Neste Corporation, Financial Statements Release, 13 February 2025 at 9 a.m. (EET)
Actions initiated to respond to a challenging market environment and weak financial performance
Year 2024 in brief:
- Comparable EBITDA totaled EUR 1,252 (3,458) million
- EBITDA totaled EUR 1,005 (2,548) million
- Renewable Products' sales 3,729 (3,382) kton
- Oil Products' sales 10,147 (11,885) kton
- Cash flow before financing activities totaled EUR -313 (751) million
- Comparable return on average capital employed (comparable ROACE) was 2.5% (23.9%)
- Leverage ratio was 36.1% at the end of December (31 Dec 2023: 22.7%)
- Comparable earnings per share were EUR 0.17 (2.88)
- Earnings per share: -0.12 EUR (1.87)
- Board of Directors will propose a dividend of EUR 0.20 per share (1.20), totaling EUR 154 (922) million
Fourth quarter in brief:
- Comparable EBITDA totaled EUR 168 (797) million
- EBITDA totaled EUR 143 (672) million
- Renewable Products' comparable sales margin was USD 242 (813)/ton
- Oil Products' total refining margin was USD 11.8 (18.9)/bbl
- Cash flow before financing activities was EUR 504 (475) million
- Comparable earnings per share were EUR -0.13 (0.66)
Figures in parentheses refer to the corresponding period for 2023, unless otherwise stated.
President and CEO Heikki Malinen:
"The year 2024 was marked by geopolitical, economic and regulatory uncertainty. For Neste, the year was particularly challenging. We faced significant changes in the markets of both Renewable Products and Oil Products and several operational challenges at our refineries. Our 2024 full-year comparable EBITDA totaled EUR 1,252 (3,458) million. This level is not satisfactory, nor sustainable.
In Renewable Products, numerous new competitors and increased capacity entered the markets during 2024. While there are regional differences, this global overcapacity resulted in a decline in renewable fuel sales prices and intensified demand for waste and residue raw materials. In addition, the weakening fossil diesel price had a further negative impact on the Renewable Products' sales prices. Consequently, sales margins fell significantly below previous years' levels. Our full-year comparable sales margin was USD 377 (863)/ton and segment's comparable EBITDA EUR 514 (1,906) million. Our sales volume in Renewable Products was 3.7 (3.4) million tons, increasing in the second half of the year, but falling below the level we had planned in the beginning of the year. The share of waste and residue feedstocks remained high throughout the year and averaged 90% (92%) of our total renewable material inputs in 2024.
As we have communicated, our renewable refineries faced operational challenges in 2024. We have tackled these, but they had a negative impact on renewable diesel production and sales especially in the fourth quarter. Renewable Products posted a comparable EBITDA of EUR 13 (433) million for the quarter and our comparable sales margin was USD 242 (813)/ton. On a positive note, sustainable aviation fuel (SAF) sales increased in the final quarter of 2024.
In Oil Products, the product margins normalized from the high levels of 2023 and the full-year total refining margin decreased to USD 14.1 (21.1)/bbl. Oil Products' full-year comparable EBITDA was EUR 633 (1,434) million, which was also affected by decreased sales volumes in the second quarter due to the Porvoo major turnaround. In the fourth quarter, comparable EBITDA was EUR 153 (330) million, reflecting similarly the more normalized market compared to last year. The total refining margin averaged USD 11.8 (18.9)/bbl and the average refinery utilization rate of the Porvoo refinery was 88% (92%) in the fourth quarter.
In 2024, we progressed with our strategic growth investment project in Rotterdam. However, due to the challenging contractor market, the scheduled start of commercial operations has been delayed from 2026 to 2027. At the same time, the investment cost is estimated to increase from EUR 1.9 billion to EUR 2.5 billion. We have taken action to ensure that from now on the project proceeds on-schedule and on-budget. We maintain strict capital discipline throughout the company and in the coming few years, our capital expenditure beyond the Rotterdam investment is expected to be on an annual level of approximately EUR 0.5 billion with focus on safety and reliability investments.
