In May 1998 Castrén & Snellman wrote in Mondad Business Briefing that Metra Corporation, a listed Finnish multi-sector company and the parent company of the Metra Group, was to demerge into three separate groups: Wärtsilä NSD and Metra Finance was to form a diesel and gas engine group; Sanitec was to form a bathroom products group; and Imatra Steel together with Metra Real Estate was to form a new investment company.
Owing to the deteriorating international economic situation Metra will, however, postpone the decision on its demerger. In addition Wärtsilä NSD, the power plant manufacturer, has had severe problems with fluctuating cash flows, coupled with the need for large amounts of working capital, which has continued to suppress the Group's financial situation. Between January and August the operating result of Wärtsilä NSD was approximately -62 million US$ attributable to the difficult situation in South East Asia, cost overruns on certain power plant projects and weaker results reported from associated companies.
Nevertheless Wärtsilä NSD retained its market shares in the global marine and power plant markets.
To adjust resources to the prevailing market situation a restructuring of Wärtsilä NSD has been decided upon. The plans include restructuring of Wärtsilä NSD's own companies and its joint ventures to match the prevailing market demand and to achieve substantial reductions in operating costs. These measures are expected to reduce personnel by about 900 the organisation.
Despite the postponement of the demerger the Metra Group will further increase the independence of its divisions. It is thus still regarded that Metra's demerger would benefit the business operations of the companies and the shareholders.
In 1997 The Metra Group had net sales totalling 2.8 billion US$ and around 13 000 employees. Wärtsilä NSD, which is the largest division of the Metra group, stood in 1997 for net sales totalling 2.1 billion US$ and had 7 300 employees. Wärtsilä NSD is the largest of the three associate companies.
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