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, compared to the previous $600–$800/ton range.

• Demand for renewables is expected to return to growth in 2025, with long-term projections showing supply growing at 11% CAGR and demand at 20% CAGR by 2030.

• SAF (Sustainable Aviation Fuel) volumes are expected to increase, especially in the second half of 2024, with a focus on mandated demand supporting volume growth.

Trading performance and revenue trends

• Renewable product markets weakened further in Q2, with RIN D4 and LCFS credit prices at low levels, and European diesel prices dropping by about 20% from mid-April to early June.

• European spot prices for renewables have trended down since Q1, and some US biodiesel producers have reported closures or reduced production due to low margins.

• Renewable sales volumes have been slow in Q2, with the last month of the quarter typically being the strongest.

Profitability and margins

• Revised margin guidance reflects a clearly weakening market in Q2 compared to Q1, with external data showing margin pressure.

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

• SAF prices have also been impacted by weak market conditions, but mandated demand is expected to support margins in H2.