In Neste's current situation, it is obvious that a change of direction is needed. Shortly after I took over as a CEO, we launched a group-wide, comprehensive full potential analysis. This work has now been completed and we have today launched a performance improvement program. The goal is to enhance Neste's financial performance while securing our strong market position with better cost competitiveness in renewable fuels. There is no single silver bullet to improve our financial and operative performance. Instead, we need to take steps on many fronts and this work has already started. The planned efficiency measures have personnel impacts and are thus especially difficult for our employees, but at the same time necessary to ensure Neste's long-term competitiveness and success.
In line with changes in our operating environment and financial performance, we have updated our financial targets for 2025-2026 to reflect the actions required to respond to this. Firstly, we are targeting EUR 350 million EBITDA run rate improvement by the end of 2026 from our performance improvement program, of which EUR 250 million from operational costs. Secondly, we are committed to maintaining our investment grade credit rating and leverage below 40%.
As we look towards the future, the fundamental need to tackle climate change is stronger than ever as 2024 was characterized by record high temperatures globally. To reduce global CO2 emissions, readily available solutions that can also decarbonize hard to abate sectors like aviation, are needed. Neste has a leading role in this: we have an established position in renewable diesel and we are also well positioned in SAF, thanks to our world-leading renewables platform and the needed competences in, for example, technology, pre-treatment and feedstocks. Going forward, we plan to focus more clearly on fuels, the products that have been at the core of our company for decades.
All in all, 2024 was a tough year in many ways from market changes to trade policy developments. I would like to thank all our employees for their resilience and contribution in these challenging circumstances. In 2025, the renewables market continues to be challenging and we cannot expect a return to previous years' exceptional margin levels. Regulation continues to create uncertainties, e.g. in the US, and we need to fight for a level playing field, e.g. in the EU versus imports from China and US (SAF). However, I am confident that with a determined approach we can and we will reverse the current trend in our financial performance while maintaining our investment grade credit rating, fund the critical investments in running projects, and ensure Neste will be successful in the future.
The Board has today proposed a dividend payout of 0.20 euros (1.20) per share for the year 2024 to the Annual General Meeting."
The Group's fourth-quarter 2024 results
Neste's revenue in the fourth quarter totaled EUR 5,568 (6,303) million. Revenue decrease is driven by lower market and sales prices, which had a negative impact of approximately EUR -0.9 billion. Sales volumes had a small negative impact on revenue, mainly due to Oil Products while Renewable Products' sales volumes (especially SAF) increased year-over-year. An increase in trading volumes, mainly in Oil Products, positively impacted the revenue by approximately EUR 0.2 billion.
The Group's comparable EBITDA was EUR 168 (797) million. Renewable Products' comparable EBITDA was EUR 13 (433) million. Lower sales margin had a negative impact of approximately EUR -0.5 billion, while sales volume and fixed costs had a small positive impact on the result. Oil Products' comparable EBITDA was EUR 153 (330) million, mainly as a result of a lower refining market and small decrease in sales volumes. Marketing & Services' comparable EBITDA was EUR 22 (25) million. Others' comparable EBITDA was EUR -18 (3) million. The Group's fixed costs were EUR 1 million higher year-over-year.
The Group's EBITDA was EUR 143 (672) million, which was affected by inventory valuation gains totaling EUR 63 (-255) million and changes in the fair value of open commodity and currency derivatives totaling EUR -83 (128) million. Profit before income taxes was EUR -160 (407) million and net profit EUR -135 (400) million. Comparable earnings per share were EUR -0.13 (0.66) and earnings per share EUR -0.18 (0.52).
The Group's full-year 2024 results
Neste's full-year 2024 revenue totaled EUR 20,635 (22,926) million. Revenue decreased mainly due to lower market and sales prices, which had a negative impact of approximately EUR -1.6 billion. Renewable Products' sales volumes increased year-over-year, but group sales volumes had a negative impact of approximately EUR -1.4 billion in revenue mainly due to the Oil Products' major turnaround in Porvoo in Q2/2024. The increasing trading volumes, mainly in Oil Products, had a positive impact on the revenue by approximately EUR 0.7 billion. The exchange rate effect was minimal for full-year results.
