Neste Corporation, Interim Report, 29 April 2025 at 9 a.m. (EET)
Solid operational start for the year, performance improvement program progresses
First quarter in brief:
- Comparable EBITDA totaled EUR 210 (551) million
- EBITDA totaled EUR 200 (442) million
- Renewable Products' comparable sales margin was USD 310 (562)/ton
- Oil Products' total refining margin was USD 9.9 (20.4)/bbl
- Cash flow before financing activities was EUR -225 (-354) million
- Leverage ratio was 38.0% at the end of March (31.12.2024: 36.1%)
Figures in parentheses refer to the corresponding period for 2024, unless otherwise stated.
President and CEO Heikki Malinen:
"During the first quarter, our operations were running according to plan and the year started with improved demand for renewable fuels. However, renewable fuel margins were low as a result of persistent high feedstock prices. In Oil Products, refining margins continued to normalize, and the mild winter affected demand for winter grades in both Oil Products and Marketing & Services. Our comparable EBITDA in the first quarter reached EUR 210 (551) million and cash flow before financing activities was EUR -225 (-354) million. Financial performance remained unsatisfactory, and we have taken a number of measures to change the course.
We have launched a performance improvement program to enhance our cost competitiveness and started to implement it with determination. Initial progress has been encouraging, achieving a EUR 52 million run rate by the end of the quarter. Leveraging our ability to optimize production and sales globally is an important focus area of the program, in addition to ongoing actions aimed at improving the reliability of our refineries. Working capital efficiency is part of the program following our earlier decisions in cutting capital expenditure and dividends.
In Renewable Products, our comparable EBITDA totaled EUR 72 (242) million in the first quarter, impacted by clearly weaker margins in renewable fuels. Our comparable sales margin was USD 310 (562)/ton and sales volume reached 892 (849) thousand tons, benefitting from additional production capacity. Sustainable aviation fuel (SAF) sales are expected to increase towards the end of the year, reflecting the seasonality of demand and the SAF annual mandate structure.
In Oil Products, comparable EBITDA totaled EUR 120 (278) million in the first quarter. Sales volumes improved to 2,778 (2,553) thousand tons compared to the first quarter in 2024 that was affected by the preparations for the Porvoo turnaround 2024. The total refining margin dropped to USD 9.9 (20.4)/bbl.
In Marketing & Services, our comparable EBITDA was EUR 17 (23) million in the first quarter, impacted mainly by lower demand for heating oil.
Our strategic growth investment project in Rotterdam, the Netherlands, proceeded according to the updated plan. When completed in 2027, the refinery will be the world's largest facility producing renewable diesel and SAF. In April 2025, Neste's global SAF production capability increased to 1.5 million tons per annum as our existing refinery in Rotterdam was modified to produce up to 500,000 tons of SAF per annum. This is a significant milestone that underlines our commitment to support our customers in the aviation industry to reduce their greenhouse gas emissions.
Despite geopolitical and economic uncertainty, societies need to keep their climate ambitions and targets high. Mandates and incentives continue to be crucial to usage of SAF and other renewable fuels as the world needs to reduce the use of fossil energy. We at Neste have invested heavily to contribute to the implementation of renewable fuels mandates, such as ReFuelEU Aviation. Now that there are significant changes in global trade policy and new tariffs are being imposed, we expect the European policymakers to safeguard a level playing field and competitiveness of European industrial companies and highlight the need for a predictable operating environment.
With regards to the recent developments in regulation and trade policy, the direct impact of US tariffs to Neste is expected to be limited as renewable diesel, SAF and most oil products are exempt from the announced tariffs, but feedstocks are included in them. The US market remains important, but the removal of Blender's Tax Credit (BTC) has led Neste to reoptimize its Singapore shipments.
We have a lot of work ahead of us, but I am confident in our actions and the Neste team's ability to drive the required performance improvement.
The Group's first quarter 2025 results
Neste's revenue in the first quarter totaled EUR 5,017 (4,801) million. The increase in revenue was driven by stronger sales volumes in both Renewable Products and Oil Products, which had a positive effect of approx. EUR 0.2 billion in total. However, lower prices had a negative impact of approx. EUR -0.7 billion. Other items had a positive impact of approximately EUR 0.6 billion, including trading volumes in Oil Products.
The Group's comparable EBITDA was EUR 210 (551) million. Renewable Products' comparable EBITDA was EUR 72 (242) million. Higher sales volume, lower fixed costs and positive currency effect were outweighed by the weaker market resulting in lower sales margin compared to the first quarter of 2024. Oil Products' comparable EBITDA totaled EUR 120 (278) million. The decrease was due to lower refining margins despite increased sales volume and positive currency effect. Marketing & Services comparable EBITDA was EUR 17 (23) million affected by lower heating oil sales than in the comparison period. Others' comparable EBITDA was EUR -4 (8) million.
The Group's EBITDA was EUR 200 (442) million, impacted by inventory valuation gains of EUR 44 (-129) million, and changes in the fair value of open commodity and currency derivatives totaling EUR -31 (30) million. Profit before income taxes was EUR -57 (189 million), and net profit EUR -40 (162) million. Comparable earnings per share were EUR -0.04 (0.33), and earnings per share EUR -0.05 (0.21).
One-off costs related to organizational restructuring, totaling EUR 24 million, were booked in the first quarter results. These one-off costs have been eliminated from comparable EBITDA.
Outlook
Market outlook for 2025
The uncertainty in global trade and geopolitics and their impact on the global economic outlook are causing market volatility. Markets for both renewable fuels and oil products are sensitive to oil price development. The market in renewable fuels is expected to remain oversupplied in 2025.
Guidance for 2025 (unchanged)
- Renewable Products' sales volumes in 2025 are expected to be higher than in 2024?.
- Oil Products' sales volumes in 2025 are expected to be higher than in 2024?.
Additional information
- There will be two scheduled maintenance turnarounds in 2025: a 5-week turnaround in Rotterdam in Q4 2025 and a 6-week turnaround starting in mid-December 2025 in Singapore. There are no planned turnarounds in Porvoo?.
- The Group's comparable total fixed costs in 2025 are expected to be below 2024 level excluding one-off costs?.
- The Group's full-year 2025 cash-out capital expenditure excluding M&A is estimated to be approximately EUR 1.1 - 1.3 billion?.
Conference call
A conference call in English for investors and analysts will be held on 29 April 2025, at 3 p.m. Finland / 1 p.m. London / 8 a.m. New York. In order to receive the participant dial in numbers and a unique personal PIN, participants are requested to register using this link: https://events.inderes.com/neste/q1-2025/dial-in. The conference call can also be followed as a webcast.
Further information:
Heikki Malinen, President and CEO, tel. +358 10 458 11
Eeva Sipilä, Chief Financial Officer, tel. +358 40 727 6766
Anssi Tammilehto, SVP, Strategy, M&A and Investor Relations, tel. +358 50 458 8436
Neste in brief
Neste (NESTE, Nasdaq Helsinki) creates solutions for mitigating climate change and accelerating a shift to a circular economy. The company is the world's leading producer of sustainable aviation fuel (SAF) and renewable diesel, enabling its customers to reduce their greenhouse gas emissions. Neste refines waste, residues and other renewable raw materials to high-quality renewable fuels at its refineries located on three continents. The company's annual renewable fuels production capacity will be increased to 6.8 million tons in 2027.
Neste has high standards for sustainability and the company has consistently been recognized by several leading sustainability indices. In 2024, Neste's revenue stood at EUR 20.6 billion. Read more: neste.com
