Neste’s Q1 shows good results amid market uncertainty, still on track for Singapore project

In Finland, Neste had a solid start to the year according to their Q1 2020 financials which showed a comparable operating profit of EUR 408 million in the first quarter, compared to EUR 378 million in the corresponding period last year. Renewable Products’ sales volumes were high, and renewables facilities reached a new quarterly production record.

The Singapore renewables capacity expansion project is on track, and it is scheduled to be up and running in mid-2022, depending on restrictions set by the local government due to COVID-19.

President and CEO Peter Vanacker said:

“Neste had a solid start to the year considering the negative market impacts caused by the global coronavirus (COVID-19) pandemic in the latter part of the first quarter. We posted a comparable operating profit of EUR 408 million in the first quarter, compared to EUR 378 million in the corresponding period last year. Renewable Products’ sales volumes were high, and our renewables facilities reached a new quarterly production record. Oil Products’ comparable operating profit was at the same level as in the first quarter of 2019, mainly as a result of high additional margin. Marketing & Services’ financial performance mainly reflected the volume reduction caused by warm weather and the COVID-19 impacts. Oil price declined significantly during the quarter, which resulted in material inventory valuation losses in the Group’s operating profit. Neste reached a ROACE of 26.7% over the last 12 months and a leverage ratio of -1.1%.”

“Renewable Products posted a comparable operating profit of EUR 329 million (EUR 337 million) in the first quarter. The renewable diesel demand was good in early 2020, but, as expected, the feedstock markets remained tight. Combined with the significant impact of the COVID-19 situation on commodity pricing, the tight feedstock market created some pressure on the sales margin. The lower sales margin had a negative impact of EUR 45 million on the comparable operating profit compared to the corresponding period last year. The US Blender’s Tax Credit (BTC) contribution was EUR 52 million (EUR 40 million) in the first quarter. Our sales volumes were 731,000 tons, which was approximately 6% higher than in the corresponding period last year. During the first quarter our renewable diesel production facilities operated at an average 101% utilization rate, and reached a new quarterly production record of 795,000 tons. Feedstock mix optimization continued, and the proportion of waste and residue inputs was 82%.”