Neste returns better than expected – Vanacker: Rotterdam investment schedule takes geopolitical situation into account

Fuel company Neste’s comparable EBITDA rose to EUR 578 million from EUR 429 million in the comparison period, while analysts expected EUR 567 million.

Neste’s comparable earnings per share were EUR 0.45, compared to EUR 0.31 a year ago and analysts expected earnings per share of EUR 0.44.

Net sales rose to EUR 5,523 million from EUR 3,132 million a year ago, compared to analysts’ forecast of EUR 4,598 million.

As expected, earnings growth was driven in particular by a strong sales margin for renewable products and a recovery in oil products.

The sales margin for renewable products rose to $ 806 per tonne from $ 699 a year ago. Analyst consensus predicts $ 761 per tonne.

However, based on Neste’s outlook, the sales margin is expected to decline slightly from its peak in the second quarter.

The overall refining margin for petroleum products rose to $ 10.30 a barrel from $ 6.73 a year ago and analysts forecast $ 10.40.

Comparable EBITDA for renewable products increased to EUR 419 million from 344 million a year ago. Comparable EBITDA for petroleum products rose to EUR 137 million from EUR 52 million a year ago.

Renewable sales volumes are expected to grow

Typically, Neste comments verbally on its near-term outlook.

Sales in the Renewable Products segment in the second quarter are expected to be slightly higher than in the previous quarter and a sales margin of $ 675-750 per tonne.

The overall refining margin for petroleum products in the second quarter, on the other hand, is expected to be approximately at the same level as in the first quarter of 2022.

Uncertainty affects Rotterdam’s investment

Neste was also expected to comment on the progress of investments related to increasing the capacity of renewable products.

The company’s refinery in Rotterdam is in the planning stages, and capacity at the Singapore refinery is set to increase.

Neste’s resigning CEO Peter Vanackerin geopolitics and uncertainty are taken into account in the Rotterdam refinery investment.

The expected investment decision has not yet been received.

“The project for our potential next world-class renewable product refinery in Rotterdam is in the planning stages, and we are approaching the technical readiness to make a final investment decision in the coming months. However, the timetable for decision-making will take into account the current geopolitical situation. “

In addition to the refinery investments, Neste has announced the establishment of a joint venture in the United States Marathon Petroleumin with.

“Our ongoing expansion project in Singapore and this joint venture will increase our total renewable production capacity to 5.5 million tonnes by the end of 2023,” Vanacker commented on the Singapore investment.

Russian oil replaced

Neste has used Russian Urals crude oil in refining. After Russia invaded Ukraine, oil has been replaced by other crude oils.

“Neste is shocked and concerned about the war in Ukraine and strongly condemns the Russian invasion. We have largely replaced Russian crude oil with other crude oils, and our remaining Russian crude oil supply contracts expire in July, ”Vanacker commented.

“We have not bought Russian crude oil on the spot market since the start of the war and we are not entering into new supply contracts for Russian crude oil or fossil raw materials.”

Due to changes in the procurement of crude oil and the unstable market situation, Neste has stopped dividing the total refining margin for petroleum products into a reference margin and an additional margin.

By Editor

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