PONSSE?S INTERIM REPORT FOR 1 JANUARY TO

PONSSE OYJ STOCK EXCHANGE BULLETIN 23 October 2003 at 2pm      1(6)

PONSSE’S INTERIM REPORT FOR 1 JANUARY TO 30 SEPTEMBER 2003

Ponsse Group turnover rose by 34.2 per cent and the operating profit
by 40.1 per cent compared to the previous year.

Ponsse Group’s turnover for the first nine months of 2003 was EUR
115.5 million (1-9/2002 EUR 86.1m). Exports and foreign business
operations accounted for 56.2 per cent (56.5%) of turnover. The
operating profit was EUR 7.6 million (EUR 5.4). At 30 September
2003, the Group’s back orders totalled EUR 28.2 million (EUR 22.6m
at 30 September 2002).

TURNOVER AND RESULT

Group turnover rose by 34.2 per cent to EUR 115.5 million. Sales
during the period under review were brisker, especially in Q1 and
Q3, compared to the previous year. Summer holidays on the production
side were scheduled for Q3. Because of this, production and delivery
volumes remained, as expected, smaller than during Q2.

During the period under review, the operating profit was EUR 7.6
million, up by EUR 2.2 million or 40.1 per cent compared to the
figure a year earlier. The operating profit percentage for the
period under review was 6.6 per cent (6.3%).

The profit after financial items rose by 51.0 per cent on the year
to EUR 8.6 million (EUR 5.7m). The income from hedging currency
positions has been booked under financial income, which was EUR 0.9
million net (EUR 0.2m). There were no extraordinary items during the
first nine months of the period under review, nor during the
corresponding period a year earlier.

The profit for the period under review was EUR 5.5 million (EUR
3.5m), up by 54.4 per cent on the figure a year earlier.

There was encouraging demand for Ponsse machines during the first
nine months of the year. This and uninterrupted production led to a
marked increase in the number of new machines made compared to the
corresponding period a year earlier.

Even though hedging through derivatives alleviated the impact of
exchange rate changes, a weakening of the US dollar against the euro
eroded earnings.

MARKET SITUATION

Compared to a year earlier, there was a marked increase in sales
volumes at home.  During the summer, Ponsse became the leading
harvester and forwarder supplier. Exports picked up towards the end
of the period under review.

The global economy remained marked by uncertainty at the end of the
period under review, with conflicting estimates as to when the shift

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to a faster growth track will occur. During the period under review,
Ponsse’s business made very encouraging progress given the overall
economic climate.

In June 2003, Kone Corporation announced its intention to divest
some of its businesses (Valtra tractors, Valmet forest tractors and
Sisu Diesel engines). In the summer and early autumn, Ponsse was
part of a Finnish consortium that sought to buy the Valtra and Sisu
Diesel businesses. The project fell through when the vendor
announced that it had chosen to sell to Agco Corporation of the
United States.

NEW ORDERS AND BACK ORDERS

We secured new orders worth EUR 111.9 million (EUR 85.6m). Back
orders at 30 September 2003 were EUR 28.2 million (EUR 22.6m). In
keeping with previous practice, distributors’ minimum purchase
commitments are included in back orders.

SUBSIDIARIES

During the period under review, Ponsse Oyj, the parent company,
acquired full ownership of the Group’s French subsidiary, Ponssé
S.A., in which it previous had a 99.2 per cent stake.

No significant changes otherwise took place in the operations of
Ponsse’s marketing and after sales subsidiaries abroad.

BALANCE SHEET

The consolidated balance sheet total at 30 September 2003 was EUR
81.1 million (EUR 69.8m). Interest-bearing debts totalled EUR 25.7
million (EUR 21.7m). Cash assets totalled EUR 12.5 million (EUR
5.5m). The equity ratio was 48.8 per cent (50.5%).

CAPITAL EXPENDITURE AND R&D

Investments during the first six months of 2003 totalled EUR 2.4
million (EUR 1.4m). These focused on an extension to the Vieremä
factory, other production machinery and information technology.

During the period under review, R&D costs amounted to EUR 2.6
million (EUR 2.4m).

