	171	29	202
Translation differences	–	-1	-1	-2
Business disposals	–	-6	-1	-6
Additions	5	25	10	40
Derecognition	-2	-23	-10	-35
Acquisition cost at end of year	5	167	27	199

Accumulated depreciation at beginning of year	–	-55	-15	-70
Translation differences	–	-2	–	-2
Business disposals	–	5	1	5
Accumulated depreciation for derecognized contracts	–	12	8	21
Depreciation charges for the year	–	-29	-8	-38
Accumulated depreciation at end of year	–	-70	-14	-84

Net book value at end of year	5	97	13	115

Amounts recognized in profit and loss


EUR million	2023	2022
Operating profit
Depreciation expense on right-of-use assets	-37	-38
Rental expense relating to leases of low-value assets	-1	-1
Rental expense relating to leases of short-term assets	-4	-3
Finance expenses
Interest expense on lease liabilities	-5	-5
Total amount recognized in profit and loss	-46	-47

Metso Oyj – Board of Directors’ report and financial statements 2023 86

The total cash outflow for leases including short-term leases and leases of low-value assets in 2023 was EUR 47 million

(EUR 44 million in 2022). A maturity analysis of lease liabilities is presented in note 4.5.

3.4. Depreciation and amortization

Year 2023 figures comprise continuing operations and year 2022 has been restated accordingly.

Depreciation and amortization by asset class


EUR million	2023	2022
Intangible assets
Intangible assets from acquisitions	-49	-52
Other intangible assets	-15	-11
Property, plant and equipment
Buildings	-9	-9
Machinery and equipment	-44	-42
Right-of-use assets
Land areas	0	0
Buildings	-26	-27
Machinery and equipment	-9	-8
Total	-153	-149

Depreciation and amortization by function


EUR million	2023	2022
Cost of goods sold	-88	-85
Selling, general and administrative expenses	-64	-64
Total	-153	-149

The depreciation and amortization of discontinued operations totaled EUR 6 million in year 2023 (EUR 7 million in 2022).

Metso Oyj – Board of Directors’ report and financial statements 2023 87

4. Capital structure and financial instruments

4.1. Financial risk management

As a global company, Metso is exposed to a variety of business and financial risks. Financial risks are managed centrally by

the Group Treasury under annually reviewed written policies approved by the Board of Directors. Treasury operations are

monitored by the Treasury Management Team chaired by the CFO. Group Treasury identifies, evaluates, and hedges financial

risks in close cooperation with the operating units. Group Treasury functions as counterparty to the operating units, manages

centrally external funding, and is responsible for the management of financial assets and appropriate hedging measures. The

objective of financial risk management is to minimize potential adverse effects on Metso’s financial performance.

Sensitivity analysis

Sensitivity analysis figures presented in connection with different financial risks are based on the risk exposures at the balance

sheet date. The sensitivity is calculated by assuming a change in one of the risk factors of a financial instrument, such as

interest or currency. It is not likely that the future volatility of a risk factor will develop in accordance with the test assumptions

and that only one factor would be impacted.

When calculating the sensitivity, Metso has chosen to use market conventions in assuming a one percentage point (100 basis

points) variation in interest rates, and a 10 percent change in foreign exchange rates because this provides better

comparability from one period to another and information on volatility to users of financial statements. Metso is aware that

such assumptions may not be realistic when compared to past volatility and they are not intended to reflect the future. Metso

has chosen not to use past volatility as this could mislead the users of financial statements to assume the analysis reflects

management’s view on future volatility of the financial instruments.

Liquidity and refinancing risk and capital structure management

Liquidity or refinancing risk arises when a company is not able to arrange funding at terms and conditions corresponding to its

creditworthiness. Sufficient cash, short-term investments, and committed and uncommitted credit facilities are maintained to

protect short-term liquidity. Diversification of funding among different markets and an adequate number of financial institutions

is used to safeguard the availability of liquidity at all times. Group Treasury monitors bank account structures, cash balances

and forecasts of the operating units, and manages the utilization of the consolidated cash resources.

The liquidity position of Metso remained strong supported by the healthy operative cash flow, maturity structure of the funding,

and available back up credit facilities. Liquid funds, consisting of cash and cash equivalents, amounted to EUR 638 million

(EUR 601 million in 2022), and there were no deposits or securities with a maturity more than three months (EUR 0 million in

2022).

In addition, Metso has a committed and undrawn syndicated EUR 600 million revolving credit facility with a maturity in 2026. At

the end of the period the facility was undrawn. The company also has a EUR 600 million Finnish commercial paper program,

which was not utilized at the end of the period.

Metso has a Euro Medium Term Note Program (EMTN) of EUR 2 billion, under which EUR 1.081 million at carrying value was

outstanding at the end of December (EUR 758 million at the end of December 2022).

During the third quarter, Metso signed a one-year extension to an existing EUR 100 million term loan agreement with a new

maturity in September 2025.

During the fourth quarter, Metso issued its first Sustainability Linked Bond for EUR 300 million with a coupon of 4.375% and

maturity in 2030. The bond has two sustainability linked step-up components tested at the end of 2025 and 2027. If Metso is

not compliant with these KPI’s the coupon will increase. During the period company also draw-down EUR 50 million research,

development, and innovation (RDI) loan with European Investment Bank maturing in 2030.

Metso’s refinancing risk is managed by balancing the proportion of short-term and long-term debt as well as the average

remaining maturity of long-term debt. The tables below analyze the repayments and interests on Metso’s liabilities by the

remaining maturities from the balance sheet date to the contractual maturity date. The net interest payments of interest-rate

swaps hedging long-term loans are included in the long-term debt repayment figures.

Metso Oyj – Board of Directors’ report and financial statements 2023 88

Maturities of debts


	Dec 31, 2023			Dec 31, 2022
EUR million	<1 year	1–5 years	> 5 years	<1 year	1–5 years	> 5 years
Long-term debt
Repayments	–	813	368		700	336
Interests	–	162	35		99	6
Other liabilities	–	–	–	–	–	–
Short-term debt
Repayments	245	–	–	176	–	–
Interests	56	–	–	33	–	–
Trade payables	675	–	–	772	–	–
Other liabilities	–	–	–	–	–	–
Total	976	975	403	981	799	342

Detailed information on balance sheet items is presented in other notes to the Consolidated financial statements. Capital

structure is assessed regularly by the Board of Directors and managed operationally by Group Treasury.

Capital structure management in Metso comprises both equity and interest-bearing debt. As of December 31, 2023, the equity

attributable to shareholders was EUR 2,608 million (EUR 2,342 million in 2022), and the amount of interest-bearing debt

excluding lease liabilities was EUR 1,410 million (EUR 1,174 million in 2022).

Metso has a target to maintain an investment-grade credit rating. Moody’s Investor Service has assigned a ‘Baa2’ long-term

issuer rating with stable outlook and S&P Global Ratings a ‘BBB’ long-term issuer credit rating with stable outlook to Metso.

There are no prepayment covenants in Metso’s financial contracts that would be triggered by changes in the credit rating.

Covenants included in some financing agreements would only become valid, if Metso's credit rating was below Investment

Grade, and the covenants would be related to Metso’s capital structure. Covenants are related to EUR 290 million loans from

financial institutions and syndicated EUR 600 million revolving credit facility. Metso is in compliance with all covenants and

other terms of its debt instruments.

Interest rate risk

Interest rate risk arises when changes in market interest rates and interest margins influence finance costs, returns on

financial investments and valuation of interest-bearing balance sheet items. Interest rate risks are managed by balancing the

ratio between fixed and floating interest rates and by managing the duration of debt and investment portfolios. Additionally,

Metso may use derivative instruments, such as forward rate agreements, swaps, options, and futures contracts, to mitigate the

risks arising from interest-bearing assets and liabilities. The interest rate risk is managed and controlled by the Group Treasury

and measured using sensitivity analysis and duration of long-term debt. The duration of total interest-bearing debt was 1.8

years as of December 31, 2023 (1.7 years in 2022).

At the end of 2023, the balance sheet items exposed to interest rate risk were interest-bearing assets of EUR 644 million

(EUR 609 million in 2022), and interest-bearing debt excluding lease liabilities amounted to EUR 1,410 million (EUR 1,174

million in 2022).

The basis for the interest rate sensitivity analysis is an aggregate group-level interest exposure, composed of interest-bearing

assets, interest-bearing debt, and financial derivatives, such as interest rate swaps and options, which are used to hedge the

underlying exposures. For all interest-bearing current debt and assets to be fixed during the next 12 months, a one percentage

point move upwards or downwards in interest rates with all other variables held constant would have an effect on Metso’s net

interest expenses, net of taxes, of EUR -/+0.1 million (EUR -/+0.1 million in 2022).

Metso Oyj – Board of Directors’ report and financial statements 2023 89

For financial assets valued at fair value, a one percentage point change upwards or downwards in all interest rates with all

other variables held constant would have the following effects, net of taxes, in the income statement and equity:


EUR million	2023	2022
Effects in
Income statement	+/-4.4	+/-3.2
Equity	+/-0.0	+/-0.0

The effect in the income statement comprises the changes in the fair value on the financial instruments, which are measured

at fair value through profit and loss. The effect in equity is comprised of the changes in the fair value on the financial

instruments, which are measured at fair value through other comprehensive income, such as derivatives under hedge

accounting.

Foreign exchange risk

Metso operates globally and is exposed to foreign exchange risk in several currencies, although the geographical diversity of

operations decreases the significance of any individual currency. About 78 percent of Metso’s sales originate from outside the

euro zone; the main currencies being euro, US dollar, Australian dollar, Chilean peso and Chinese yuan.

Transaction exposure

Foreign exchange transaction exposure arises when an operating unit has commercial or financial transactions and payments

in other than its own functional currency and when related cash inflow and outflow amounts are not equal or concurrent.

In accordance with the Metso Treasury Policy, operating units are required to hedge in full the foreign currency exposures on

balance sheet and other firm commitments. Treasury Policy specifies certain currencies and certain legal units, where the

open exposures are left unhedged. Similarly open exposures below certain euro nominated amount are left unhedged. Future

cash flows denominated in a currency other than the functional currency of the unit are hedged with internal foreign exchange

contracts with the Group Treasury for periods that usually do not exceed two years. Operating units also do some hedging

directly with banks in countries where regulation does not allow group internal cross-border foreign exchange hedging

contracts.

Group Treasury monitors the net position of each currency and decides to what extent a currency position is to be closed.

Group Treasury is, however, responsible for entering into an external forward transaction whenever an operating unit applies

hedge accounting. Metso Treasury Policy defines upper limits on the open currency exposures managed by the Group

Treasury; limits have been calculated on the basis of their potential profit impact. To manage the foreign currency exposure,

Group Treasury may use forward exchange contracts and foreign exchange options.

Total amount of foreign currency exposures


EUR million	2023	2022
Operational items	529	639
Financial items	838	761
Hedges	-1,414	-1386
Total exposure	-47	14

This aggregate group-level currency exposure is the basis for the sensitivity analysis of foreign exchange risk. This exposure,

net of respective hedges, is composed of all assets and liabilities denominated in foreign currencies, projected cash flows for

unrecognized firm commitments, both short- and long-term sales and purchase contracts, and anticipated operational cash

flows to the extent their realization has been deemed highly probable and therefore hedged. This analysis excludes net foreign

currency investments in subsidiaries together with instruments hedging these investments.

