PONSSE?S IFRS-COMPLIANT INTERIM REPORT FOR 1 JANUARY - 31 MARCH 2005

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PONSSE OYJ STOCK EXCHANGE RELEASE 20 APRIL 2005, AT 9:00 A.M.

PONSSE’S IFRS-COMPLIANT INTERIM REPORT FOR 1 JANUARY - 31 MARCH 2005

- Consolidated turnover: EUR 59.4 million (Q1/2004: EUR 44.0 million)
- Exports and foreign business operations accounted for 60.3% of turnover (58.9%)
- Operating profit: EUR 7.2 million (EUR 4.9 million)
- Operating profit accounted for 12.2% of turnover (11.0%)
- Profit after financial items: EUR 7.3 million (Q1/2004, EUR 5.0 million)
- Earnings per share: EUR 0.39 (EUR 0.23)
- Equity ratio: 38.8% (38.4%)
- Order books on 31 March 2005: EUR 56.1 million (31 March 2004: EUR 38.9 million)

Arto Tiitinen, President and CEO, states the following:

   -  Our business performance for the first quarter progressed in line with
      our targets in both home and international markets. We began to take measures to
      establish a subsidiary in Russia in order to ensure business growth and customer
      support. During the report period, Ponsse divested its Information Systems
      Production in Kajaani to its subsidiary Epec Oy, with the aim of making Epec Oy a
      strong control and information system supplier. The divestment will also open
      doors for a broader customer base outside the forest industry.

   -  Thanks to larger production volumes and successful exports, we were
      able to improve our operating profit.

   -  In co-operation with the municipality of Vieremä, we began to implement
      our investment programme for 2005 and 2006 aimed at the possibility to double the
      Vieremä plant’s production capacity to meet demand. Our order books hit historic
      highs at the end of March.

IAS/IFRS-COMPLIANT REPORTING

Since 1 January 2005, Ponsse Group has applied the International Financial
Reporting Standards (IFRS) in its financial reporting. Related, preliminary data
published in a stock exchange release of 22 March 2005, IFRS-compliant figures for
2004 are used as comparative data in this interim report. The accounting
principles in this interim report are the same as those applied in the March
release. The data in this interim report are based on unaudited figures.

TURNOVER

Consolidated turnover rose by 35.2 per cent over Q1/2004, to EUR 59.4 million (EUR
44.0 million), due to growth in deliveries, improvements in the used machines
business and a new subsidiary joining the Group.

International business operations accounted for 60.3 per cent (58.9 per cent) of
turnover. Demand was brisk for export forest machines.

Domestic sales accounted for 39.7 per cent (41.1. per cent) of turnover. During
the report period, Ponsse strengthened its market position in Finland.

PROFIT PERFORMANCE

Ponsse improved its year-on-year operating profit by 49 per cent, to EUR 7.2
million (IFRS: EUR 4.9 million in Q1/2004), accounting for 12.2 per cent of
turnover (11.0 per cent). In comparison with FAS-compliant (Finnish Accounting
Standards) operating profit for Q1/2004, the figure improved by 50.3 per cent.
Return on investment (ROI) stood at 42.8 per cent (33.5 per cent).

Net financial income came to EUR 30 thousand (EUR 0.2 million). Income and
expenses resulting from currency risk hedging were included in financial items.
The period saw no entries of extraordinary items.

Profit for the period totalled EUR 5.4 million (EUR 3.2 million). Earnings per
share were EUR 0.39 (EUR 0.23).

BALANCE SHEET AND FINANCIAL POSITION

On 31 March 2005, consolidated balance sheet total amounted to EUR 98.4 million
(EUR 81.9 million). Interest-bearing liabilities totalled EUR 26.5 million (EUR
26.5 million) and net liabilities EUR 16.8 million (EUR 16.3 million). Equity
ratio stood at 38.8 per cent (38.4 per cent). Cash in hand and at banks rose to
EUR 10.7 million (EUR 10.3 million).

Reported cash flow from business operations totalled EUR 4.6 million (EUR 7.3
million), while that from investing activities was EUR -1.1 million (EUR -0.5
million).

ORDER INTAKE AND ORDER BOOKS

The order intake for the period totalled EUR 77.0 million (EUR 41.9 million) while
period-end order books were valued at EUR 56.1 million (EUR 38.9 million), order
books including dealers’ minimum purchase commitments, based on previous practice.

