INTERIM REPORT 1.1.-30.6.2004

INTERIM REPORT 1.1.-30.6.2004

RAUTE OYJ 1 (9) RAUTE OYJ S INTERIM REPORT FOR JANUARY 1 JUNE 30, 2004 Net sales MEUR 41.9 (MEUR 33.0) and operating profit MEUR 4.1 (MEUR -7.4) increased. Net sales of current business MEUR 34.5 (MEUR 19.9) increased, and operating profit MEUR 1.3 (MEUR -6.3) improved. Net sales for 2004 will decrease due to the sale of Raute Precision. Operating profit will be profitable for the current business. KEY FIGURES MEUR Net Sales Operating Profit Return On Investment, % Equity Ratio, % Balance Sheet Total CURRENT BUSINESS Net Sales Operating Profit Order Intake Order Book Capital Expenditure Personnel Q2/ 2004 41,9 4,1 29,1 46,5 54,4 34,5 1,3 28,4 22 0,7 575 Q2/ 2003 33,0-7,4-42,7 40,5 58,6 19,9-6,3 47,6 48 0,5 599 2003 97,6-3,3-5,4 41,3 63,5 66,7-2,7 62,8 22 1,5 560 TAPANI KIISKI, PRESIDENT AND CEO: PROFITABILITY IMPROVEMENT ON GOOD TRACK "Only change is constant. In case of Raute, this is an apt description for some recent financial quarters. In the beginning of 2003, we hardly received any orders at all; mid 2003, we received three large mill-size orders in a very short time. All in all, we received very few small or mid-size orders in 2003. The situation turned opposite in the beginning of this year: mill-size projects are progressing slowly, but the demand for small investments and modernization projects is very strong. In these turbulent market conditions we have improved our profitability and increased our market share. This can be ascribed to two factors. Our continuous and strong commitment to the development of our products and technology has resulted in competitive products. We have reacted to the changing market conditions by taking various development initiatives already since late 2002. Our business setup is now more cost efficient and our profitability more tolerant to market changes than earlier. This development work continues. The improved profitability is an indication of a business structure, which will be profitable over the economic cycle. We will maintain and improve our competitive position in the future as well. That will be based on the most extensive and competitive product and service offering in the industry, our extensive network of sales representatives and agents, our efficient procurement and project organizations and our good reputation gained through a large number of previous deliveries. We are ready for profitable growth, when investments in the wood-based panel industry return to their normal level. In order to support this growth and level out the characteristic cyclic nature of our business and to serve our customers better than ever we are placing a systematic emphasis on the development of maintenance and service offering. There are already signs of positive results of this effort, and we will see more of that in the future."

RAUTE OYJ 2 (9) MARKET SITUATION Customer Industry The capacity utilization rate of the wood-based panel industry remained high during the reporting period. The demand for wood panels was at a good level. In particular, the market prices of softwood plywood in North America were high. Prices in other market areas and of other wood-based panel products have also settled at a higher level year on year. The improved situation of the veneer-based panel industry has triggered small-scale investments which aim mainly at enhancing existing production capacity. Larger investments aiming at adding production capacity are in process, but they will not be implemented until the general economic situation has stabilized. The Russian plywood industry in particular is developing rapidly both in terms of production amounts and quality of end-products. According to published statistics, plywood production has grown very strongly in China. However, the industry over there is mainly based on manual work and a large number of small production units. It has not required investments that would have generated demand for western technology. Demand for Raute s Products The demand for Raute s products during the second quarter continued as during the first quarter: overall demand was active, but it focused mainly on smallscale projects. In Russia, good demand continued. In western Europe some projects that had been under progress for years were also launched. Domestic demand remained low, but signs can be seen of investment plans coming to life. In North America, the emphasis on small-scale investments was particularly strong: there was an active demand for modernization projects and smallscale investments in equipment, but no large projects are in hand. In Southeast Asia, especially Indonesia and Malaysia, a low investment demand continued, although weak signs of a recovery have been seen. Demand for western wood-based panel technology has been almost non-existent in China. Order Intake and Order Book of Current Business The new project orders of MEUR 12.8 received during the second quarter consisted of production lines and modernization projects for the plywood industry. The largest new orders comprised peeling, pressing and overlaying lines to Russia, a lay up line to Spain and a veneer handling line to the United States. The order intake of the first quarter of MEUR 28.4 (MEUR 47.6) was significantly smaller than during the equivalent period last year, when several longterm mill-scale orders were received. The order intake for production lines and modernization projects was more than triple year on year. The Group's order book of MEUR 21.9 has remained at the level of the first quarter. The evident drop in the order book compared to the previous year (MEUR 48.4) is ascribed to the above-mentioned mill-scale orders from that year. As far as production line and modernization projects are concerned, the order book almost doubled in comparison with the equivalent period last year. Competitive Position Investments in the wood-based panel industry are focused mainly on projects aimed at improving existing production capacity. The improvements are targeted, among other things, to reductions in production costs by improving the recovery, lowering the consumption of additives, increasing the productivity of the workforce, and improving the quality of the end-products. Raute's competitive position as a supplier of woodbased panel technology has strengthened due to continuous product and technology development. A breakthrough for Raute has been our receipt of some modernization project orders for equipment delivered by our competitors on their home markets.