If the euro were to appreciate or depreciate ten percent against all other currencies, the impact on cash flows, net of taxes,

derived from the year-end net exposure as defined above, would be EUR +/-4.0 million (EUR -/+1.3 million in 2022).

Transaction exposure is spread to about 40 currencies and as of December 31, 2023, the biggest open exposures were in the

US dollars, Ghanaian cedi and Indian rupee (approximately 39 percent).

Metso Oyj – Board of Directors’ report and financial statements 2023 90

A sensitivity analysis of financial instruments as required by IFRS 7, excludes the following items: projected cash flows for

unrecognized firm commitments, advance payments, both short- and long-term purchase contracts, and anticipated

operational cash flows. The next table presents the effects, net of taxes, of a -/+10 percent change in EUR foreign exchange

rates:


				2023	2022
EUR million	USD	ZAR	Other	Total	Total
Effects in
Income statement	+/-22.4	+/-2.1	+/-0.2	+/-24.7	+-25.6
Equity	+/-1.4	+/-1.7	+/-0.1	+/-0.3	+/-7.2

The effect in equity is the fair value change in derivatives contracts qualifying as cash flow hedges for unrecognized firm

commitments. The effect in the income statement is the fair value change for all other financial instruments exposed to foreign

exchange risk including derivatives, which qualify as cash flow hedges, to the extent the underlying sales transaction,

recognized over time, has been recognized as revenue.

Translation or equity exposure

Foreign exchange translation exposure arises when the equity of a subsidiary is denominated in currency other than the

functional currency of the Parent company. The major translation exposures are in US dollar, Chinese yuan, Canadian dollar,

Brazilian real and Indian rupee, which altogether comprise approximately 64 percent of the total equity exposure. Metso is

currently not hedging any equity exposure.

Credit and counterparty risk

Credit or counterparty risk is defined as the possibility of a customer or a financial counterparty not fulfilling its commitments

towards Metso. The operating units of Metso are primarily responsible for credit risks pertaining to sales and procurement

activities. The units assess the credit quality of their customers, by taking into account their financial position, past experience,

and other relevant factors. When appropriate, advance payments, letters of credit, and third-party guarantees, or credit

insurance are used to mitigate credit risks. Group Treasury provides centralized services related to customer financing and

seeks to ensure that the principles of the Treasury Policy are adhered to with respect to terms of payment and required

collateral. Metso has no significant concentrations of credit risks.

The maximum credit risk equals the carrying value of trade and loan receivables. The credit quality is evaluated both on the

basis of aging of the trade receivables and on the basis of customer specific analysis. The aging structure of trade receivables

is presented in note 2.2.

Counterparty risk arises also from financial transactions agreed upon with banks, financial institutions and corporates. The risk

is managed by careful selection of banks and other counterparties, by counterparty-specific limits determined in the Treasury

Policy, and netting agreements, such as ISDA (Master agreement of International Swaps and Derivatives Association). The

compliance with counterparty limits is regularly monitored.

Credit risk exposure relates to the carrying value of financial assets valued at amortized cost, such as trade receivables,

interest-bearing receivables, other receivables, deposits and security investments, and cash and cash equivalents, and

customer contract assets.

Impairment on cash on hand, bank accounts, deposits, and interest-bearing investments is assessed regularly, but deemed

minor because of their high investment grade and short duration. Group Treasury makes a financial analysis of corporate

counterparties regularly. In addition, the investments are constantly monitored by Group Treasury, and Metso does not expect

any future credit losses from these investments.

For trade receivables and customer contract assets, Metso applies the IFRS 9 simplified approach to measuring expected

credit losses, which uses a lifetime expected loss allowance to be assessed and recognized regularly, see note 2.2.

Metso Oyj – Board of Directors’ report and financial statements 2023 91

Fair value estimation

For those financial assets and liabilities that have been recognized at fair value in the balance sheet, the following

measurement hierarchy and valuation methods have been applied:

Level 1Unadjusted quoted prices in active markets at the balance sheet date. The market prices are readily and

regularly available from an exchange, dealer, broker, market information service system, pricing service, or regulatory

agency. The quoted market price used for financial assets is the current bid price. Level 1 financial instruments include

fund investments classified as fair value through profit and loss.

Level 2The fair value of financial instruments in Level 2 is determined using valuation techniques. These techniques

utilize observable market data readily and regularly available from an exchange, dealer, broker, market information

service system, pricing service, or regulatory agency. Level 2 financial instruments include:

• Over-the-counter derivatives classified as financial assets/liabilities at fair value through profit and loss or qualified

for hedge accounting

• Debt securities classified as financial instruments at fair value through profit and loss

• Fixed-rate debt under fair value hedge accounting

Level 3A financial instrument is categorized into Level 3 if the calculation of the fair value cannot be based on

observable market data. Metso had no such instruments in 2023 nor in 2022.

Financial assets and liabilities measured at fair value


	Dec 31, 2023			Dec 31, 2022
EUR million	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Assets
Financial assets at fair value through profit and loss
Derivatives not under hedge accounting	–	33	–	–	68	–
Financial assets at fair value through other comprehensive income
Derivatives under hedge accounting	–	12	–	–	21	–
Total	–	46	–	–	88	–

Liabilities
Financial liabilities at fair value through profit and loss
Derivatives not under hedge accounting	–	36	–	–	29	–
Financial liabilities at fair value through other comprehensive income
Derivatives under hedge accounting	–	9	–	–	51	–
Total	–	45	–	–	80	–

Metso Oyj – Board of Directors’ report and financial statements 2023 92

4.2. Financial assets and liabilities by category

Material accounting policies

Under IFRS 9, Metso classifies financial assets and liabilities in measurement categories according to contractual terms of

the cash flows and Metso’s business model to manage the investment at the inception. Reclassification of the categories will

be made only if the business model for managing those assets changes. Financial assets and liabilities are classified as non-

current items when the remaining maturity exceeds 12 months and as current items when the remaining maturity is 12

months or less. Financial assets and liabilities are classified as follows:

At amortized cost

Financial assets

Financial assets valued at amortized cost are investments in debt instruments or receivables, that are held to maturity and

for the collection of contractual cash flows, where those cash flows are solely payments of principal and/or interest. These

are recognized at fair value, less transaction costs, and subsequently measured at amortized cost using the effective interest

method. Interest income is recognized in finance income in the income statement. Financial assets at amortized cost include

deposits, commercial papers, interest-bearing loans and receivables, trade receivables, and non-interest-bearing

receivables. Impairment is assessed regularly, and when the carrying value exceeds the recoverable value of discounted

cash flows, the appropriate impairment is recognized in the income statement.

For trade receivables, Metso applies the IFRS 9 simplified method, which requires expected lifetime losses to be recognized

from the initial recognition of the receivables. See more in note 2.2 Trade receivables.

Financial liabilities

Issued bonds and withdrawn loan facilities from financial institutions as well as trade and other liabilities are valued at fair

value, net transaction costs, and subsequently measured at amortized cost using the effective interest method. Trade and

other receivables are non-interest-bearing short-term unpaid debts.

The difference between the debt amount, net transaction costs of bonds and loans from financial institutions and the

redemption amount is recognized in the income statement as an interest expense over the period of the borrowings using the

effective interest method. Fees paid on the establishment of loan facilities are recognized in the income statement as other

finance expenses over the period of the facility, or, if withdrawal of the loan is probable, as part of the transaction cost.

At fair value through other comprehensive income (FVOCI)

Financial assets

Financial assets valued at fair value through other comprehensive income are debt instruments or receivables, which are

held for collection of contractual cash flows or held for selling the assets, and where contractual cash flows are solely

payments of principal and/or interest. Interest income is recognized in the income statement using the effective interest

method. Change in fair value is recognized in other comprehensive income (OCI). At derecognition, the cumulative

previously booked gains and losses in OCI are released from equity to the income statement. Metso includes in this

measurement category derivatives under hedge accounting, trade receivables for sale, and security investments with a

maturity of less than three months.

At fair value through profit and loss (FVPL)

Financial assets

Financial assets valued at fair value through profit and loss are equity investments, investments in funds, derivatives used in

fair value hedging and derivatives not under hedge accounting. Change in fair value and gain or loss at derecognition will be

recognized in the income statement. The change in fair value includes the valuation of impairment risk as well.

The fair value of listed equity shares or investments in funds is the quoted market price on the balance sheet date. Unlisted

shares are valued at cost less impairment, if any.

Financial liabilities

Financial liabiities valued at fair value through profit and loss include derivatives used in fair value hedging and derivatives

not under hedge accounting. Change in fair value and gains or losses at derecognition are recognized in the income

statement.

Balance sheet value for year 2023 present continuing operations, and the comparison year 2022 has not been restated.

Metso Oyj – Board of Directors’ report and financial statements 2023 93

Financial assets and liabilities by category


2023	At fair value through profit and loss	At fair value through other comprehensive income	At amortized cost	Carrying value	Fair value
EUR million	At fair value through profit and loss	At fair value through other comprehensive income	At amortized cost	Carrying value	Fair value
Non-current financial assets
Equity investments	2	–	–	2	2
Derivatives financial instruments	10	–	–	10	10
Other receivables	–	–	20	20	20
Total	12	–	20	31	31

Current financial assets
Trade receivables	–	–	845	845	845
Trade receivables, for sale	–	10	–	10	10
Loan receivables	–	–	6	6	6
Derivatives financial instruments	23	12	–	36	36
Deposits and securities, maturity three months or less	–	–	194	194	194
Cash on hand and in bank accounts	–	–	445	445	445
Total	23	22	1,490	1,535	1,535

Non-current liabilities
Bonds 1)	–	–	886	886	876
Loans from financial institutions	–	–	281	281	281
Lease liabilities	–	–	86	86	86
Derivatives financial instruments	18	–	–	18	18
Other liabilities	–	–	7	7	7
Total	18	–	1,260	1,278	1,267

Current liabilities
Current portion of non-current debt	–	–	203	203	202
Loans from financial institutions	–	–	39	39	39
Lease liabilities	–	–	32	32	32
Trade payables	–	–	675	675	675
Derivatives financial instruments	19	9	–	28	28
Total	19	9	950	978	976

1) The bonds have been measured at amortized cost, adjusted by the fair value to the extent of the hedged risk.

Metso Oyj – Board of Directors’ report and financial statements 2023 94


2022	At fair value through profit and loss	At fair value through other comprehensive income	At amortized cost	Carrying value	Fair value
EUR million	At fair value through profit and loss	At fair value through other comprehensive income	At amortized cost	Carrying value	Fair value
Non-current financial assets
Equity investments	2	–	–	2	2
Loan receivables	–	–	5	5	5
Derivatives financial instruments	3	–	–	3	3
Other receivables	–	–	19	19	19
Total	5	–	24	29	29

Current financial assets
Trade receivables	–	–	796	796	796
Trade receivables, for sale	–	2	–	2	2
Loan receivables	–	–	3	3	3
Derivatives financial instruments	65	21	–	86	86
Deposits and securities, maturity three months or less	–	–	104	104	104
Cash on hand and in bank accounts	–	–	497	497	497
Total	65	23	1,400	1,488	1,488

Non-current liabilities
Bonds 1)	–	–	758	758	734
Loans from financial institutions	–	–	240	240	240
Lease liabilities	–	–	87	87	87
Derivatives financial instruments	33	–	–	33	33
Other liabilities	–	–	2	2	2
Total	33	–	1,088	1,121	1,097

Current liabilities
Loans from financial institutions	–	–	96	96	96
Commercial papers	–	–	80	80	80
Lease liabilities	–	–	31	31	31
Trade payables	–	–	787	787	787
Derivatives financial instruments	29	18	–	47	47
Total	29	18	994	1,040	1,040

For more information on derivative financial instruments, see note 4.8.