SUBSIDIARIES

On 1 March 2005, Jouni Matikainen, B.Sc./Automation, took up his duties as Epec
Oy’s Managing Director. He was previously employed by ABB.

CAPITAL AND R&D EXPENDITURE

During the period, capital expenditure totalled EUR 1.1 million (EUR 0.6 million)
and R&D expenses EUR 1.1 million (EUR 0.7 million).

The period saw the launch of a new Elk forwarder and the third crane option
available for the smaller Beaver harvester in response to increasing thinning
operations. The period also saw the introduction of new equipment that improves
forest-machine operators’ safety and machine ergonomics.

PERSONNEL

The Group had an average staff of 675 (567) during the period and employed 683
(573) personnel at the period-end.

ANNUAL GENERAL MEETING AND ADMINISTRATION

The Annual General Meeting (AGM) held in Iisalmi on 15 March 2005 decided to
distribute a per-share dividend of EUR 0.20, totalling EUR 2.8 million, the payout
date being 30 March 2005.

It re-elected Nils Hagman, Ilkka Kylävainio, Seppo Remes, Mirja Ryynänen, Einari
Vidgrén and Juha Vidgrén to the Board of Directors and Ernst & Young Oy as the
Group’s auditor, with Heikki Laitinen, Authorised Public Accountant, acting as the
principal auditor.

At its organising meeting, the Board elected Einari Vidgrén as Chairman and Juha
Vidgrén Vice Chairman. The Board has not set up any special committees comprising
its members, considering the extent of the Group’s business and the size of the
Board.

SHARE PERFORMANCE

The trading volume of Ponsse Oyj shares for 1 January-31 March 2005 totalled
855,486, accounting for 6.1 per cent of the total number of shares. Share turnover
came to EUR 14.9 million, with the period’s lowest and highest price amounting to
EUR 14.50 and EUR 19.51, respectively. On 31 March 2005, the share closed at EUR
15.14 and the market capitalisation totalled EUR 212.0 million.

PROSPECTS

The company expects cut-to-length harvesting to continue to account for
an increasing share of total harvesting. It is estimated that thinning operations
will account for a growing share in Finland, which will increase demand for forest
machines.

During the current year, Ponsse will expand its international distribution
network. The company’s order books reached historic highs at the end of the
period. Consolidated turnover and operating profit for 2005 as a whole are
expected to exceed the previous year’s figures, due to favourable market prospects
and the company’s own measures.


PONSSE GROUP

CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)

                                             IFRS       FAS      IFRS       IFRS
                                           Q1/’05    Q1/’04    change     Q1/’04
TURNOVER                                   59,422    43,874        86     43,960
Increase (+)/decrease (-) in stocks of      3,058     1,826         0      1,826
finished goods and work in progress
Other operating income                        422       371         0        371
Raw materials and services                -41,822   -30,410        60    -30,350
Staff costs                                -8,434    -6,649         0     -6,649
Depreciation                                 -831      -655      -102       -757
Other operating expenses                   -4,588    -3,550         0     -3,550
OPERATING PROFIT                            7,227     4,807        44      4,851
Share of results of associated                                                  
companies                                      17         2         0          2
Financial income and                                                            
expenses                                       30       201       -14        187
PROFIT BEFORE APPROPRIATIONS AND TAXES      7,274     5,010        30      5,040
Income taxes                               -1,797    -1,787        -9     -1,796
Minority interest                             -33         0         0          0
PROFIT FOR THE PERIOD                       5,444     3,223        21      3,244

CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
                                                        FAS      IFRS       IFRS
                                                  Q1-Q4/’04    change  Q1-Q4/’04
TURNOVER                                            190,002       345    190,347
Increase (+)/decrease (-) in stocks of                  968         0        968
finished goods and work in progress
Other operating income                                1,453         0      1,453
Raw materials and services                         -126,136       136   -126,000
Staff costs                                         -26,917         0    -26,917
Depreciation                                         -2,676      -413     -3,089
Other operating expenses                            -17,062         0    -17,062
OPERATING PROFIT                                     19,632        68     19,700
Share of results of associated                                                  
companies                                               251         0        251
Financial income and                                                            
expenses                                               -730       -48       -778
PROFIT BEFORE APPROPRIATIONS AND TAXES               19,153        20     19,173
Income taxes                                         -5,624        -6     -5,630
Minority interest                                       -11         0        -11
PROFIT FOR THE PERIOD                                13,518        14     13,532

