Neste Oil reports more renewable diesel capacity in Q1 results

By Katie Fletcher | April 29, 2015

On April 24, Neste Oil released financial results for the first quarter of 2015, reporting that a strong refining environment, favorable currency rates, and good internal performance made for an excellent first quarter.

Neste reported a comparable operating profit of €215 million ($277.58 million) for quarter one, compared to €50 million during the first quarter of 2014. Oil products alone generated a high comparable operating profit of €156 million, compared to €32 million in the first quarter of 2014. Also, the company’s reference margin strengthened during the first quarter, and gasoline margins were strong—supported by a weak crude oil market, good demand, contango storage building, strikes and U.S. refinery outages.

Matti Lievonen, president and CEO of Neste Oil, said the company’s Porvoo renewable diesel refinery in Finland operated at a high utilization rate (98 percent). The facility includes two production units, each with a capacity of 190,000 tons per year. One was commissioned in 2007, the other in 2009.

Lievonen added that preparations for the major turnaround of the facility proceeded according to plan. The Porvoo turnaround began in April and is expected to last for about eight weeks. The turnaround is expected to have an approximately €100 million negative impact on the oil products segment's comparable operating profit. This €100 million investment is part of the company’s total expected investments of €450 million for the year.

In the company’s renewable products line of business, a comparable operating profit of €42 million was reported, compared to €12 million in the first quarter of 2014. Lievonen said that Neste’s sales increased by 5 percent from the first quarter of 2014. “After successful debottlenecking in 2014, we have increased our renewable diesel nameplate production capacity from 2 million to 2.4 million tons per year, which has also led to lower production costs,” he said.

Oil retail markets continue to be competitive, but Lievonen said the company was able to increase profits by introducing new products, such as low sulphur marine fuel, and by improving margins particularly in Northwest Russia. The segment generated a comparable operating profit of €17 million, an increase from the €14 million booked in the first quarter of 2014.

Neste Oil included a brief market outlook for the remainder of the year in its first quarter results. Lievonen said crude oil price changes, supply and demand balances, together with uncertainties related to political decision-making on biofuel mandates, the U.S. blender's tax credit and other incentives will be reflected in the oil and renewable fuel markets. Also mentioned was the EPA’s announcement that it will propose renewable fuel standard (RFS) volume requirements for 2014, 2015 and 2016, as well as the biomass-based diesel volume requirement for 2017, by June 1, and finalize them by Nov. 30.

“As a result of the strong performance during the first quarter and based on the current market outlook for the remainder of the year, Neste Oil revised its guidance on April 21 and now estimates the group's full-year 2015 comparable operating profit to remain robust and to be higher than that reached in 2014,” Lievonen said.

Besides the Porvoo facility, Neste Oil operates two other renewable diesel plants that produce its proprietary NEXBTL diesel. The company operates an 800,000-ton-per-year renewable diesel refinery in Singapore, commissioned in 2010. The other facility is an 800,000-ton-per-year plant in Rotterdam, Netherlands, that was commissioned in 2011.