Metso Oyj – Board of Directors’ report and financial statements 2023 95

4.3. Liquid funds

Material accounting policies

Cash and cash equivalents consist of cash on hand and bank accounts, deposits, and interest-bearing investments, which

can be easily converted into a known amount of cash within a period of three months or less.

Cash on hand, bank accounts, deposits, and interest-bearing investments are measured at amortized cost. Impairment on

cash on hand, bank accounts, deposits, and interest-bearing investments is assessed regularly, but deemed minor because

of their high investment grade and short duration.


EUR million	2023	2022
Cash and cash equivalents
Deposits and securities, maturity three months or less	194	104
Cash on hand and bank accounts	445	497
Cash and cash equivalents total	638	601

Liquid funds total	638	601

Average returns for deposits and securities


%	2023	2022
With maturity three months or less	5.19%	4.16%

4.4. Equity

Material accounting policies

Issue of new shares and own shares

Transaction costs directly attributable to the issue of new shares or options are shown net of their tax effect in equity as a

deduction from the proceeds.

Own shares held by the Parent company valued at the historical acquisition price are deducted from equity. Should such

shares be subsequently sold or reissued, the consideration received, net of any directly attributable transaction costs and

related income tax, is recorded in equity.

Translation differences

The translation differences arising from subsidiary net investments and non-current subsidiary loans without agreed

settlement dates are recognized through Other Comprehensive Income (OCI) to cumulative translation adjustments under

equity. When Metso hedges the net investment of its foreign subsidiaries with foreign currency loans and with financial

derivatives, the translation difference is adjusted by the currency effect of the hedging instruments which has been recorded,

net of taxes, through OCI in equity. When a foreign entity is disposed of, the respective accumulated translation difference,

including the effect from qualifying hedging instruments, is reversed through OCI and recognized in the consolidated

statements of income as part of the gain or loss on the sale. If the equity of a subsidiary denominated in a foreign currency is

reduced by a return of capital, the translation difference relating to the reduction is reversed through OCI and recognized in

the consolidated statements of income.

Dividends

Dividends proposed by the Board of Directors are not recognized in the financial statements until they have been approved

by the shareholders in the Annual General Meeting.

Share capital and number of shares

Metso Corporation's registered share capital, which is fully paid, was EUR 107,186,442.52 on December 31, 2023, and

December 31, 2022. Metso's shares have no nominal value.

Metso Oyj – Board of Directors’ report and financial statements 2023 96


	2023	2022
Number of outstanding shares at beginning of year	825,635,935	828,047,419
Shares granted from share ownership plans	692,256	624,516
Redemption of own shares	–	-3,036,000
Number of outstanding shares at end of year	826,328,191	825,635,935
Own shares held by the Parent Company	2,644,249	3,336,505
Total number of shares at end of year	828,972,440	828,972,440

As of December 31, 2023, the acquisition price of 2,644,249 own shares held by the Parent company was EUR 22,514,857.99

and was recognized in treasury shares.

Dividend proposals

The Board of Directors proposes that a dividend of EUR 0.36 per share be paid based on the balance sheet to be adopted for

the financial year, which ended December 31, 2023. Insofar as the dividend to be paid exceeds the net profit for the year

ended December 31, 2023, the remaining amount will be paid from retained earnings from previous years. These financial

statements do not reflect this dividend payable of EUR 297 million.

Fair value and other reserves

The hedge reserve includes the fair value movements of derivative financial instruments which qualify as cash flow hedges.

The fair value reserve includes the change in fair values of trade receivables for sale as well as share-based payments.

The legal reserve consists of restricted equity, which has been transferred from distributable funds under the Articles of

Association, local company act, or by a decision of the shareholders.

The other reserves consist of the distributable fund and the invested non-restricted equity fund held by the Parent company.

Changes in fair value and other reserves


EUR million	Treasury shares	Hedge reserve	Fair value reserve	Legal reserve	Other reserves	Total
January 1, 2023	-28	-1	18	0	1,133	1,122
Cash flow hedges
Fair value gains (+) / losses (-), net of tax	–	-16	–	–	–	-16
Transferred to profit and loss, net of tax
Sales	–	0	–	–	–	0
Cost of goods sold / Administrative expenses	–	14	–	–	–	14
Share-based payments, net of tax	5		4			10
Other	–	–	–	–	1	1
December 31, 2023	-23	-3	22	0	1,134	1,131

Metso Oyj – Board of Directors’ report and financial statements 2023 97


EUR million	Treasury shares	Hedge reserve	Fair value reserve	Legal reserve	Other reserves	Total
January 1, 2022	-9	-4	9	0	1,134	1,130
Cash flow hedges
Fair value gains (+) / losses (-), net of tax	–	-27	–	–	–	-27
Transferred to profit and loss, net of tax
Sales	–	3	–	–	–	3
Cost of goods sold / Administrative expenses	–	27	–	–	–	27
Instruments at fair value and share-based rewards
Transferred to profit and loss, net of tax	–	–	-1	–	–	-1
Redemption of own shares	-25	–	–	–	–	-25
Share-based payments, net of tax	6	–	10	–	–	16
Other	–	–	–	0	-1	-1
December 31, 2022	-28	-1	18	0	1,133	1,122

Cumulative translation adjustments included in shareholders’ equity


EUR million	2023	2022
Cumulative translation adjustment at beginning of year	-150	-164
Currency translation, change	-27	13
Cumulative translation adjustment at end of year	-177	-150

Metso Oyj – Board of Directors’ report and financial statements 2023 98

4.5. Borrowings and lease liabilities

Material accounting policies

Long-term debt is initially recognized at fair value, net of transaction costs incurred, and subsequently measured at

amortized cost using the effective interest method. The difference between the debt amount recognized and the redemption

amount is recognized in the income statement as an interest expense over the period of the borrowings. The fair value

changes in borrowings covered by fair value hedge are, in respect of hedged risk, recognized through profit and loss. A

portion of long-term debt is classified as short-term debt when the settlement of the liability is due within 12 months from the

balance sheet date. Borrowings are derecognized only if the contractual obligation is discharged, cancelled, or expired.

Fees paid on the establishment of loan facilities are recognized in the income statement as other finance expenses over the

period of the facility, or, if withdrawal of the loan is probable, as part of the transaction cost. Transaction costs arising from

modification to debt instruments are included in the carrying value of the debt and amortized using the effective interest

method over the remaining period of the modified liability, provided that the new conditions obtained through the modification

do not substantially differ from those of the original debt. Modification gains or losses are recognized in the income statement

at the time of non-substantial modification.


	2023		2022
EUR million	Carrying values	Fair values	Carrying values	Fair values
Long-term interest-bearing debt
Bonds	886	876	758	734
Loans from financial institutions	281	281	240	240
Other long-term debt	0	–	0	–
Total long-term borrowings	1,167	1,157	998	974

Lease liabilities	86	86	87	87
Total long-term interest-bearing debt	1,253	1,243	1,086	1,061

Short-term borrowings
Bonds, current portion	194	193	–	–
Loans from financial institutions, current portion	9	9	–	–
Loans from financial institutions	39	39	96	96
Commercial papers	–	–	80	80
Total short-term borrowings	243	241	176	176

Lease liabilities	32	32	31	31
Total short-term interest-bearing debt	275	274	207	207

Total interest-bearing debt	1,528	1,517	1,293	1,268

Bonds


2023
EUR million	Nominal interest rate	Effective interest rate	Outstanding original loan amount	Outstanding carrying value
Public bond 2017–2024	1.125%	1.92%	197	194
Public bond 2020–2028	0.875%	1.04%	300	282
Public bond 2022–2027	4.875%	4.98%	300	300
Public bond 2023–2030	4.375%	4.54%	300	304
Bonds total			1,097	1,081

Metso Oyj – Board of Directors’ report and financial statements 2023 99


2022
EUR million	Nominal interest rate	Effective interest rate	Outstanding original loan amount	Outstanding carrying value
Public bond 2017–2024	1.125%	1.92%	197	190
Public bond 2020–2028	0.875%	1.04%	300	273
Public bond 2022–2027	4.875%	4.96%	300	296
Bonds total			797	758

Metso has a Euro Medium Term Note Program (EMTN) of EUR 2 billion, under which EUR 1,081 million at carrying value was

outstanding at the end of 2023 (EUR 758 million in 2022).

Metso had committed and undrawn syndicated EUR 600 million revolving credit facility with a maturity in 2026. Metso also has

a EUR 600 million Finnish commercial paper program, which EUR was not utilized at the end of the period.

On December 31, 2023 the average interest rate of total loans and derivatives was 4.3% (3.2%), the duration of total interest-

bearing debt 1.8 years (1.7 years) and the average maturity 3.9 years (3.4 years).

Short-term loans from financial institutions consist of bank loans withdrawn by Metso subsidiaries to fund local operations. The

subsidiary loans are Indian rupee denominated. The weighted average interest rate applicable to the short-term borrowing on

December 31, 2023, was 6.16% (3.76% in 2022). In 2024, interest amounting to EUR 0.4 million is expected to be paid

concurrently with respective principals on the short-term debt.

Maturities of interest-bearing debt at nominal value


2023
EUR million	Borrowings	Repayments	Interests	Lease liabilities 1)
2024	301	245	56	36
2025	209	158	51	27
2026	63	18	45	20
2027	363	318	45	15
2028	339	318	21	10
Later	403	368	35	24
Total	1,678	1,426	252	132


2022
EUR million	Borrowings	Repayments	Interests	Lease liabilities 1)
2023	209	176	33	39
2024	336	306	30	29
2025	82	58	24	22
2026	41	18	23	18
2027	341	318	22	15
Later	342	336	6	40
Total	1,351	1,213	138	162

1) Future lease payments at nominal value.

The maturities of derivative financial instruments are presented in note 4.8.

Metso Oyj – Board of Directors’ report and financial statements 2023 100

4.6. Interest-bearing net debt reconciliation

Net interest-bearing liabilities


EUR million	2023	2022
Borrowings, non-current 1)	1,371	998
Lease liabilities 2)	118	118
Borrowings, current	39	176
Loan receivables	-6	-8
Liquid funds	-638	-601
Net interest-bearing liabilities	884	684

1) The amount of non-current borrowings for year 2023 includes the current portion of EUR 203 million.

2) The amount of lease liabilities for year 2023 includes the current portion of EUR 32 million (EUR 31 million in year 2022).

Changes in net interest-bearing liabilities


2023					Other non-cash movements
EUR million	Balance at beginning of year	Cash flows	Acquisitions	Translation differences	Other non-cash movements	Balance at end of year
Borrowings, non-current	998	347	–	0	25	1,371
Lease liabilities	118	-37	2	-2	37	118
Borrowings, current	176	-139	4	-2	–	39
Loan receivables	-8	5	0	0	-3	-6
Liquid funds	-601	-42	-5	10	–	-638
Net interest-bearing liabilities	684	134	1	5	59	884


2022					Other non-cash movements
EUR million	Balance at beginning of year	Cash flows	Acquisitions and disposals	Translation differences	Other non-cash movements	Balance at end of year
Borrowings, non-current	777	246	2	0	-26	998
Lease liabilities	133	-35	-2	0	22	118
Borrowings, current	42	140	–	-6	–	176
Loan receivables	-9	1	0	0	–	-8
Liquid funds	-473	-113	-10	-5	–	-601
Net interest-bearing liabilities	470	239	-10	-10	-4	684

Metso Oyj – Board of Directors’ report and financial statements 2023 101

4.7. Contingent liabilities and other commitments

Material accounting policies

Guarantees have been given for obligations arising in the ordinary course of business of Metso Group companies.

