Neste (NESTE) Q2 2024 earnings summary

Executive summary

• Q2 2024 was marked by a significantly weaker renewables market and a major turnaround at the Porvoo refinery, resulting in the lowest quarterly results expected for the year, but operational performance at refineries remained solid with cost efficiency improvements and major turnarounds completed as planned.

• Cash flow before financing activities was negative in Q2, mainly due to weak EBITDA and high inventories, but is expected to turn substantially positive in H2 2024.

• SAF (Sustainable Aviation Fuel) sales are expected to grow significantly in the second half of 2024, with regulatory mandates in Europe set to drive demand from 2025 and new production capacity ramping up.

Financial highlights

• Q2 2024 comparable EBITDA: EUR 240 million (Q2 2023: EUR 784 million); renewable products' sales margin dropped to USD 382/ton from USD 800/ton year-over-year.

• Oil products Q2 comparable EBITDA: EUR 62 million (EUR 239 million), mainly due to turnaround-related sales volume reduction; refining margin at USD 15.1/bbl (USD 16.7/bbl).

• Marketing and services Q2 comparable EBITDA: EUR 24 million (EUR 29 million); market share remained strong and RONA improved to 32.2%.

• Q2 2024 revenue: EUR 4,642 million (EUR 5,351 million); Q2 2024 net profit: EUR -144 million (EUR 259 million); comparable EPS: EUR -0.05 (EUR 0.63).

• Cash flow before financing activities was EUR -461 million in Q2; cash out investments in Q2 totaled EUR 455 million, mainly for Porvoo turnaround and Rotterdam expansion.

Outlook and guidance

• Full-year 2024 average sales margin for renewables now guided at USD 480–580/ton (previously up to USD 650/ton).

• SAF sales volume for 2024 expected at 0.5–0.7 million tons; Renewable Products' total sales volume expected at ~4.4 Mt (+/-10%).

• Oil Products' total sales volume and refining margin for 2024 expected to be lower than 2023 due to Porvoo turnaround.

• Multiple planned maintenance shutdowns in H2 at Rotterdam and Singapore; Martinez Renewables ramp-up targeted to reach 75% utilization in Q3 and 100% by year-end.

• Group's full-year 2024 cash-out capex (excluding M&A) estimated at EUR 1.4–1.6 billion; cash flow expected to be substantially positive in H2 2024.