Neste (NESTE) Pre-Silent Call summary

Executive summary

• Full-year 2024 comparable sales margin guidance for renewable products was revised down to $480–$650/ton due to a weaker market outlook; previous guidance was $600–$800/ton.

• Market conditions for renewables further weakened in Q2, but demand in Europe is expected to return to growth in 2025.

• SAF (Sustainable Aviation Fuel) volumes are expected to grow, especially in the second half of the year, with inventory build-up planned to optimize for H2 sales.

Trading performance and revenue trends

• RIN D4 prices remained low, averaging $0.50/gallon in Q2, while LCFS credits dropped to $41.5/ton before stabilizing around $45/ton.

• Northwest European diesel prices fell about 20% from mid-April to early June, impacting renewables sales margins.

• European spot prices for renewables trended down since Q1, with some US biodiesel producers reporting closures and financial stress.

• SAF sales are weighted toward H2, with a guidance range of 500,000–1,000,000 tons for 2024.

Profitability and margins

• Overall margins in renewables are under pressure due to low market prices and high feedstock costs.

• Martinez Renewables JV continues to depress overall margin until ramp-up and profitability improve.

• Lower hedging ratios for D4 RINs in Q2 and Q3 due to illiquid markets; overall impact of hedges expected to be neutral for Q2.