Guarantees have been given by financial institutions or by Metso Corporation on behalf of Group companies. These

guarantees have typically been given to secure a customer’s advance payments or to secure commercial contractual

obligations, or given as counter guarantees to banks, which have given commercial guarantees to a Group company.

The repurchase commitments represent engagements whereby Metso agrees to purchase back equipment sold to customer.

The conditions triggering the buy-back obligation are specific to each sales contract.


EUR million	2023	2022
Guarantees
External guarantees given by parent and group companies	1,608	1,546
Other commitments
Repurchase commitments	–	–
Other contingencies	0	1
Total	1,608	1,547

More information about lawsuits and claims is presented in note 6.2.

4.8. Derivative instruments

Material accounting policies

Derivatives are initially recognized in the balance sheet at fair value and subsequently measured at their fair value at each

balance sheet date. Derivatives are designated at inception either as hedges of firm commitments or forecasted transactions

(cash flow hedge) or as hedges of fixed-rate debt (fair value hedge), or as hedges of net investment in a foreign operation

(net investment hedge), or as derivatives at fair value through profit and loss that do not meet the hedge accounting criteria.

In hedge accounting, Metso documents at inception the relationship between the hedging instruments and the hedged items

in accordance with its risk management strategy and objectives. Metso also tests the effectiveness of the hedge relationships

at hedge inception, and quarterly, both prospectively and retrospectively.

Derivatives are classified as non-current assets or liabilities when the remaining maturities exceed 12 months and as current

assets or liabilities when the remaining maturities are less than 12 months.

Cash flow

Metso applies cash flow hedge accounting to certain interest rate swaps, foreign currency forward contracts and to electricity

forwards.

Metso designates only the currency component of the foreign currency forward contracts as the hedging instrument to hedge

foreign currency-denominated firm commitments. The interest component is recognized under other operating income and

expenses, net. The gain or loss relating to the effective portion of the currency forward contracts is recognized in the income

statement concurrently with the underlying in the same line item. The effective portion of foreign currency forwards hedging

sales and purchases is recognized in the sales and the cost of goods sold, respectively. The gain or loss relating to the

effective portion of interest rate swaps hedging variable rate borrowings is reversed from the hedge reserve through other

comprehensive income (OCI) to the income statement within financial items concurrently with the recognition of the

underlying liability. Both at hedge inception and at each balance sheet date, an assessment is performed to ensure the

continued effectiveness of the designated component of the derivatives in offsetting changes in the fair values of the cash

flows of hedged items.

The effective portion of the derivatives is recognized through OCI in the hedge reserve under equity and reversed through

OCI to be recorded through profit and loss concurrently with the underlying transaction being hedged. The gain or loss

relating to the ineffective portion of the derivatives is reported under other operating income or expenses, net or under

financial items when contracted to hedge variable rate borrowings. Should a hedged transaction no longer be expected to

occur, any cumulative gain or loss previously recognized under equity is reversed through OCI to profit and loss.

Metso Oyj – Board of Directors’ report and financial statements 2023 102

Fair value hedge

Metso applies fair value hedge accounting to certain fixed-rate loans. The change in fair value of the interest rate swap

hedging the loan is recognized through profit and loss concurrently with the change in value of the underlying. Both at

inception and quarterly, the effectiveness of the derivatives is tested by comparing their change in fair value against those of

the underlying instruments.

Derivatives at fair value through profit and loss

Certain derivative instruments do not qualify for hedge accounting. These instruments, which have been contracted to

mitigate risks arising from operating and financing activities, comprise foreign exchange forward contracts, currency and

interest rate options and interest rate swaps.

Changes in the fair value of interest rate swaps are recognized in interest expenses. Changes in the fair value of foreign

exchange forward contracts are mainly recognized in other operating income and expenses. However, when the foreign

exchange forwards have been contracted to mitigate the exchange rate risks arising from foreign currency-denominated

cash and from financial instruments used for cash management, the changes in fair value of the derivatives are recognized

in finance income and expenses. Changes in the fair value of other derivative instruments, such as commodity instruments,

are recognized in other operating income and expenses.

Fair value estimation of derivative instruments

The fair value of the foreign currency forward contracts is determined using forward exchange market rates at the balance

sheet date. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows

based on observable yield curves. The fair value of options is determined using the Black-Scholes valuation model.

Notional amounts and fair values of derivative financial instruments on December 31


2023 EUR million	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net
Forward exchange contracts 1)	3,269	36	26	9
Interest rate swaps	605	10	19	-9
Total	3,874	46	45	0

2022 EUR million	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net
Forward exchange contracts 1)	3,540	86	47	39
Interest rate swaps	425	3	33	-31
Total	3,965	88	80	8

1) Some 28 percent and 34 percent of the notional amount at the end of 2023 and 2022, respectively, qualified for cash flow hedge accounting.

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

Derivative financial instruments recognized in the balance sheet at the end of year


	2023		2022
EUR million	Assets	Liabilities	Assets	Liabilities
Interest rate swaps - fair value hedges	8	19	–	33
Interest rate swaps - non-qualifying hedges	1	–	3	–
Interest rate swaps total	10	19	3	33

Forward exchange contracts - cash flow hedges	12	9	21	18
Forward exchange contracts - non-qualifying hedges	23	17	65	29
Forward exchange contracts total	36	26	86	47

Derivatives total	46	45	88	80

In 2023 and 2022, there was no ineffectiveness related to the cash flow hedges. As of December 31, 2023, the fixed interest

rates of swaps varied from -0.38 percent to 3.09 percent.

Metso Oyj – Board of Directors’ report and financial statements 2023 103

Maturities of financial derivatives on (expressed as notional amounts)


December 31, 2023
EUR million	2024	2025	2026	2027	2028 and later
Forward exchange contracts	3,252	17	–	–	–
Interest rate swaps	100	–	–	150	355

Notional and carrying amounts of financial derivatives applying hedge accounting


2023 EUR million	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net
Forward exchange contracts	911	36	26	9
Interest rate swaps	580	8	19	-11
Total	1,491	44	45	-1

2022 EUR million	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net
Forward exchange contracts	1,189	21	18	3
Interest rate swaps	400	–	33	-33
Total	1,589	21	51	-30

Forward exchange contracts hedge commercial cash flows of projects applying hedge accounting. The hedge ratio is 1:1. 99%

of hedged cash flows mature in year 2024, 1% in year 2025.

Impact of cash flow hedge in the statement of financial position


2023 EUR million	Notional amount	Hedging gain / loss recognized in OCI, net of tax	Amount reclassified from OCI to P/L	Cost of hedging recognized in P/L
	3,269	-2	0	-2

Metso applies fair value hedge accounting to the bonds maturing in 2024, 2027, 2028 and 2030. The hedge accounted total

notional value is EUR 580 million (EUR 400 million in 2022). The terms of the interest rate swap match the terms of the fixed

rate bonds (maturity date, interest fixing and payments dates). Fair values of cash flows of interest rate swap and bond are

compared when measuring hedge accounting effectiveness. Credit margin is added to the discount curve of the bond.

Bonds applying fair value hedge accounting at end of year


Notional amount of loan, EUR million	Hedge ratio	Maturity date of loan	Fair value of loan, EUR million	Notional amount of interest rate swap	Maturity date of interest rate swap	Fair value of interest rate swap, EUR million
197	51%	June 13, 2024	1	100	June 13, 2024	-1
300	50%	December 7, 2027	-1	150	December 7, 2027	1
300	50%	May 26, 2028	16	150	May 26, 2028	-18
300	60%	November 22, 2030	-7	180	November 22, 2030	7

Metso Oyj – Board of Directors’ report and financial statements 2023 104

5. Consolidation

5.1. Principles of consolidation

Subsidiaries

The Consolidated financial statements include the financial statements of the Parent company and each of those companies

over which Metso exercises control. Control is achieved when Metso is exposed, or has rights, to variable returns from the

investee and has the ability to affect those returns through its power over the investee. The companies acquired during the

financial period have been consolidated from the date Metso acquired control. Subsidiaries sold or distributed to the owners

have been included up to their date of disposal.

All intercompany transactions, balances, and gains or losses on transactions between subsidiaries are eliminated as part of

the consolidation process. Non-controlling interests are presented in the consolidated balance sheet within equity, separate

from equity attributable to shareholders. Non-controlling interests are separately disclosed in the consolidated statement of

income.

Acquisitions of businesses are accounted for using the acquisition method. The purchase consideration of an acquisition is

measured at fair value over the assets given up, shares issued, or liabilities incurred or assumed at the date of acquisition. For

each acquisition, the non-controlling interest in the acquiree, if any, can be recognized either at fair value or at the non-

controlling interest’s proportionate share of the acquiree’s net assets. The excess acquisition price over the fair value of net

assets acquired is recognized as goodwill and/or intangible assets. If the purchase consideration is less than the fair value of

the Group’s share of the net assets acquired, the difference is recognized directly through profit and loss.

When Metso ceases to have control, any retained interest in equity is re-measured to its fair value at the date when control is

lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the

purposes of subsequently accounting for the retained interest as an associate, joint venture, or financial asset. In addition, any

amounts previously recognized in other comprehensive income in respect of that entity is accounted for as if the Group had

directly disposed of the related assets or liabilities.

Non-controlling interest

Transactions with non-controlling interests are regarded as transactions with equity owners. In the case of purchases from

non-controlling interests, the difference between any consideration paid and the relevant share of the carrying value of net

assets acquired in the subsidiary is recorded in shareholders’ equity. Gains or losses on disposal to non-controlling interests

are also recorded directly in shareholders’ equity.

Non-current assets or disposal group held-for-sale

Metso classifies a non-current asset or disposal group as held for sale if its carrying amount will be recovered principally

through a sale transaction rather than through continuing use. These assets are valued at the lower of its carrying value and

fair value, less costs to sell, and assets subject to depreciation or amortization are no longer amortized. Assets related to non-

current assets, or a disposal group classified as held-for-sale are disclosed separately from other assets, but financial

statements for prior periods are not reclassified.

Foreign currency translation

The financial statements are presented in euros, which is the Parent company’s functional currency and Metso’s presentation

currency.

Transactions in foreign currencies are recorded at the rates of exchange prevailing at the date of the transaction. At the end of

the reporting period, unsettled foreign currency transaction balances are valued at the rates of exchange prevailing at the

balance sheet date. Trade-related foreign currency exchange gains and losses are recorded in other operating income and

expenses, unless the foreign currency-denominated transactions are subject to hedge accounting, in which case the related

exchange gains and losses are recorded in the same line item as the hedged transaction. Foreign exchange gains and losses

associated with financing are entered as a net amount under finance income and expenses.

The statement of income of a subsidiary with a functional currency different from the presentation currency is translated into

euros at the average month end exchange rate for the financial year, and the balance sheet is translated at the exchange rate

in effect on the balance sheet date. This exchange rate difference is recorded through other comprehensive income (OCI)

within cumulative translation adjustments under equity.