RAUTE OYJ 3 (9) REPORTING PERIOD EVENTS DURING THE PERIOD During the second quarter, the first two plywood lay up lines with foam-gluing technology were sold. With this new technology customers may save more than 10 percent in glue costs. The new technology also reduces the amount of harmful emissions both in plywood production and panel end-use. The plywood industry's first automated, machine vision based grading line for sanded panels was also sold. The first new technology block chargers delivered to Finland in the beginning of the year were taken to productional use. The savings achieved in wood raw material consumption and the improvements in production capacity met expectations. In April, some support operations were outsourced at Raute s main operation in Nastola, Finland. In connection with this about 20 people were transferred into the employment of the service providers. In May, the implementation of a new ERP system was completed at Raute s Nastola and Jyväskylä operations. Product base management, project management, maintenance and spare part operations, and supplier management are improved by this new system At the end of June, the Board of Directors of Raute Oyj expanded on the regulations of the company's administration. The company follows the recommendations of Dec. 2, 2003 by the Central Chamber of Commerce and the Confederation of Finnish Industry and Employers (TT) on the governance of a publicly listed company. NET SALES AND PROFITS Group Recorded net sales for Raute Group, at MEUR 41.9 (MEUR 33.0), increased year on year. The Group s operating profit came to MEUR 4.1 (MEUR -7.4), and profit before extraordinary items totaled MEUR 4.3 (MEUR -7.3). The MEUR 2.8 in capital gains on the sale of the shares in Raute Precision Oy on February 24, 2004, included in other operating income, contributed to higher profits. The accounts of Raute Precision were consolidated in the Group's income statement for the period of January 1 to February 24, 2004. The value of the Group's new orders came to MEUR 28.4 (MEUR 59.9) and the order book amounted to MEUR 21.9 (MEUR 58.7). Raute (proforma) During the period, Raute sold its Raute Precision business. As of February 24, the company is focusing on operations involving wood panel technology business, which was previously reported as the Raute Wood business group. In the Raute (proforma) figures, comparable with the Group's current business, net sales outside the Group, results for the Raute Precision business group and the capital gains on the sale of that business have been eliminated. Raute's (proforma) net sales during the reporting period of MEUR 34.5 (MEUR 19.9) improved by 72 percent in comparison with the exceptionally slow beginning of the previous year. The final deliveries of mill projects sold in the previous year to Australia and South America also contributed to the increased sales. The company's operating profit MEUR 1.3 (MEUR 6.3) improved compared to the equivalent period in the previous year. In addition to increased net sales, operating profit was improved by costsavings resulting from implemented reorganization and development measures. Raute Precision Raute Group divested its Raute Precision business on February 24, 2004. The effect of the Raute Precision business group and its shares sold on the consolidated net sales during the reporting period amounted to MEUR 7.4 (MEUR 13.1), and on the operation profit MEUR 2.8 (MEUR 1.1). FINANCIAL POSITION The Group's financial position remained stable, with the Group's cash flow amounting to MEUR 1.8 (MEUR 1.1). The Group s liquid assets totaled MEUR 17.1 (MEUR 14.0), with gearing at 44 percent (-19 percent) and equity ratio reaching 47 percent (41 percent).

