Neste reports strong renewable products sector for first half of 2020

In Finland, Neste noted another strong quarter in Renewable Products with record-high sales volumes while Oil Products was hit by an unprecedentedly weak refining market and their scheduled Porvoo refinery unit maintenance in their half-year 2020 report.

Their focus is to scale up faster and bolder, drive efficiency in operations and increase innovations especially in renewable and circular solutions, though they admit the Covid-19 pandemic is still severaly impacting their business and outlook for the rest of 2020.

President and CEO Peter Vanacker said, “Despite the market turbulence due to the COVID-19 pandemic, Neste’s performance was solid during the second quarter. We posted a comparable operating profit of EUR 255 million, compared to EUR 367 million in the corresponding period last year. Neste reached a ROACE of 24.5% over the last 12 months, and had a leverage ratio of 8.8% at the end of June.”

“Renewable Products exceeded last year’s second quarter result by posting a comparable operating profit of EUR 314 million (EUR 286 million). The renewable diesel demand remained good, and our sales volumes reached a record 773,000 tons. This new quarterly record was also supported by very good operational performance at the refineries. Our nameplate production capacity for Renewable Products has been increased to 3.2 million tons per annum. The catalyst change at the Singapore refinery had to be slightly rescheduled due to the COVID-19 related lockdown measures by the local government, but it was successfully completed in the first half of July. As expected, the feedstock markets remained very tight. That combined with the low oil product prices created some pressure on the comparable sales margin, which averaged at USD 625/ton, a still very healthy level. The share of waste and residues was 78% of the total renewable raw material inputs.”

In terms of outlook, Nestes’s report notes that “Visibility in the global economic development remains very low due to the COVID-19 pandemic. As a consequence, we expect volatility in the oil products and renewable feedstock markets to remain high. Based on our current estimates and a hedging rate of 85%, Neste’s effective EUR/US dollar rate is expected to be within a range 1.10-1.15 in the third quarter of 2020.”