Metso Oyj – Board of Directors’ report and financial statements 2023 105

The translation differences arising from subsidiary net investments and long-term subsidiary loans without agreed settlement

dates are recognized through OCI within cumulative translation adjustments under equity. When Metso hedges the net

investment of its foreign subsidiaries with foreign currency loans and financial derivatives, the translation difference is adjusted

by the currency effect of hedging instruments that has been recorded, net of taxes, through OCI under equity. When a foreign

entity is disposed of, the respective accumulated translation difference, including the effect from qualifying hedging

instruments, is reversed through OCI and recognized in the consolidated statement of income as part of the gain or loss on

the sale. If the equity of a foreign currency-denominated subsidiary is reduced by reimbursement of invested funds, the

translation difference relating to the reduction is reversed through OCI and recognized in the consolidated statement of

income.

Net investment hedge

The equity of subsidiaries reporting in certain currencies can be hedged mainly by foreign currency loans and foreign currency

forward contracts. Both realized and unrealized exchange gains and losses measured on these instruments are recorded, net

of taxes, through OCI in a separate component of equity against the translation differences arising from consolidation to the

extent these hedges are effective. The interest portion of derivatives qualifying as hedges of net investment is recognized

under finance income and expenses.

Metso Oyj – Board of Directors’ report and financial statements 2023 106

5.2. Subsidiaries


		Ownership
Country	Company name	Dec, 31 2023
Algeria	Metso Algerie EURL	100.0%
Argentina	Metso Outotec Argentina SA	100.0%
Australia	Metso Australia Ltd	100.0%
	Outotec Pty. Ltd.	100.0%
	Brouwer Engineering Pty Ltd	100.0%
Austria	Metso Austria GmbH	100.0%
Brazil	Metso Brazil Indústria e Comércio Ltda	100.0%
	Outotec Tecnologia Brazil Ltda	100.0%
Bulgaria	Metso Bulgaria EOOD	100.0%
Canada	Metso Canada Inc.	100.0%
	McCloskey International Limited	100.0%
Chile	Metso Industrial Services SpA	100.0%
	Metso Chile SpA	100.0%
	Outotec Servicios Industriales Ltda.	100.0%
China	Metso Outotec New Material Technology (Shanghai) Co., Ltd.	100.0%
	Metso Heavy Industries (Quzhou) Co., Ltd.	100.0%
	Metso Heavy Industries (Tianjin) Co., Ltd.	100.0%
	Metso (Tianjin) Investment Co., Ltd.	100.0%
	Metso Machinery Heavy Industries (Suzhou) Co., Ltd.	100.0%
	Shaorui Heavy Industries (Guangdong) Co. Ltd	100.0%
	SISUPER Machinery Heavy Industry (Suzhou) Co Ltd	100.0%
	Powertrack Machinery (Jiangsu) Co., Ltd	100.0%
Czech Republic	Metso Czech Republic s.r.o.	100.0%
Ecuador	Metso Outotec-Technology (Ecuador) S.A.	100.0%
Egypt	Metso Outotec Egypt Company LLC	100.0%
Finland	International Project Services Ltd. Oy	100.0%
	Metso Finland Oy	100.0%
	Metso (Ceramics) Oy	100.0%
	Outotec International Holdings Oy	100.0%
	Rauma Oy	100.0%
	Metso Metals Oy	100.0%
	Ab A. Häggblom Oy	100.0%
	PHN Management Oy	100.0%
France	Metso France SAS	100.0%
Germany	Metso Outotec Germany GmbH	100.0%
	Outotec Deutschland GmbH	100.0%
	Outotec GmbH & Co KG	100.0%
	Outotec Holding GmbH	100.0%
Ghana	Metso Ghana Ltd	100.0%
	Outotec (Ghana) Limited	100.0%
Greece	Metso Greece IKE	100.0%
India	Metso Outotec India Private Ltd	100.0%
	Outotec India Private Ltd.	100.0%
	Metso Outotec Metals India Private Limited	100.0%
Indonesia	PT Metso Outotec Indonesia 1)	99.9%
	PT. Outotec Technology Solutions	100.0%
Iran	Outotec Iranian Minerals and Metals Processing 4)	100.0%
Italy	Metso Italy Srl	100.0%
Japan	Metso Japan Godo-Kaisha	100.0%

Metso Oyj – Board of Directors’ report and financial statements 2023 107


		Ownership
Country	Company name	Dec, 31 2023
Kazakhstan	Metso Kazakhstan LLP	100.0%
	Metso Management LLP	100.0%
Lithuania	Metso Global Business Services UAB	100.0%
	Metso Lithuania UAB	100.0%
Macedonia	Metso Dooel Skopje	100.0%
Malaysia	Metso Outotec Malaysia Sdn Bhd	100.0%
Morocco	Metso Outotec Morocco LLC	100.0%
Mexico	Metso Mexico SA de CV	100.0%
Mongolia	Metso Mongolia LLC	100.0%
Namibia	Outotec Namibia (Pty.) Ltd	100.0%
Netherlands	Metso (Netherlands) B.V.	100.0%
	Metso Outotec B.V.	100.0%
Norway	Metso Norway A/S	100.0%
Panama	Metso Central America SA	100.0%
Papua New Guinea	Metso PNG Limited	100.0%
Peru	Metso Perú SA	100.0%
Poland	Metso Poland Sp. z o.o.	100.0%
Portugal	Metso Portugal, Lda	100.0%
Qatar	Outotec Trading & Contracting WLL 3)	49.0%
Russia	OOO Metso Outotec	100.0%
Romania	Metso Romania S.R.L.	100.0%
Saudi Arabia	Metso Saudi Arabia LLC	100.0%
	Outotec Technology Saudi LLC	100.0%
Serbia	Metso d.o.o. Beograd	100.0%
Singapore	Metso Outotec Asia Pacific Pte Ltd	100.0%
South Africa	Metso South Africa Pty Ltd	74.9%
	Outotec Africa Holdings (Pty) Ltd	100.0%
Spain	Metso Espana SA	100.0%
Sweden	AB P. J. Jonsson och Söner	100.0%
	Larox AB	100.0%
	Metso Sweden AB	100.0%
	Metso Outotec Metals Sweden AB	100.0%
	Häggblom Sverige AB	100.0%
Thailand	Metso Outotec (Thailand) Limited	100.0%
Turkey	Metso Maden Teknolojileri Anonim Sirketi	100.0%
United Arab Emirates	Metso Outotec DMCC	100.0%
	Outotec Middle East Industrial Projects Consultancy LLC 2)	49.0%
United Kingdom	McCloskey International Ltd	100.0%
	Metso Captive Insurance Limited	100.0%
	Metso Outotec UK Ltd	100.0%
	Outotec (UK) Limited	100.0%
	Tesab Engineering Ltd	100.0%
	Tedd Engineering Ltd	100.0%
United States	Metso McCloskey USA LLC	100.0%
	Metso USA Inc.	100.0%
	Outotec USA Inc.	100.0%
Uzbekistan	FE Metso LLC	100.0%
Vietnam	Metso Vietnam Co. Ltd	100.0%
Zambia	Metso Zambia Ltd	100.0%
	Outotec (Zambia) Limited	100.0%

1) Has been 100% consolidated due to the control established.

2) Has been 90% consolidated due to the control established.

3) Has been 70% consolidated due to the control established.

4) Non-operative and dormant.

Metso Oyj – Board of Directors’ report and financial statements 2023 108

5.3. Associated companies, joint ventures and related party transactions

Material accounting policies

The equity method of accounting is used for investments in associated companies in which the investment provides Metso

the ability to exercise significant influence over the operating and financial policies of the investee company. Such influence

is presumed to exist for investments in companies in which Metso’s direct or indirect shareholding is between 20 and 50

percent of the voting rights or if Metso is able to exercise significant influence. Investments in associated companies are

initially recognized at cost after which Metso’s share of their post-acquisition retained profits and losses is included as part of

investments in associated companies in the consolidated balance sheets.

Under the equity method, the share of profits and losses of associated companies and joint ventures is presented separately

in the consolidated statements of income.

A joint arrangement is an arrangement in which two or more parties have joint control. Within Metso, all the joint

arrangements are joint ventures. Investments in joint ventures in which Metso has the power to jointly govern the financial

and operating activities of the investee company are accounted for using the equity method. Investments in joint ventures in

which Metso has control over the financial and operating activities of the investee company are fully consolidated and a non-

controlling interest is recognized.

Associated companies and joint ventures


	2023		2022
Company	Ownership	Carrying value	Ownership	Carrying value
Liugong Metso Construction Equipment (Shanghai) Co. Ltd	–	–	50.0%	4
Enefit Outotec Technology Oü	40.0%	3	40.0%	1
Sidvin Outotec Engineering Private Ltd	25.1%	1	25.1%	0
Total		3		6

Liugong Metso Construction Equipment (Shanghai) Co. Ltd was liquidated in year 2023.

Movements in the carrying value of investments in associated companies and joint ventures


EUR million	2023	2022
Investments in associated companies and joint ventures
Acquisition cost as of January 1	10	10
Liquidation	-7	–
Acquisition cost as of December 31	2	10

Equity adjustments in investments in associated companies and joint ventures
Equity adjustments as of January 1	-3	-2
Share of results	2	-1
Liquidation	3	–
Translation differences	–	0
Equity adjustments as of December 31	1	-3

Classified as held for sale	-1	–

Carrying value at end of year	3	6

Metso Oyj – Board of Directors’ report and financial statements 2023 109

Metso's share of the assets and liabilities, sales and results of the associated companies and joint ventures, which have been

accounted for using the equity method


EUR million	2023	2022
Assets	4	8
Liabilities	0	1
Sales	2	6
Profit	2	-1

Related party transactions

Transactions carried out and related balances with associated companies and joint ventures


EUR million	2023	2022
Sales	0	0
Purchases	-1	0
Receivables	–	–
Payables	0	0

Information on remuneration of the Board as well as Chief Executive Officer and other Executive Team members can be found

in note 1.5.

5.4. Acquisitions and business disposals

Acquisitions in 2023

Metso completed the acquisition of Ab A. Häggblom Oy, a Finnish engineering and manufacturing company on August 1,

2023. The acquisition will broaden Metso's offering in bodies and buckets and strengthens the company's position in the

aftermarket. The acquired business was consolidated into the Minerals segment. Häggblom's sales in 2022 were

approximately EUR 26 million. The company employs about 100 people. Metso's ownership in Häggblom covers 100% of the

company's shares.

On August 1 2023, Metso acquired a 100% share of of Brouwer Engineering Ltd. Brouwer is an Australian company

specialized in automation, control systems, and electrical solutions for bulk material handling solutions. The acquired business

was consolidated into the Minerals segment. Brouwer's sales in the financial year that ended in June 2023 were

approximately EUR 8 million. The company employs about 30 people.

Metso completed the acquisition of Tedd Engineering Ltd on November 1, 2023 by acquiring 100% of the company's shares.

Tedd Engineering employs approximately 70 employees and it is based in Chesterfield, UK. The company is specialized in

automation, control systems, and electrical solutions for mobile equipment and aftermarket, primarily focusing on the

aggregates business. The acquired business was consolidated into the Aggregates segment. The company's sales in the

financial year that ended in June 2023 were approximately EUR 17 million.

