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 and lower profitability and cash flow compared to last year.

• Operational performance at refineries remained solid, with major turnarounds completed safely, on time, and on budget, and continued focus on strategic execution and efficiency, including cost reductions.

• SAF (Sustainable Aviation Fuel) sales are expected to grow significantly in the second half of 2024, with regulatory mandates and new production capacity ramp-ups driving future demand.

• Cash flow before financing activities was negative in Q2 but is expected to turn substantially positive in H2 2024.

Financial highlights

• Q2 2024 group comparable EBITDA: EUR 240 million (Q2 2023: EUR 784 million); revenue: EUR 4,642 million (Q2 2023: EUR 5,351 million); comparable EPS: EUR -0.05 (Q2 2023: EUR 0.63).

• Renewable products' sales margin dropped to USD 382/ton (Q2 2023: USD 800/ton), including a one-off EUR 36 million inventory valuation loss.

• Oil products Q2 comparable EBITDA: EUR 62 million (Q2 2023: EUR 239 million), mainly due to Porvoo turnaround; refining margin at USD 15.1/bbl (Q2 2023: USD 16.7/bbl).

• Marketing and services comparable EBITDA: EUR 24 million (Q2 2023: EUR 29 million), with improved return on net assets at 32.2%.

• Cash flow before financing activities was EUR -461 million in Q2 (Q2 2023: EUR -24 million); H1 2024: EUR -801 million (H1 2023: EUR -126 million).

Outlook and guidance

• Full-year 2024 average sales margin for renewables expected at USD 480–580/ton (previously up to USD 650/ton); total sales volume expected at ~4.4 Mt (+/-10%), with SAF sales volume guidance narrowed to 0.5–0.7 Mt.

• 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 Rotterdam and Singapore in H2 2024; Martinez Renewables ramp-up targeted to reach 75% utilization in Q3 and 100% by year-end.

• Cash flow expected to be substantially positive in H2 2024.

• Market volatility expected to persist due to global economic and geopolitical uncertainties.