Neste earns €277m profit in Q2

Neste Corporation earned a total of EUR 277 million operating profit in the second quarter (April-June) this year, which was EUR 236 million during the stipulated period of the previous year, said an official press release.

“Renewable Products was again able to exceed the previous year's performance as a result of successful sales allocation and feedstock optimization, despite the scheduled maintenance activities,” said Neste President and CEO Matti Lievonen.

Oil Products' result was impacted by a weaker USD exchange rate year-on-year and a lower sales volume due to scheduled unit maintenances.

“The weaker USD had a negative impact totaling EUR 33 million on the Group's comparable operating profit compared to the second quarter of 2017. Neste reached a strong ROACE of 20.8% over the last 12 months and a leverage ratio of 5.8%,” the CEO added.

Renewable Products posted a comparable operating profit of EUR 177 million (EUR 101 million). The renewable diesel market remained favorable in Europe and North America.

“Our additional margin was significantly higher than in the corresponding period last year, which had a positive impact of EUR 112 million on the operating profit. During the second quarter we implemented a scheduled five-week maintenance at the Rotterdam refinery, and our production facilities operated at an average 73% utilization rate. The negative impact of the Rotterdam maintenance on operating profit was approximately EUR 60 million, of which approximately 60% materialized in the second quarter. The remaining profit impact will materialize in the third quarter,” he added.

Due to the scheduled maintenance activities our sales volumes were 589,000 tons, approximately 13% lower than in the corresponding period last year. During the second quarter 68% of sales were allocated to the European markets and 32% to North America. The share of 100% renewable diesel delivered to end-users was record-high 34% of total volumes.

Feedstock mix optimization towards lower-quality raw materials continued successfully, and the proportion of waste and residue inputs was 92%. In May Neste agreed to acquire the share majority of IH Demeter B.V., a Dutch trader of animal fats and proteins. This is an important step for Neste in our strategy of building a global waste and residue raw material platform to secure raw material availability and competitiveness. Neste's cooperation with IKEA is also making progress as the first commercial scale pilot production of renewable, bio-based polypropylene plastic will start during the fall of 2018.

Neste's revenue in the second quarter totaled EUR 3,745 million (3,280 million). The increase resulted from higher sales prices, which had a positive impact of approx. EUR 800 million on the revenue. Lower sales volumes due to scheduled maintenance activities had a negative impact of approx. EUR 100 million, and a weaker USD exchange rate had a negative impact of approx. EUR 200 million on the revenue. The Group’s comparable operating profit was EUR 277 million (236 million). Renewable Products' comparable operating profit was significantly higher than in the second quarter of 2017, mainly as a result of higher additional margin. Oil Products' result was lower than in the second quarter of 2017, mainly due to a weaker USD exchange rate and lower sales volumes.

The scheduled maintenance activities in Renewable Products and Oil Products had a negative impact of approx. EUR 70 million on the operating profit. Marketing & Services was able to increase its unit margins, which lead to a higher comparable operating profit compared to the second quarter of 2017. The Others segment's comparable operating profit was weaker than in the corresponding period of 2017, mainly due to Nynas' lower result.

Renewable Products’ second quarter comparable operating profit was EUR 177 million (101 million), Oil Products’ EUR 92 million (122 million), and Marketing & Services' EUR 20 million (19 million). The comparable operating profit of the Others segment totaled EUR -11 million (-6 million); Nynas accounted for EUR -5 million (-1 million) of this figure.