Assets and liabilities recognized as a result of the acquisitions


EUR million	Total 2023
Fixed assets	32
Inventory	10
Receivables	7
Liquid funds	5
Liabilities	-29
Net identifiable assets acquired at fair value	26
Goodwill	14
Purchase consideration	40

Goodwill is mainly attributable to synergies. The goodwill is not deductible for tax purposes. The initial calculation of goodwill

generated is based on the result of the acquired company, adjusted by changes in accounting principles and effects from the

fair value adjustment of acquired assets and related tax adjustments.

Metso Oyj – Board of Directors’ report and financial statements 2023 110

Net cash flow impact of the acquisitions


EUR million	Total 2023
Cash consideration paid	-34
Cash and cash equivalents acquired	5
Net cash flow for the year	-29
Contingent consideration	-6
Cash considerations, total	-35

Acquisition costs of EUR 1.7 million related to the acquisitions were expensed and included in administrative expenses in the

income statement and in operating cash flow in the statement of cash flows.

Acquisitions in 2022

Metso acquired a 100% share of Tesab Engineering Ltd on May 3, 2022. Tesab is a Northern Ireland based company

specializing mostly in mobile crushing equipment for aggregates applications, including quarrying, recycling, asphalt and

concrete. The acquired business was consolidated into the Aggregates segment. Tesab's turnover in 2021 was approx. EUR

30 million and it employed about 60 people.

On September 1, 2022, Metso acquired 100% share of Global Physical Asset Management Inc, a technology provider based

in North America. The acquisition will further strengthen Metso’s capabilities in digital field service inspections for grinding. The

company has offices in Kelowna, British Columbia, Canada and in Wisconsin, USA. The acquired business was consolidated

into the Minerals segment. In 2021 the sales of Global Physical Asset Management were approximately EUR 5 million and it

employed about 20 people.

Assets and liabilities recognized as a result of the acquisitions


EUR million	Total 2022
Fixed assets	11
Inventory	7
Receivables	8
Liquid funds	0
Liabilities	-10
Net identifiable assets acquired at fair value	16
Goodwill	5
Purchase consideration	21

Goodwill is mainly attributable to synergies. The goodwill is not deductible for tax purposes. The initial calculation of goodwill

generated is based on the result of the acquired company, adjusted by changes in accounting principles and effects from the

fair value adjustment of acquired assets and related tax adjustments.

Net cash flow impact of the acquisitions


EUR million	Total 2022
Cash consideration paid	-21
Cash and cash equivalents acquired	0
Net cash flow for the year	-21
Contingent consideration	–
Cash considerations, total	-21

Acquisition costs of EUR 0.4 million related to the acquisition of Tesab Engineering Ltd and Global Physical Asset

Management Inc were expensed and included in administrative expenses in the income statement and in operating cash flow

in the statement of cash flows.

Business disposals

There were no business disposals in 2023.

In year 2022 Metal Recycling business was divested, and information is presented in note 5.5. Discontinued operations.

Metso Oyj – Board of Directors’ report and financial statements 2023 111

5.5. Discontinued operations

Material accounting policies

Discontinued operations is a component of an entity that either has been disposed of or is classified as held for sale and

represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to

dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a

view to resale. The result from discontinued operations is shown separately in the consolidated statement of income, and the

comparative figures are restated accordingly.

Non-current assets and assets and liabilities related to discontinued operations are classified as held for sale if their carrying

amounts are expected to be recovered primarily through sale rather than through continuing use. Classification as held for

sale requires that the following criteria are met: the sale is highly probable, the asset is available for immediate sale in its

present condition – subject to usual and customary terms, the management is committed to the sale, and the sale is

expected to be completed within one year from the date of classification.

Prior to classification as held for sale, the assets or assets and liabilities related to a disposal group in question are measured

according to the respective IFRS standards. From the date of classification, non-current assets held for sale are measured at

the lower of the carrying amount and the fair value, less costs to sell, and the recognition of depreciation and amortization is

discontinued. Non-current assets held for sale are presented in the statement of financial position separately from other

items. The comparative figures for statement of financial position are not restated.

Metals & Chemical Processing and Ferrous & Heat Transfer businesses

Metso has decided to initiate the divestment of the Metals & Chemical Processing and Ferrous & Heat Transfer businesses,

and these businesses have been classified as discontinued operations starting from September 30, 2023. Consequently, the

figures for 2023 related to the consolidated statement of income are presented separately from the continuing operations and

comparative figures for year 2022 have been restated accordingly. Recording of the amortization and depreciation of

intangible, tangible and right-of-use assets has been discontinued on the classification date. The assets and liabilities held for

sale have been transferred to separate lines in the consolidated balance sheet on December 31, 2023. The comparative

figures for 2022 related to the consolidated balance sheet have not been restated.

Recycling business

In 2020, Metso announced its decision to divest its Recycling business. The business was classified as discontinued

operations. Waste Recycling business was sold in 2021 to Ahlström Capital, and in 2022, Metso announced the completion of

the divestment of the Metal Recycling business line to Mimir, a Swedish investment company. The sold Metal Recycling

business included the brands Lindemann and Texas Shredder. Its approximately 160 employees have been transferred to the

new company.

Waste-to-energy business

At the date of the Outotec acquisition, June 30, 2020, the Waste-to-energy businesses were disclosed as discontinued

operations. The balance sheet classification of Waste-to-energy business was changed in year 2022 due to prolonged

divestment process, and the assets and liabilities directly attributable classified as part of continuing operations. Due to the

change in classification, depreciation of fixed assets and right-of-use assets continues, and the cumulative effect of

depreciation from years 2020–2021 has been recorded in the balance sheet of continuing operations through the income

statement for year 2022. All the income statement items related to the Waste-to-energy business continue to be adjusted to

show the discontinued operations separately from continuing operations.

Metso Oyj – Board of Directors’ report and financial statements 2023 112

Result from the discontinued operations


EUR million	2023	2022
Sales	357	392
Cost of sales	-301	-336
Sales, general and administrative expenses	-38	-54
Other income and expenses, net	2	-3
Share of results of associated companies	1	–
Operating result	21	-1

Finance income and expenses, net	–	0
Income taxes	-12	-5
Result for the period	8	-6

Gain / loss from business disposals	–	-12
Total result of period, discontinued operations	8	-18

Balance sheet of the discontinued operations


EUR million	2023	2022
Non-current assets	97	–
Inventories	53	–
Trade and other receivables	87	–
Cash and cash equivalents	–	–
Total assets	238	–

Non-current liabilities	33	–
Current liabilities	136	–
Total liabilities	169	–

Business disposals

There have been no business disposals in 2023.

In 2022 Metso announced the completion of the divestment of its Metal Recycling business line to Mimir, a Swedish

investment company. The sold Metal Recycling business includes the brands Lindemann and Texas Shredder. Approximately

160 employees were transferred to the new company.


EUR million	2022
Goodwill	–
Other non-current and current assets	42
Cash and cash equivalents	10
Liabilities	-35
Net assets of disposed business	17

Cash consideration	5
Net assets of disposed business	-17
Result on disposal	-12

Cost of disposals	-2
Gain / loss on disposed business	-13

Consideration received in cash	2
Cash and cash equivalents sold	-10
Net cash inflow on disposal	-7

Metso Oyj – Board of Directors’ report and financial statements 2023 113

5.6. New accounting standards

New and amended standards effective in 2023

The following new or revised IFRS standards have been adopted from January 1, 2023, in these Consolidated financial

statements.

Amendments to IAS 8 - Definition of Accounting Estimates

The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and

the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting

estimates. The amendments had no impact on the Group’s Consolidated financial statements.

Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies

The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples to

help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide

accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’

accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities

apply the concept of materiality in making decisions about accounting policy disclosures. The amendments have had an

impact on the Group’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any

items in the Group’s financial statements.

Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction

The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer applies to

transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning

liabilities. The amendments had no material impact on the Group’s Consolidated financial statements.

IFRS 17 Insurance Contracts

IFRS 17 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering recognition and

measurement, presentation and disclosure. The new standard had no impact on the Group’s Consolidated financial

statements.

IASB and OECD Pillar 2 Global minimum taxation

Amendments to IAS 12 standard on the effects of the implementation of the Pillar 2: A mandatory temporary exception to the

recognition and disclosure of deferred taxes. Mandatory temporary exemptions consist of the jurisdictional implementation of

the Pillar 2 model rules and disclosure requirements for group entities. In the Consolidated financial statements, the

application of the Pillar 2 Directive is disclosed in note 1.8 Income Taxes.

New and amended standards to be applied

Metso has not applied the following new and revised IFRS Standards that have been issued but are not yet effective [and (in

some cases) have not yet been adopted by the EU (marked with *)]:

• Amendments to IAS 1 - Classification of Liabilities as Current or Non-current (effective date January 1, 2024)

• Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback (effective date January 1, 2024)

• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements (IASB effective date January 1, 2024) *

• Amendments to IAS 21 - Lack of Exchangeability (IASB effective date January 1, 2025) *

The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial

statements of Metso in future periods.

Metso Oyj – Board of Directors’ report and financial statements 2023 114

5.7. Exchange rates used


		Average rates		Year-end rates
		2023	2022	2023	2022
USD	(US dollar)	1.0816	1.0563	1.1050	1.0666
SEK	(Swedish krona)	11.4563	10.6258	11.0960	11.1218
GBP	(Pound sterling)	0.8702	0.8537	0.8691	0.8869
CAD	(Canadian dollar)	1.4606	1.3757	1.4642	1.4440
BRL	(Brazilian real)	5.4128	5.4748	5.3618	5.6386
CNY	(Chinese yuan)	7.6589	7.0836	7.8509	7.3582
AUD	(Australian dollar)	1.6297	1.5189	1.6263	1.5693

Metso Oyj – Board of Directors’ report and financial statements 2023 115

6. Other notes

6.1. Audit fees


EUR million	2023	2022
Audit services	-3.8	-3.0
Tax services	0.0	-0.1
Other services	-0.1	-0.1
Total	-3.9	-3.2

The above table discloses fees to Metso’s auditor Ernst & Young Oy.

6.2. Lawsuits and claims

Several lawsuits, legal claims and disputes based on various grounds are pending against Metso in various countries related,

among other things, to Metso’s products, projects, other operations, and customer receivables. Metso’s management

assesses, however, to the best of its present understanding that the outcome of these lawsuits, claims, and legal disputes

would not have a material adverse effect on Metso in view of the grounds presented for them, provisions made, insurance

coverage in force, and the extent of Metso’s total business activities. It should be noted, however, that outcomes of pending

lawsuits, legal claims, and disputes are beyond the direct influence of Metso’s management and may, therefore, materially

deviate from management’s current assessment.