RAUTE OYJ 4 (9) SHARES Share trading volume for January-June totaled 318,685 shares, valued at EUR 2,603 thousand. The growth in the total number of shareholders from 772 at the beginning of the year to 857 is mainly contributed by the increased number of private shareholders. The highest and lowest bids during the reporting period were EUR 8.60 and EUR 7.10, respectively. The share closed at EUR 8.10 on June 30, 2004. Market capitalization on June 30, 2004 totaled MEUR 30.9, with the K shares valued at the value of the A shares. On April 14, 2004, a total of 4,900 K shares were converted into A shares. After that there is a total of 991,161 K shares and 2,823,447 A shares, totaling to 3,814,608 shares in all. DIVIDEND FOR 2003 Of the EUR 1.00 per-share dividend, the second installment of EUR 0.50 will be paid on December 16, 2004. The corresponding matching date is December 9, 2004. PERSONNEL The number of personnel amounted to 758 at the beginning of the year, but stood at 551 at the end of March and 575 at the end of June. Outside of Finland, there were stationed 121 employees (12 percent). The number of personnel has decreased due to the sales of the Raute Precision business operations, the outsourcing of some operations and some rationalization measures. The increase in the number of personnel at the end of the second quarter was due to trainees and a number of diverse additional employees in accordance with the capacity situation of the North American operations. On June 1, 2004, the company's Board of Directors confirmed the composition of the Group Executive Management Team as follows: - Mr. Tapani Kiiski, Chairman, President and CEO - Ms. Arja Hakala, CFO, Deputy to President and CEO - Mr. Petri Strengell, Vice President, Operations - Mr. Bruce Alexander, President of North American operations CAPITAL EXPENDITURE The Group's capital expenditure during the reporting period amounted to MEUR 0.7 (MEUR 0.5). The biggest single investment was the completion of the new ERP system. Other investments focused on technology development and information technology. PROSPECTS It is estimated that the market development of woodbased panel products will continue to be stable in the near future, and no significant changes are to be expected in the investment demand of the wood-based panel industry. The focus of investment demand will remain on production line and modernization projects. Thanks to new technology, Raute's competitiveness in these projects is strong. Mill-size investment plans are still in progress in various market areas. The uncertainty of the implementation and timing of these projects continues, but at least one of these mill projects is estimated to be initiated by the end of the current year. Raute's competitiveness in mill-size projects is strong. New products launched on the markets also improve Raute's competitiveness. The Group's cost-efficiency is further maintained through implemented reorganizations of operations and continuous operations development work. As for the comparable wood-based panel technology business (proforma), net sales for 2004 are expected to increase year on year and operating results be profitable. Raute Group's net sales for 2004 will decrease year on year due to the sale of the Raute Precision business. However, the Group's overall results will be profitable.