PERSONNEL

The Group employed an average of 553 (517) persons during the period
under review. At 30 September 2003, the Group employed 551 (527)
persons.

ANNUAL GENERAL MEETING

The Annual General Meeting held on 20 March 2003 decided to pay a
dividend of EUR 0.65 per share. Dividends totalling EUR 4.6 million
were paid on 1 April 2003.
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The Annual General Meeting also approved the proposal by the Board
of Directors that a bonus be paid to Ponsse Oyj’s personnel. The
amount of bonuses paid totalled EUR 118,002.

Einari Vidgrén, Ilkka Kylävainio, Samuli Perttala, Orvo Siimestö,
Juha Vidgrén and Mika Vidgrén were elected as members of the Board
of Directors. In the formation meeting held after the Annual General
Meeting, Einari Vidgrén
was elected Chairman of the Board of Directors and Juha Vidgrén
Deputy Chairman.

Authorised public accountants Ernst&Young Oy were appointed as
auditors.

SHARES

A total of 685,482 Ponsse Oyj shares, 9.8 per cent of the total
number, were traded between 1 January and 30 September 2003 for a
total of EUR 7.6 million. The lowest and highest trading prices paid
during the period under review were EUR 9.50 and EUR 13.60 per share
respectively. The closing price at 30 September 2003 was EUR 13.60
and the market capitalisation was EUR 95.2 million.

INTRODUCTION OF IAS/IFRS
Ponsse has made a start on preparations for the introduction of
IAS/IFRS. The project will study the differences between IAS/IFRS
accounting principles and those of the Ponsse Group and define new
IAS/IFRS compliant principles for its consolidated financial
statements.  The project will also study the impact of the changes
in accounting practice, revamp the Group’s accounting and reporting
instructions and reporting systems. Training within the organisation
and setting up other preparations for the new accounting standard
will be put in place so that it will be possible to produce
quarterly benchmarking data from 2004 for 2005 Group reporting.

The first financial statements in compliance with IAS/IFRS will be
prepared for the financial year commencing 1 January 2005.

OUTLOOK FOR THE REST OF THE YEAR


The company saw an encouraging trend in its back orders in the
second half of the period under review. Back orders stood at 24.6
per cent higher than at the end of Q3 a year earlier. Turnover and
the result for the entire year are expected to be much better than
those for 2002.

BOARD OF DIRECTORS


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Ponsse Group key indicators


Profit and loss account                 1-9/03    1-9/02    1-12/02
                                      EUR 1000  EUR 1000   EUR 1000
Turnover                               115 510    86 103    133 171
Increase (+) or decrease (-) in stocks of
    finished goods and work in progress   -270     2 842      1 776
Other operating income                     982       856      1 199
Raw materials and services             -78 113   -56 006    -87 510
Staff expenses                         -17 455   -16 338    -22 714
Depreciation                            -1 935    -2 064     -2 766
Other operating expenses               -11 104    -9 959    -13 776
Operating profit                         7 615     5 434      9 380
Share of results of associated undertakings 49        74        157
Financial income and expenses              907       169        265
Result before appropriations and taxes   8 571     5 677      9 802
Income taxes                            -3 446    -2 673     -2 894
Change in deferred tax liability           349       540          0
Minority interest                            0         1         -1
Result for the period under review       5 474     3 545      6 907


Balance sheet                          30.9.03   30.9.02   31.12.02
                                      EUR 1000  EUR 1000   EUR 1000
Assets
Fixed assets and other non-current assets
    Intangible assets                    1 755     1 225      1 157
    Tangible assets                     13 803    13 613     13 987
Financial assets                           501       412        495
Stocks and current assets
    Stocks                              35 098    35 051     33 920
    Receivables                         17 458    14 004     12 358
    Cash in hand and at banks           12 486     5 515     11 950
Total                                   81 101    69 820     73 867

Shareholders’ equity and liabilities
Shareholders’ equity
    Share capital                        3 500     3 500      3 500
    Other equity                        36 021    31 748     35 072
Minority interest                            0         1          3
Creditors
    Non-current                         17 952    13 615     10 930
    Current                             23 628    20 956     24 362
Total                                   81 101    69 820     73 867


Receivables at 30 September 2003 include deferred tax assets of EUR
650 thousand (30 September 2002, EUR 849 thousand, 31 December 2002,
EUR 438 thousand). Non-current creditors at 30 September 2003
include a deferred tax liability of EUR 843 thousand (30 September
2002, EUR 984 thousand, 31 December 2002 EUR 952 thousand).