Metso Oyj – Board of Directors’ report and financial statements 2023 116

Financial statements of the Parent company, FAS

Statement of income of the Parent company


EUR	Note	2023	2022
Sales		24,754,086.88	20,611,681.12
Other operating income	2	3,493,569.16	1,233,215.11
Personnel expenses	3	-25,636,945.07	-24,823,466.91
Depreciation and amortization	4	-371,464.80	-390,638.27
Other operating expenses	5	-30,092,851.61	-24,475,623.85
Operating profit / loss		-27,853,605.44	-27,844,832.80

Financial income and expenses, net	7	160,876,187.53	142,473,505.19
Profit before appropriations and taxes		133,022,582.09	114,628,672.39

Appropriations	8	260,000,000.00	200,000,000.00
Profit before taxes		393,022,582.09	314,628,672.39

Income taxes	9
Current tax expense		-43,473,972.16	-33,702,968.75
Change in deferred taxes		-299,040.60	-300,680.40
Profit for the year		349,249,569.33	280,625,023.24

Metso Oyj – Board of Directors’ report and financial statements 2023 117

Balance sheet of the Parent company


Assets

EUR	Note	2023	2022
Non-current assets
Intangible assets	10	421,471.02	757,622.23
Tangible assets	10	225,904.91	261,218.50
Investments	11
Shares in Group companies		1,245,231,528.75	1,244,704,584.34
Other investments		510,594,929.87	347,172,377.82
Total non-current assets		1,756,473,834.55	1,592,895,802.89

Current assets
Long-term receivables	13	9,786,290.55	3,093,865.81
Short-term receivables	13	1,110,398,075.46	897,800,275.98
Securities		159,000,000.00	50,000,000.00
Bank and cash		248,911,504.97	306,992,681.25
Total current assets		1,528,095,870.98	1,257,886,823.04

Total assets		3,284,569,705.53	2,850,782,625.93

Shareholders' equity and liabilities

EUR	Note	2023	2022
Shareholders' equity	14
Share capital		107,186,442.52	107,186,442.52
Share premium fund		20,180,000.00	20,180,000.00
Treasury shares		-22,514,857.99	-27,935,122.14
Invested non-restricted equity fund		434,272,229.86	433,376,746.22
Retained earnings		381,257,274.03	348,530,708.09
Profit for the year		349,249,569.33	280,625,023.24
Total shareholders' equity		1,269,630,657.75	1,161,963,797.93

Liabilities
Long-term liabilities	15	1,184,800,070.66	1,034,734,095.00
Current liabilities	16	830,138,977.12	654,084,733.00
Total liabilities		2,014,939,047.78	1,688,818,828.00

Total shareholders' equity and liabilities		3,284,569,705.53	2,850,782,625.93

Metso Oyj – Board of Directors’ report and financial statements 2023 118

Cash flow statement of the Parent company


EUR thousand	2023	2022
Cash flows from operating activities
Profit for the year	349,250	280,625
Adjustments to profit for the year
Depreciation and amortization	370	391
Impairment	5,002	–
Unrealized exchange gains and losses	-3,741	–
Financial income and expenses	-166,076	-142,474
Gains and losses on sale	-3,197	-62
Group contributions	-260,000	-200,000
Taxes	43,773	34,004
Other non-cash items	3,194	–
Total adjustments to profit for the year	-380,674	-308,141

Increase / decrease in short-term non-interest-bearing trade receivables	25,670	-31,610
Increase / decrease in short-term non-interest-bearing debt	-45,869	137,471
Change in working capital	-20,199	105,861

Interest paid	-68,264	-36,762
Other financial expenses paid	-11,988	-50,296
Dividends received	186,118	294,017
Interest received	5,183	11,230
Income taxes paid	-54,682	-19,784
Net cash provided by operating activities	4,744	276,749

Cash flows from investing activities
Investments in subsidiary shares	-5,632	-14,807
Decrease in subsidiary shares	3,203	–
Long-term loans granted	-886,908	-570,102
Repayments of long-term loans	640,134	500,358
Short-term loans granted	-667,730	-342,609
Repayments of short-term loans	536,139	277,014
Withdrawals and repayments of short-term loans, net	9,112	–
Purchase of other investments	-109,000	-50,000
Divestments in other investments	–	2,000
Interest received from investments	47,632	23,167
Net cash used in investing activities	-433,049	-174,979

Cash flows from financing activities
Purchase of treasury shares	–	-25,104
Decrease in treasury shares	–	6,001
Invested non-restricted equity fund	–	-1,123
Sales from treasury shares to subsidiaries	4,228	3,039
Changes of short term loans, net	-79,643	79,643
Withdrawal of long-term loans	347,288	499,583
Repayments of long-term loans	–	-252,692
Dividends paid	-247,748	-198,389
Change in Group pool accounts	146,100	-201,684
Group contributions	200,000	100,000
Net cash provided by / used in financing activities	370,224	9,274

Net increase / decrease in bank and cash	-58,081	111,044
Bank and cash on January 1	306,993	195,949
Bank and cash on December 31	248,912	306,993

Metso Oyj – Board of Directors’ report and financial statements 2023 119

Notes to the financial statements of the Parent company

1 Accounting principles

The Parent Company Financial Statements have been prepared in accordance with the Finnish Generally Accepted

Accounting Principles. The financial statements are presented in euros.

Foreign currency translations

Transactions in foreign currencies are recorded at the rates of exchange prevailing at the date of the transaction. At the end of

the accounting period, monetary items are valued at the rate of exchange prevailing at the end of period.

Tangible and intangible assets

Tangible and intangible assets are valued at historical cost, less accumulated depreciation according to plan. Land and water

areas are not depreciated.

Depreciation and amortization is calculated on a straight-line basis over the expected useful lives of the assets as follows:

Computer software3–5 years

Other intangibles10 years

Buildings20–25 years

Machinery and equipment3–5 years

Other tangible assets 20 years

Financial instruments

Metso’s financial risk management is carried out by a central treasury department (Group Treasury) under the policies

approved by the Board of Directors. Group Treasury functions in cooperation with the operating units to minimize financial

risks in both the Parent Company and the Group. Long-term debt is initially recognized at fair value, net of transaction costs

incurred. In subsequent periods, they are valued at amortized cost using the effective interest rate method. The fair value

changes in borrowings covered by fair value hedge are, in respect of hedged risk, recognized through financial income and

expenses. Transaction costs arising from issuance of bonds are recognized over the life of the bond using the effective yield

method. The unrecognized portion as of the balance sheet date is presented as a decrease in liabilities. Derivatives outside

hedge accounting are valued at fair value through profit and loss according to the Finnish Accounting Act 5:2 a §. Forward

exchange contracts are measured at fair value. The change in fair value is recognized as income or expense in the income

statement. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance

sheet date. Bank and cash, as well as securities, consist of cash in bank accounts and investments of liquid funds in interest-

bearing instruments. Financial assets are measured at historical cost, less possible impairment loss.

Provisions

Provisions are unrealized costs, for which the company is committed, and which will not provide any income in the future, and

which are likely to occur. Provision changes are included in profit and loss.

Leases

Leases of assets, where the lessor retains all the risks and benefits of ownership, are classified as operating leases.

Payments made under operating lease agreements are expensed on a straight-line basis over the lease periods.

Income taxes

Income tax expense includes taxes calculated for the financial year, adjustments to prior year taxes, and changes in the

deferred taxes. Deferred tax liability or asset has been determined for all temporary differences in between the tax bases of

assets and liabilities and their amounts in financial reporting, using the enacted tax rates effective for the future years.

Deferred tax liabilities are recognized in the balance sheet in full, and deferred tax assets are recognized when it's probable

that there will be sufficient taxable profit against which the asset can be utilized.

Metso Oyj – Board of Directors’ report and financial statements 2023 120

2 Other operating income


EUR thousand	2023	2022
Gain on disposal of subsidiary shares	3,197	–
Foreign exchange gains	–	945
Other	296	288
Total	3,494	1,233

3 Personnel expenses


EUR thousand	2023	2022
Salaries and wages	-21,615	-21,159
Pension costs	-3,507	-3,581
Other indirect employee costs	-516	-84
Total	-25,637	-24,823

Remuneration paid to Chief Executive Officer and Board members


EUR thousand	2023	2022
Chief Executive Officer	-4,503	-4,153
Board members 1)	-966	-958
Total	-5,469	-5,111

1) Board remuneration is presented in note 1.5 of the Consolidated financial statements.

Number of personnel


	2023	2022
Personnel at end of year	143	130
Average number of personnel during the year	138	132

4 Depreciation and amortization

Depreciation and amortization expenses


EUR thousand	2023	2022
Capitalized software	-204	-204
Other intangible assets	-132	-143
Machinery and equipment	-35	-44
Total	-371	-391

Metso Oyj – Board of Directors’ report and financial statements 2023 121

5 Other operating expenses


EUR thousand	2023	2022
Foreign exchange losses	-5,568	-4,606
Other	-24,525	-19,870
Total	-30,093	-24,476

6 Audit fees


EUR thousand	2023	2022
Audit	-840	-488
Tax consulting	–	-30
Other services	-54	–
Total	-894	-518

7 Finance income and expenses


EUR thousand	2023	2022
Dividends received from
Group companies	186,118	294,017
Total	186,118	294,017

Interest income from investments from
Group companies	47,627	23,129
Others	5	38
Total	47,632	23,167

Other interest and financial income from
Group companies	33,633	18,002
Others	13,550	4,285
Fair value change in derivatives	–	2,773
Interest and financial income, total	280,933	342,245

Interest expenses to
Group companies	-15,812	-1,329
Others	-86,339	-46,103
Total	-102,151	-47,432

Other financial expenses
Fair value change in derivatives	-720	–
Exchange rate differences	-4,710	-9,043
Impairment loss on non-current assets	-5,198	-133,628
Others	-7,278	-9,668
Interest and other financial expenses, total	-120,057	-199,772

Financial income and expenses, net	160,876	142,474

Metso Oyj – Board of Directors’ report and financial statements 2023 122

8 Appropriations


EUR thousand	2023	2022
Group contributions received	260,000	200,000

9 Income taxes


EUR thousand	2023	2022
Income taxes on operating activities	-43,125	-33,545
Income taxes for prior years	-349	-158
Change in deferred taxes	-299	-301
Total	-43,773	-34,004

10 Fixed assets


2023
EUR thousand	Patents and licenses	Capitalized software	Other intangible assets	Intangible assets total	Land areas	Buildings	Machinery and equipment	Tangible assets total	Total
Acquisition cost Jan 1	1,539	2,374	1,150	5,063	156	733	974	1,863	6,926
Decreases	–	–	-860	-860	–	–	-641	-641	-1,501
Acquisition cost Dec 31	1,539	2,374	289	4,203	156	733	334	1,223	5,425

Accumulated depreciation Jan 1	-1,539	-1,780	-986	-4,305	–	-733	-869	-1,602	-5,908
Accumulated depreciation of decreases	–	–	859	859	–	–	641	641	1,500
Depreciation for the period	–	-187	-148	-335	–	–	-35	-35	-370
Accumulated depreciation Dec 31	-1,539	-1,967	-275	-3,781	–	-733	-264	-997	-4,778

Net carrying value Dec 31	–	407	14	421	156	–	70	226	647

Metso Oyj – Board of Directors’ report and financial statements 2023 123


2022
EUR thousand	Patents and licenses	Capitalized software	Other intangible assets	Intangible assets total	Land areas	Buildings	Machinery and equipment	Tangible assets total	Total
Acquisition cost Jan 1	1,539	2,374	1,150	5,063	156	733	974	1,863	6,926
Acquisition cost Dec 31	1,539	2,374	1,150	5,063	156	733	974	1,863	6,926

Accumulated depreciation Jan 1	-1,539	-1,593	-826	-3,959	–	-733	-825	-1,558	-5,517
Depreciation for the period	–	-187	-160	-347	–	–	-44	-44	-391
Accumulated depreciation Dec 31	-1,539	-1,780	-986	-4,305	–	-733	-869	-1,602	-5,908