CONSOLIDATED BALANCE SHEET (EUR 1,000)

                                             IFRS       FAS      IFRS       IFRS
ASSETS                                   31 March  31 March    change   31 March
                                              ’05       ’04                  ’04
FIXED AND OTHER NON-CURRENT                                                     
ASSETS
Intangible assets                           5,618     1,617         0      1,617
Tangible assets                            18,587    15,347       862     16,209
Financial assets                               25        22         0         22
Holdings in associated                                                          
companies                                     845       579         0        579
Non-current receivables                       105       219         0        219
Deferred tax assets                           891       532       214        746
TOTAL FIXED AND OTHER NON-                                                      
CURRENT ASSETS                             26,071    18,316     1,076     19,392
                                                                                
CURRENT ASSETS                                                                  
Stocks                                     37,328    33,793       606     34,399
Trade receivables                          22,583    16,941         0     16,941
Other current receivables                   1,766       856         0        856
Cash in hand and at banks                  10,652    10,273         0     10,273
TOTAL CURRENT ASSETS                       72,329    61,863	  606	  62,469
                                                                                
TOTAL ASSETS                               98,400    80,179     1,682     81,861
                                                                                
CAPITAL AND RESERVES AND                                                        
LIABILITIES
CAPITAL AND RESERVES                                                            
Share capital                               7,000     3,500         0      3,500
Share premium account                           0     2,544         0      2,544
Other reserves                                 20        17         0         17
Retained earnings                          25,590    23,615      -957     22,658
Profit for the period                       5,444     3,223        21      3,244
Other capital and reserves                   -711      -552         0       -552
Capital and reserves owned by parent       37,343    32,347      -936     31,411
company shareholders
Minority interest                             451         0         0          0
                                                                                
TOTAL CAPITAL AND RESERVES                 37,794    32,347      -936     31,411
                                                                                
NON-CURRENT CREDITORS                                                           
Non-current interest-bearing                                                    
liabilities                                23,348    22,258     1,399     23,657
Deferred tax liabilities                      717       778       176        954
Other non-current creditors                   335       120       492        612
TOTAL NON-CURRENT CREDITORS                24,400    23,156     2,067     25,223
                                                                                
CURRENT CREDITORS                                                               
Current interest-bearing liabilities        3,170     2,583       256      2,839
Trade creditors                            15,302     9,251         0      9,251
Tax liabilities for the                                                         
period                                      1,108     1,383         0      1,383
Other current creditors                    12,216     9,141       295      9,436
Provisions                                  4,410     2,318         0      2,318
TOTAL CURRENT CREDITORS                    36,206    24,676       551     25,227
TOTAL LIABILITIES                          60,606    47,832     2,618     50,450
                                                                                
TOTAL CAPITAL AND RESERVES                                                      
AND LIABILITIES                            98,400    80,179     1,682     81,861

CONSOLIDATED BALANCE SHEET (EUR 1,000)

                                                        FAS      IFRS       IFRS
ASSETS                                              31 Dec.    change    31 Dec.
                                                        ’04                  ’04
FIXED AND OTHER NON-CURRENT                                                     
ASSETS
Intangible assets                                     6,250         0      6,250
Tangible assets                                      17,119       577     17,696
Financial assets                                         25         0         25
Holdings in associated                                                          
companies                                               829         0        829
Non-current receivables                                 107         0        107
Deferred tax assets                                     455       153        608
TOTAL FIXED AND OTHER NON-                                                      
CURRENT ASSETS                                       24,785       730     25,515
                                                                                
CURRENT ASSETS                                                                  
Stocks                                               35,722       387     36,109
Trade receivables                                    19,228         0     19,228
Other current receivables                               649         0        649
Cash in hand and at banks                            15,706         0     15,706
TOTAL CURRENT ASSETS                                 71,305       387     71,692
                                                                                
TOTAL ASSETS                                         96,090     1,117     97,207
                                                                                
CAPITAL AND RESERVES AND                                                        
LIABILITIES
CAPITAL AND RESERVES                                                            
Share capital                                         7,000         0      7,000
Other reserves                                           19         0         19
Retained earnings                                    15,851      -958     14,893
Profit for the period                                13,518        14     13,532
Other capital and reserves                             -838         0       -838
Capital and reserves owned by parent                 35,550      -944     34,606
company shareholders
Minority interest                                       419         0        419
                                                                                
