Neste reports strong performance in Renewable Products, but struggling Oil Products in Q3

In Finland, Neste reports overall performance as solid during the third quarter despite the COVID-19 pandemic. The Renewable Products business was very resilient and improved its sales margin and sales volume compared to the corresponding period last year.

Oil Products continued to suffer from a very weak refining market caused by the global COVID-19 related demand destruction and over-supply, and the segment delivered a slightly negative comparable operating profit.

Third quarter in brief:

• Comparable operating profit totaled EUR 373 million (EUR 435 million)
• Operating profit totaled EUR 425 million (EUR 442 million)
• Renewable Products’ comparable sales margin, including BTC, was USD 744/ton (USD 722/ton)
• Oil Products’ total refining margin was USD 5.89/bbl (USD 12.07/bbl)
• Cash flow before financing activities was EUR 315 million (EUR 71 million)

January-September in brief:

• Comparable operating profit totaled EUR 1,036 million (EUR 1,181 million)
• Operating profit totaled EUR 830 million (EUR 1,184 million)
• Cash flow before financing activities was EUR -51 million (EUR 211 million)
• Cash-out investments were EUR 751 million (EUR 346 million)
• Return on average capital employed (ROACE) was 23.1% over the last 12 months (2019: 26.6%)
• Leverage ratio was 4.5% at the end of September (31.12.2019: -3.3%)
• Comparable earnings per share: EUR 1.16 (EUR 1.12)
• Earnings per share: EUR 0.92 (EUR 1.11)

President and CEO Peter Vanacker:

“Neste’s overall performance was solid during the third quarter despite the COVID-19 pandemic. Renewable Products business was very resilient and improved its sales margin and sales volume compared to the corresponding period last year. Oil Products continued to suffer from a very weak refining market caused by the global COVID-19 related demand destruction and over-supply, and the segment delivered a slightly negative comparable operating profit. Marketing & Services performed very well during the summer period also considering the earlier divestment of our Russian business. The Group posted a comparable operating profit of EUR 373 million, compared to EUR 435 million in the corresponding period last year. Neste reached a ROACE of 23.1% over the last 12 months, and had a leverage ratio of 4.5% at the end of September.

Renewable Products posted a very good comparable operating profit of EUR 352 million (EUR 305 million) in the third quarter. The renewable diesel demand remained good, and our sales volumes were relatively stable at 730,000 tons. The renewable feedstock markets remained tight. As a result of successful sales performance and a positive contribution from hedging, we were able to increase our sales margin to USD 744/ton. The sales margin was also supported by narrowing waste and residues price differentials to vegetable oils. The operational performance at our renewable diesel refineries was very good with a capacity utilization rate of 95%. As communicated earlier, the planned catalyst change at the Singapore refinery was completed in July, and another planned catalyst change at one of the Porvoo units in September. The share of waste and residues was 86% of the total renewable raw material inputs.”