The Group's comparable EBITDA was EUR 1,252 (3,458) million. Renewable Products' comparable EBITDA was EUR 514 (1,906) million, mostly affected by the weak market environment. The sales margin had a negative impact of EUR 1,483 million while higher sales volume impacted the result positively. Oil Products' full-year comparable EBITDA was EUR 633 (1,434) million, affected mostly by the Porvoo major turnaround and a lower total refining margin. Marketing & Services' comparable EBITDA was EUR 101 (118) million. Others' comparable EBITDA was EUR -1 (-2) million. The Group's fixed costs were EUR 1,312 (1,329) million, EUR 16 million below last year.
The Group's EBITDA was EUR 1,005 (2,548) million, which was affected by inventory valuation losses of EUR -359 (-827) million and changes in the fair value of open commodity and currency derivatives totaling EUR 84 (-98) million. Profit before income taxes was EUR -113 (1,596) million and net profit EUR -95 (1,436) million. Comparable earnings per share were EUR 0.17 (2.88) and earnings per share EUR -0.12 (1.87).
Outlook
Market outlook for 2025
The uncertainty in the global economic outlook and geopolitical situation is expected to cause ongoing market volatility. The market in renewable fuels is expected to be oversupplied and therefore challenging in 2025. Possible changes in the regulatory framework especially in the US and Europe will have an impact on Neste's overall supply chain optimization. Changes in trade policy, such as tariffs in different forms, can also affect Neste's competitiveness.
Guidance for 2025
- 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?.
Dividend distribution proposal
In light of the current financial position of the company, the Board has decided to cancel the dividend policy announced on 19 June 2023, and proposes a dividend payout of EUR 0.20 per share based on the approved balance sheet for 2024 to the Annual General Meeting. Going forward, the company seeks to maximize operating cash flow in order to strengthen the balance sheet with the potential to review the dividend in the future.
The dividend shall be paid in one installment EUR 0.20 per share to shareholders registered in the shareholders' register of the Company maintained by Euroclear Finland Ltd on the record date for the dividend payment, which shall be 27 March 2025. The Board proposes to the AGM that the dividend would be paid on 3 April 2025.
The proposed total dividend EUR 0.20 per share represents a yield of 1.6% (at year-end 2024 share price of EUR 12.13). The total dividend payout in 2025 amounts to approximately EUR 154 million.
Conference call
A webcast and conference call in English for investors and analysts will be held on 13 February 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/q4-2024/dial-in. The conference call can also be followed as a webcast.
Further information:
Heikki Malinen, President and CEO, tel. +358 10 458 11
Anssi Tammilehto, Interim Chief Financial Officer, and SVP, Strategy, M&A and Investor Relations, tel. +358 50 458 8436
Neste in brief
Neste (NESTE, Nasdaq Helsinki) uses science and innovative technology to transform waste and other resources into renewable fuels and circular raw materials. The company creates solutions for mitigating climate change and accelerating a shift to a circular economy. Being the world's leading producer of sustainable aviation fuel (SAF) and renewable diesel and a forerunner in developing renewable and circular feedstock solutions for polymers and chemicals, the company aims to help its customers to reduce their greenhouse gas emissions by at least 20 million tons annually by 2030.
The company's ambition is to make the Porvoo oil refinery in Finland the most sustainable refinery in Europe. Neste is committed to reaching carbon-neutral production by 2035, and will reduce the carbon emission intensity of sold products by 50% by 2040. Neste has also set high standards for biodiversity, human rights and the supply chain. The company has consistently been included in the CDP and the DJSI lists of the world's most sustainable companies. In 2023, Neste's revenue stood at EUR 22.9 billion. Read more: neste.com