RAUTE OYJ 5(9) (The figures has not been audited) GROUP 1.1.-30.6.2004 1.1.-30.6.2003 1.1.-31.12.2003 INCOME STATEMENT 1 000 EUR 1 000 EUR 1 000 EUR NET SALES 41 920 33 044 97 608 Other operating income 3 388 562 983 Operating expenses -39 877-39 313-98 570 Depreciation and write downs -1 338-1 738-3 361 OPERATING PROFIT/LOSS 4 093-7 445-3 340 % of net sales 10 % -23 % -3 % Financial items 232 101 1 065 PROFIT/LOSS BEFORE EXTRAORDINARY ITEM 4 325-7 344-2 274 % of net sales 10 % -22 % -2 % Extraordinary items 0 0 0 PROFIT/LOSS AFTER EXTRAORDINARY ITEM 4 325-7 344-2 274 % of net sales 10 % -22 % -2 % Income taxes *) -1 406 1 260-429 Minority interests -41-29 0 PROFIT/LOSS FOR THE PRERIOD 2 878-6 113-2 703 % of net sales 7 % -18 % -3 % *) Income taxes include the tax liability estimated for the report period. NET SALES 1.1.-30.6.2004 1.1.-30.6.2003 1.1.-31.12.2003 BY BUSINESS SECTOR 1 000 EUR 1 000 EUR 1 000 EUR Raute (Proforma) 34 522 82 19 912 60 66 658 68 Raute Precision 7 398 18 13 132 40 30 950 32 Total 41 920 100 33 044 100 97 608 100 OPERATING PROFIT/LOSS 1.1.-30.6.2004 1.1.-30.6.2003 1.1.-31.12.2003 BY BUSINESS SECTOR 1 000 EUR 1 000 EUR 1 000 EUR Raute (Proforma) 1 300 32-6 296 85-2 683 80 Raute Precision *) 2 793 68-1 149 15-657 20 Total 4 093 100-7 445 100-3 340 100 *) includes the capital gains of EUR 2,8 million on the sale of Raute Precision Oy NET SALES 1.1.-30.6.2004 1.1.-30.6.2003 1.1.-31.12.2003 BY MARKET AREA 1 000 EUR 1 000 EUR 1 000 EUR Finland 6 786 16 5 928 18 13 190 14 Russia 3 823 8 4 032 12 6 497 7 Other European Countries 4 186 10 7 829 24 16 745 17 North America 5 649 13 6 587 20 20 587 21 South America 9 915 24 4 835 15 19 697 20 Asia 5 563 13 3 692 11 8 917 9 Oceania 5 537 13 0 0 10 076 10 Rest of the world 461 1 141 0 1 899 2 Total 41 920 100 33 044 100 97 608 100

RAUTE OYJ 6(9) GROUP 30.6.2004 30.6.2003 31.12.2003 BALANCE SHEET 1 000 EUR 1 000 EUR 1 000 EUR ASSETS Fixed assets - intangible 1 820 1 849 1 548 - tangible 14 860 18 362 17 883 - investments 2 093 2 685 2 638 Current Assets - inventories 4 201 5 556 5 728 - receivables 14 299 16 209 22 200 - current assets in marketable securities 14 972 10 007 11 500 - cash in hand and banks 2 131 3 977 2 012 TOTAL 54 377 58 645 63 510 LIABILITIES Shareholders' equity 22 335 19 218 23 313 Minotity interest 346 Obligatory provisions 1 688 1 829 1 985 Liabilities - long-term liabilities 1 365 780 1 424 - advances received 5 594 11 165 7 060 - short-term liabilities *) 23 048 25 653 29 728 TOTAL 54 377 58 645 63 510 *) The divident of EUR 1.9 million to be paid in December, 2004 is included in the short-term liabilities. Liquid assets 17 103 13 984 13 513 Interest bearing liabilities 7 147 10 314 9 275