TOTAL CAPITAL AND RESERVES                           35,969      -944     35,025
                                                                                
NON-CURRENT CREDITORS                                                           
Non-current interest-bearing                                                    
liabilities                                          22,885     1,052     23,937
Deferred tax liabilities                                706       112        818
Other non-current creditors                             121       215        336
TOTAL NON-CURRENT CREDITORS                          23,712     1,379     25,091
                                                                                
CURRENT CREDITORS                                                               
Current interest-bearing liabilities                  7,986       367      8,353
Trade creditors                                      13,356         0     13,356
Tax liabilities for the                                                         
period                                                2,343         0      2,343
Other current creditors                               8,571       315      8,886
Provisions                                            4,153         0      4,153
TOTAL CURRENT CREDITORS                              36,409       682     37,091
TOTAL LIABILITIES                                    60,121     2,061     62,182
                                                                                
TOTAL CAPITAL AND RESERVES                                                      
AND LIABILITIES                                      96,090     1,117     97,207


CONSOLIDATED CASH FLOW STATEMENT (EUR 1,000)
                                                       IFRS      IFRS       IFRS
                                                     Q1/’05    Q1/’04  Q1-Q4/’04
BUSINESS OPERATIONS:                                                            
Profit for the period                                 5,444     3,245     13,532
Adjustments:                                                                    
Financial income and                                                            
expenses                                                -30      -188        778
Share of results of associated                                                  
companies                                               -17        -2       -251
Depreciation                                            831       758      3,089
Deferred taxes                                         -301      -324       -227
Income taxes                                          2,098     2,119      5,857
Other adjustments                                        59        18        282
Cash flow before change in working                                              
capital                                               8,084     5,626     23,060
                                                                                
Change in working capital:                                                      
 Increase (-)/decrease (+) in current                                           
 non-interest bearing                                                           
receivables                                          -4,472        26     -2,145
 Increase (-) / decrease (+) in stocks               -1,219    -2,067     -3,778
 Increase (+) / decrease (-) in current                                         
 non-interest-bearing                                                           
creditors                                             5,414     4,329      8,658
 Change in provisions for liabilities                   257        34      1,869
and charges
Interest received                                        62       414        227
Interest paid                                          -402      -334       -661
Other financial items                                   182        16       -312
Income taxes paid                                    -3,299      -770     -4,784
NET CASH FLOW FROM BUSINESS                                                     
OPERATIONS (A)                                        4,607     7,274     22,134
                                                                                
INVESTMENTS                                                                     
Investment in tangible and intangible                                           
assets                                               -1,090      -578     -9,029
Investment in other assets                                0        59          0
CASH OUTFLOW FROM INVESTING                                                     
ACTIVITIES (B)                                       -1,090      -519     -9,029
                                                                                
FINANCING                                                                       
Withdrawal of current loans                                                     
Repayment of current loans                           -5,004    -1,981      3,673
Increase (-) / decrease in current                        0       -12         77
interest-bearing receivables
Withdrawal / repayment of non-current                  -590     9,077      9,444
loans
Payment of finance lease liabilities                   -179      -130       -269
Increase (-) / decrease (+) in non-                                             
current receivables                                       2        -1        111
Paid dividends                                       -2,800   -14,000    -21,000
NET CASH OUTFLOW FROM                                                           
FINANCING (C)                                        -8,571    -7,047     -7,964
                                                                                
Increase (-) / decrease (+)                                                     
in liquid assets (A+B+C)                             -5,054      -292      5,141
                                                                                
Liquid assets 1 Jan.                                 15,706    10,565     10,565
Liquid assets 31 March/31                                                       
December                                             10,652    10,273     15,706


RECONCILIATION OF CAPITAL AND RESERVES (EUR 1,000)
                                                   31 March  31 March    31 Dec.
                                                        ’05       ’04        ’04
Capital and reserves under                                                      
FAS                                                  38,385    32,347     35,550
IAS 17 Leases and IAS 18 Revenue                       -459      -738       -530
IAS 16 Property, Plant and Equipment                   -841      -841       -841
IAS 2 Inventories                                       400       606        387
IAS 12 Income Taxes                                      19        38         40
IFRS 3 Business Combinations: Goodwill                 -161         0          0
Capital and reserves under IFRS                      37,343    31,412     34,606