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Cash flow statement
                                        1-9/03    1-9/02    1-12/02
                                      EUR 1000  EUR 1000   EUR 1000
Cash flow from operations:                   
    Operating profit                     7 615     5 434      9 380
    Depreciation and value adjustments   1 935     2 064      2 766
    Other reconciliations                  100        66          0
Cash flow before change in working
capital                                  9 650     7 564     12 146

Change in working capital:
    Increase (-)/ decrease in interest-free
    operating receivables               -4 902      -264        913
    Increase /-)/decrease (+) in stocks -1 178    -4 894     -3 763
    Increase (+)/decrease (-) in
    current interest-free creditors      2 882     1 321      3 240
Cash flow from operations before
financial items and taxes                6 452     3 727     12 536

Financial income and expenses              907       169       -303
Taxes paid                              -3 446    -2 673     -4 047
Cash flow from operations:               3 913     1 223      8 186


Pledges given, contingent and other liabilities
                                         30.9.03  30.9.02  31.12.02
                                        EUR 1000 EUR 1000  EUR 1000
1. 1. For own debt
    Debts for which mortgages have been pledged as collateral
    Loans from credit institutions        17 210   12 360     3 838
    Mortgages given on land and buildings3   866    3 826     3 866
    Chattel mortgages given                3 293    2 893     2 893
    Mortgages pledged as collateral, total 7 159    6 719     6 759

2. Leasing commitments                     2 210    2 078     2 143

3. Contingent liabilities on behalf of Group companies
    Guarantees given on behalf of
        Group companies                    1 097      230     1 221

4. Liabilities arising from derivative contracts
    4.1 Nominal values
          Currency derivatives
             Options                       3 888    2 107     1 475
             Forward contracts            11 909   12 513    12 128
    4.2 Market values
          Currency derivatives
             Options                           9        4        11
             Forward contracts                84       -2       342

5. Other contingent liabilities
    Guarantees given on behalf of others     766      935       803
    Repurchase commitments                 6 905    4 947     6 557
    Other liabilities                          0      314         0
    Total                                  7 671    6 196     7 360

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Key indicators                        30.09.03   30.09.02  30.12.02

R&D expenditure, EUR million               2.6        2.4       3.2
Fixed asset investments, EUR million       2.4        1.4       2.5
as % of turnover                           2.0        1.7       1.9
Average number of staff                    553        517       520
Back orders, EUR million                  28.2       22.6      32.1
Equity ratio, %                           48.8       50.5      52.4
Earnings per share, EUR                   0.78       0.51      0.99
Shareholders’ equity per share, EUR       5.65       5.04      5.51

Taxes corresponding to profit for the period under review have been
included as income taxes in the Profit and Loss Account and in
earnings per share.


New orders                             1-9/03    1-9/02     1-12/02
                                         MEUR      MEUR        MEUR
Ponsse Group                            111.9      85.6       142.0


Quarterly information   7-9/02  10-12/02   1-3/03   4-6/03   7-9/03
                      EUR 1000  EUR 1000 EUR 1000 EUR 1000 EUR 1000
Turnover                27 509    47 068   36 060   43 250   36 200
Operating profit         1 411     3 946    1 551    4 142    1 922
Result before appropriations
   and taxes             1 546     4 125    2 050    4 618    1 903

The figures in the Interim Report are unaudited.

Vieremä, 23 October 2003

PONSSE OYJ


Tommi Ruha
President, CEO

Further information:
Tommi Ruha, President, CEO, tel. +358 (0)17 768 4621 and
Mikko Paananen, CFO, tel +358 (0)17 768 4648

www.ponsse.com

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