Net carrying value Dec 31	–	594	164	758	156	–	106	261	1,019

11 Investments


2023
EUR thousand	Shares in Group companies	Other shares	Receivables from Group companies	Receivables from other companies	Other investments total
Acquisition cost at Jan 1	1,244,705	594	346,578	0	347,172
Additions	10,632	–	803,306	–	803,306
Decreases	-10,105	–	-639,884	–	-639,884
Acquisition cost at Dec 31	1,245,232	594	510,001	0	510,595

Net carrying value at Dec 31	1,245,232	594	510,001	0	510,595

2022
EUR thousand	Shares in Group companies	Other shares	Receivables from Group companies	Receivables from other companies	Other investments total
Acquisition cost at Jan 1	1,363,526	2,532	276,584	250	279,366
Additions	14,807	–	569,602	–	569,602
Decreases	-133,628	-1,938	-499,608	-250	-501,796
Acquisition cost at Dec 31	1,244,705	594	346,578	–	347,172

Net carrying value at Dec 31	1,244,705	594	346,578	–	347,172

Metso Oyj – Board of Directors’ report and financial statements 2023 124

12 Shareholdings

Subsidiaries on December 31, 2023


Subsidiary	Domicile	Ownership, %
International Project Services Ltd. Oy	Finland	44.50
Metso Canada Inc.	Canada	100.00
Metso Captive Insurance Limited	Great Britain	100.00
Metso Chile SpA	Chile	24.75
Metso Finland Oy	Finland	100.00
Metso France SAS	France	100.00
Metso Metals Oy	Finland	100.00
Metso USA Inc	United States	100.00
Metso Mexico SA de CV	Mexico	10.10
Metso Outotec Morocco LLC	Morocco	100.00
Metso Outotec New Material Technology (Shanghai) Co., Ltd.	China	100.00
Metso Outotec-Technology (Ecuador) S.A.	Ecuador	99.90
Metso Perú SA	Peru	10.18
Metso Poland Sp. z o.o.	Poland	46.30
Metso South Africa Pty Ltd	South-Africa	15.30
Outotec Africa Holdings (Pty) Ltd	South-Africa	100.00
Outotec Holding GmbH	Germany	100.00
Outotec International Holding Oy	Finland	100.00
Outotec Tecnologia Brazil Ltda	Brazil	57.28
Rauma Oy	Finland	100.00

Metso Oyj – Board of Directors’ report and financial statements 2023 125

13 Specification of receivables

Long-term receivables


EUR thousand	2023	2022
Deferred tax asset	94	393
Derivatives	9,692	2,701
Long-term receivables total	9,786	3,094

Short-term receivables


EUR thousand	2023	2022
Trade receivables from
Group companies	42,422	28,085
Total	42,422	28,085

Loan receivables from
Group companies	706,173	513,648
Others	–	250
Total	706,173	513,898

Prepaid expenses and accrued income from
Group companies	311,237	255,289
Others	50,021	100,523
Total	361,257	355,812

Other receivables
VAT receivable	6	4
Other receivables	539	1
Total	545	5

Short-term receivables total	1,110,398	897,800

Specification of prepaid expenses and accrued income


EUR thousand	2023	2022
Prepaid expenses and accrued income from Group companies
Group contribution receivables	260,000	200,000
Accrued interest income	22,615	8,200
Accrued derivatives	24,408	45,286
Other accrued items	4,214	1,803
Total	311,237	255,289

Prepaid expenses and accrued income from others
Accrued interest income	627	5
Accrued derivatives	35,808	85,287
Other accrued items	13,585	15,231
Total	50,021	100,523

Metso Oyj – Board of Directors’ report and financial statements 2023 126

14 Statement of changes in shareholders' equity


EUR thousand	2023	2022
Share capital on Jan 1	107,186	107,186
Share capital on Dec 31	107,186	107,186

Share premium fund on Jan 1	20,180	20,180
Share premium fund on Dec 31	20,180	20,180

Treasury shares on Jan 1	-27,935	-8,833
Change	5,420	-19,102
Treasury change on Dec 31	-22,515	-27,935

Invested non-restricted equity fund on Jan 1	433,377	434,500
Change	895	-1,123
Invested non-restricted equity fund on Dec 31	434,272	433,377

Retained earnings on Jan 1	629,156	547,408
Dividend distribution	-247,898	-198,877
Retained earnings on Dec 31	381,257	348,531

Profit for the year	349,250	280,625

Total shareholders' equity on Dec 31	1,269,631	1,161,964


Statement of distributable funds on December 31
EUR thousand	2023	2022
Invested non-restricted equity fund	434,272	433,377
Treasury shares	-22,515	-27,935
Retained earnings	381,257	348,531
Profit for the year	349,250	280,625
Total distributable funds	1,142,264	1,034,597

At the end of the year 2023, Metso Oyj held 2,644,249 own shares, whereas at the end of the year 2022 the number of own

shares was 3,336,505.

Metso Oyj – Board of Directors’ report and financial statements 2023 127

15 Long-term liabilities


EUR thousand	2023	2022
Bonds	886,344	761,317
Loans from financial institutions	280,909	240,000
Derivatives	17,547	33,417
Total	1,184,800	1,034,734

Debt maturing after more than in five years


EUR thousand	2023	2022
Bonds	300,000	300,000
Loans from financial institutions	68,182	36,364
Total	368,182	336,364

Presented at nominal value.

16 Short-term liabilities


EUR thousand	2023	2022
Current portion of long-term liabilities
Bonds	195,349	–
Loans from financial institutions	10,465	–
Total	205,814	–

Short-term interest-bearing debt
Loans from financial institutions	–	79,643
Group pool accounts	239,470	133,191
Total	239,470	212,834

Trade payables to
Group companies	23,878	16,157
Others	3,123	2,175
Total	27,001	18,332

Accrued expenses and deferred income to
Group companies	37,484	64,638
Others	51,871	78,203
Total	89,355	142,841

Other short-term non-interest-bearing debt to
Group companies	267,148	279,233
Others	1,351	844
Total	268,499	280,077

Short-term liabilities total	830,139	654,085
Short-term liabilities to Group companies total	567,980	493,218

Metso Oyj – Board of Directors’ report and financial statements 2023 128

Specification of accrued expenses and deferred income


EUR thousand	2023	2022
Accrued expenses and deferred income to Group companies
Accrued interest expenses	1,369	803
Accrued derivatives	35,193	63,820
Other accrued items	923	15
Total	37,484	64,638

Accrued expenses and deferred income to others
Accrued interest expenses	7,799	5,268
Accrued derivatives	26,269	46,274
Accrued salaries, wages and social costs	6,977	6,509
Other accrued items	10,826	20,152
Total	51,871	78,203

17 Other contingencies

Guarantees and mortgages


EUR thousand	2023	2022
Guarantees on behalf of group companies	1,373,689	1,334,672

Lease commitments


EUR thousand	2023	2022
Payments in the following year	127	1,089
Payments later	133	92
Total	260	1,181

Metso Oyj – Board of Directors’ report and financial statements 2023 129

18 Derivative instruments


EUR thousand	2023	2022
Net fair values

Contracts made with financial institutions
Foreign exchange forward contracts	9,487	39,139
Interest rate swaps	-9,229	-30,717

Contracts made with subsidiaries
Foreign exchange forward contracts	-10,962	-18,430

Total	-10,704	-10,008

Nominal values

Contracts made with financial institutions
Foreign exchange forward contracts	3,268,945	3,539,507
Interest rate swaps	605,000	400,000

Contracts made with subsidiaries
Foreign exchange forward contracts	2,748,165	3,626,054

Total	6,622,110	7,565,561

Metso Oyj – Board of Directors’ report and financial statements 2023 130

List of account books used in Parent company


Account book	Voucher class	Archiving
General journal and general ledger		in electronic format
Specifications of accounts receivable and payable		in electronic format
Bank vouchers	16,26,43	in electronic format
Sales invoices	RV,10,11,17	in electronic format
Purchase invoices	KR,20,27,69	in electronic format
Payroll accounting with vouchers	33	in electronic format
Journal entries	01,02,03,04,05,10,21,22,23,30,32,39,54,55,60,64,76,79	in electronic format
Journal entries	34,35	in electronic format
Notes vouchers		in electronic format

Metso Oyj – Board of Directors’ report and financial statements 2023 131

Signatures of the Board of Directors’ report and

financial statements 2023

Espoo, February 15, 2024

Kari StadighKlaus CawénBrian Beamish

Chair of the BoardVice Chair of the BoardMember of the Board

Terhi KoipijärviNiko PakalénIan W. Pearce

Member of the BoardMember of the BoardMember of the Board

Reima RytsöläEmanuela SperanzaArja Talma

Member of the BoardMember of the BoardMember of the Board

Pekka Vauramo

President and CEO

Auditor's note

Our auditor’s report has been issued today.

Espoo, February 15, 2024

Ernst & Young Oy

Authorized Public Accountant Firm

Mikko Järventausta

APA

Metso Oyj – Board of Directors’ report and financial statements 2023 132

Independent Auditor’s Report on Metso Oyj’s ESEF-Consolidated Financial Statements

(Translation of the Finnish original)

To the Board of Directors of Metso Oyj

We have performed a reasonable assurance engagement on the iXBRL tagging of the consolidated financial statements

included in the digital files 549300R0VN9C371W0E07-2023-12-31-fi.zip of Metso Oyj (former Metso Outotec Oyj, business

identity code: 0828105-4) for the financial year 1.1.-31.12.2023 to ensure that the financial statements are marked/tagged with

iXBRL in accordance with the requirements of Article 4 of EU Commission Delegated Regulation (EU) 2018/815 (ESEF RTS).

Responsibilities of the Board of Directors and Managing Director

The Board of Directors and Managing Director are responsible for the preparation of the Report of Board of Directors and

financial statements (ESEF financial statements) that comply with the ESESF RTS. This responsibility includes:

• Preparation of ESEF-financial statements in accordance with Article 3 of ESEF RTS

• Tagging the primary financial statements, notes to the financial statements and the entity identifier information

in the consolidated financial statements included within the ESEF-financial statements by using the iXBRL

mark ups in accordance with Article 4 of ESEF RTS

• Ensuring consistency between ESEF financial statements and audited financial statements.

The Board of Directors and Managing Director are also responsible for such internal control as they determine is necessary to

enable the preparation of ESEF financial statements in accordance the requirements of ESEF RTS.

Auditor’s Independence and Quality Management

We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are

relevant to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with

these requirements.

The firm applies International Standard on Quality Management (ISQM) 1, which requires the firm to design, implement and

operate a system of quality management including policies or procedures regarding compliance with ethical requirements,

professional standards and applicable legal and regulatory requirements

Auditor’s Responsibilities

In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated

financial statements complies in all material respects with the Article 4 of ESEF RTS. We have conducted a reasonable

assurance engagement in accordance with International Standard on Assurance Engagements ISAE 3000.

The engagement includes procedures to obtain evidence on:

• whether the tagging of the primary financial statements in the consolidated financial statements complies in all

material respects with Article 4 of the ESEF RTS

• whether the tagging of the notes to the financial statements and the entity identifier information in the

consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS

• whether the ESEF-financial statements are consistent with the audited financial statements.

The nature, timing and extent of the procedures selected depend on the auditor’s judgement including the assessment of risk

of material departures from requirements sets out in the ESEF RTS, whether due to fraud or error.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our statement.

Metso Oyj – Board of Directors’ report and financial statements 2023 133