RECONCILIATION OF PROFIT FOR THE PERIOD (EUR 1,000)
                                                   31 March  31 March    31 Dec.
                                                        ’05       ’04        ’04
Profit for the period under FAS                       5,542     3,224     13,518
IAS 17 Leases and IAS 18 Revenue                         72        67        276
IAS 2 Inventories                                        13       -37       -256
IAS 12 Income Taxes                                     -22        -9         -6
IFRS 3 Business Combinations: Goodwill                 -161         0          0
Profit for the period under IFRS                      5,444     3,245     13,532


SEGMENT INFORMATION (EUR 1,000)
                                                     Q1/’05    Q1/’04  Q1-Q4/’04
TURNOVER                                                                        
Nordic countries                                     46,419    33,212    132,039
Rest of Europe                                       15,206    14,014     54,838
North and South America                               5,566     5,056     28,263
Inter-segment turnover                               -7,876    -8,371    -25,289
Unallocated                                             107        49        496
GROUP TOTAL                                          59,422    43,960    190,347

                                                     Q1/’05    Q1/’04  Q1-Q4/’04
OPERATING PROFIT                                                                
Nordic countries                                      5,819     4,394     14,642
Rest of Europe                                        1,912     1,436      7,049
North and South America                                 402       -82      1,864
Unallocated                                            -906      -897     -3,855
GROUP TOTAL                                           7,227     4,851     19,700


PLEDGES GIVEN, CONTINGENT AND OTHER LIABILITIES (EUR 1,000)
                                                   31 March  31 March    31 Dec.
                                                        ’05       ’04        ’04
1. FOR OWN DEBT                                                                 
Debts for which mortgages have been pledged as                                  
collateral
Loans from financial                                                            
institutions                                              0    10,763      1,261
Mortgages given on land and buildings                 1,126     2,522      1,126
Chattel mortgages given                                 820     1,947        820
TOTAL MORTGAGES GIVEN AS COLLATERAL                   1,946     4,469      1,946
                                                                                
2. LEASING COMMITMENTS (EUR                                                     
1,000)                                                  397       484        445
                                                                                
3. CONTINGENT LIABILITIES ON BEHALF OF GROUP COMPANIES (EUR 1,000)
Guarantees given on behalf of
Group companies                                         800     1,052        763

4. LIABILITIES BASED ON DERIVATIVE CONTRACTS (EUR 1,000)
4.1 Nominal values                                                              
Currency derivatives                                                            
Options                                                   0     3,882          0
Forward contracts                                    14,181     9,037     10,616
4.2 Market values                                                               
Currency derivatives                                                            
Options                                                   0       -14          0
Forward contracts                                       -82       184        136

5. OTHER CONTINGENT LIABILITIES (EUR 1,000)
Guarantees given on others’                             817       731        831
behalf
Repurchase commitments                                7,995     7,621      8,677
Other commitments                                         0         0          0
Total                                                 8,812     8,352      9,508


KEY FIGURES AND RATIOS                             31 March  31 March    31 Dec.
                                                        ’05       ’04        ’04
R&D expenditure, MEUR                                   1.1       0.7        3.7
Capital expenditure, MEUR                               1.1       0.6        9.0
% of turnover                                          1.83      1.31       4.74
Average personnel                                       675       567        607
Order books, MEUR                                      56.1      38.9       44.4
Equity ratio, %                                        38.8      38.4       36.1
Earnings per share, EUR                                0.39      0.23       0.97
Equity per share, EUR                                  2.67      2.24       2.47

Income taxes based on profit for the period are included in the Profit and Loss
Account and earnings per share.

ORDER INTAKE (MEUR)                                  Q1/’05    Q1/’04  Q1-Q4/’04
Ponsse Group                                           77.0      41.9      201.7


Data in this interim report are based on unaudited figures.

Since the above tables are based on rounded figures, they may differ from those
given in the official financial statements.


Vieremä, 20 April 2005


Arto Tiitinen
President and CEO

FOR MORE INFORMATION, PLEASE CONTACT:

Arto Tiitinen, President and CEO, tel. +358 (0)20 768 4621 or +358 (0)400 566 875
Mikko Paananen, CFO, tel. +358 (0)20 768 8648 or +358 (0)400 817 036

DISTRIBUTION

Helsinki Stock Exchange
Major media
www.ponsse.com

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