RAUTE OYJ 7(9) GROUP 1.1.-30.6.2004 1.1.-30.6.2003 1.1.-31.12.2003 CASH FLOW STATEMENT 1 000 EUR 1 000 EUR 1 000 EUR OPERATING CASH FLOW Payments from sales 38 548 40 321 93 999 Payments from other operating income 223 58 124 Cash paid to suppliers and employees -37 246-39 682-94 270 Interest and other financial expenses paid -221-183 -385 Interest and other income received 151 197 1 288 Dividend income received 298 169 169 Income taxes paid 2 240 779 Cash flow before extraordinary items (A) 1 755 1 120 1 704 INVESTMENT CASH FLOW Capital expenditure in tangible and intangible assets -757-381 -1 398 Acquisition of subsidiary shares 0-104 -104 Disposal of subsidiaries 7 385 0 0 Proceeds from sale of tangible and intangible assets 156 81 125 Proceeds from sale of investments 384 481 938 Investment cash flow (B) 7 168 77-439 FINANCIAL CASH FLOW Change in short-term loans 477 485 216 Repayment of long-term loans -2 905-277 -501 Change in long-term and short term receivables -998 13-33 Dividents paid -1 907-1 907-1 907 FINANCIAL CASH FLOW (C) -5 333-1 686-2 225 CHANGE IN FINANCIAL RESOURCES (A+B+C) 3 590-489 -960 increase (+)/decrease (-) CASH AND MARKETABLE SECURITIES at beginning of period 13 513 14 473 14 473 at end of period 17 103 13 984 13 513

RAUTE OYJ 8(9) KEY RATIOS 30.6.2004 30.6.2003 31.12.2003 Return on investment %, ROI 29,1% -42,7% -5,4% Return on equity %, ROE 25,4% -52,2% -10,7% Quick ratio 1,4 1,2 1,2 Gearing % -43,9-19,1-18,2 Equity ratio % 46,5% 40,5% 41,3% Order book, EUR million - Group 22 59 39 - Raute (Proforma) 22 48 22 Overseas sales, % of net sales 83,8% 82,1% 86,5% Gross capital expenditure, EUR Million - Group 0,7 0,5 1,5 - Raute (Proforma) 0,7 0,4 1,2 Gross capital expenditure, % of net sales 1,6 % 1,5 % 1,5 % Personnel in books on average - Group 623 788 783 - Raute (Proforma) 556 588 582 effective on average - Group 616 708 707 - Raute (Proforma) 549 513 509 Earnings per share, EUR 0,75-1,60-0,71 Equity per share, EUR 5,86 5,04 6,11 Issue-adjusted number of shares, 1 000's 3 815 3 815 3 815 Issue adjusted number of shares, at the end of the period, 1,000's 3 815 3 815 3 815

RAUTE OYJ 9(9) THE DEVELOPMENT OF THE GROUP'S 1.4.-30.6. 1.1--31.3. 1.10.-31.12. QUARTERLY RESULTS 2004 2004 2003 Net sales - Raute (Proforma) 15 799 18 723 30 823 - Raute Precision 0 7 398 11 647 TOTAL 15 799 26 121 42 470 Operating profit/loss - Raute (Proforma) 787 513 3 537 - Raute Precision *) 0 2 793 690 TOTAL 787 3 306 4 227 % of net sales 5,0 % 12,7 % 10,0 % Financial items 159 73 904 Profit/Loss before extraordinary items 945 3 380 5 131 % of net sales 6,0 % 12,9 % 12,1 % *) includes the capital gains of EUR 2.8 million on the sale of Raute Precision Oy. OFF BALANCE SHEET 30.6.2004 30.6.2003 31.12.2003 COMMITMENTS 1 000 EUR 1 000 EUR 1 000 EUR Security of own debts Pledged 123 123 123 Mortgages 8 684 10 926 10 926 Security for Group's liabilities Guarantees 2 787 3 357 4 675 Security for others' lliabilities Guarantees 1 139 Other own liabilities Leasing and rent liabilities - for the current accounting period 93 354 523 - for the following accounting periods 103 1 513 1 108 Foreign exchange derivatives forward contracts *) - nominal value 8 099 6 685 4 880 - market value -54 27 53 options, bought - nominal value 4 114 - market value 6 *) Project delivieries in foreign currencies are protected by foward foreign exchange contracts. Other own liabilities 448 No loans or pledges given or other commitments made on behalf of the company's management, shareholders or associated companies RAUTE OYJ Board of Directors DISTRIBUTION HEX Helsinki Exchanges Further details Mr. Tapani Kiiski, President and CEO, tel. + 358 3 829 3560, mobile + 358 400 814 148 Mrs. Arja Hakala, CFO, tel. + 358 3 829 3293