Slide 1: Neste Q2 2024
Neste Q2 2024 Matti Lehmus | President and CEO | 25 July 2024
Slide 2: Contents
2 Contents 1. Key takeaways from Q2 2024 2. Market update Place and crop your 3. Segment reviews image here 4. Group financials 5. Outlook 6. Appendix
Slide 3: Disclaimer
3 Disclaimer The following information contains, or may be deemed to contain, “forward-looking statements”. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital ex
Slide 4: Focus on operational excellence in weak renewables market
4 Focus on operational excellence in weak renewables market • Result in the second quarter reflects the Group comparable Comparable sales Total refining EBITDA, EUR m margin, USD/ton margin, USD/bbl significantly weaker renewables market and the Porvoo refinery major turnaround 240 (784) 382 (800) 1
Slide 5: Key market environment drivers in Q2/2024
5 Key market environment drivers in Q2/2024 Avg, Change, % vs. Change, % • The comparable sales margin in Q2/24 Q1/24 vs. Q2/23 Renewable Products was affected by: Crude oil price (USD/bbl) 84.9 +2% +8% Macro drivers1) • decreasing price for middle distillates Diesel price (USD/ton) 787 -7% +8% • we
Slide 6: Clear focus areas supporting value creation
6 Clear focus areas supporting value creation Growth in most Value creation attractive markets Continued focus through competitive and optimization on efficiency advantages in based on strong and long-term feedstock global market competitiveness position Short-term priorities include SAF sales growt
Slide 7: Segment reviews
7 Segment reviews Place and crop your image here and send to back
Slide 8: Renewable Products: Market environment continued to weaken in Q2/24
8 Renewable Products: Market environment continued to weaken in Q2/24 Comparable EBITDA Q2/24 vs. Q2/23, MEUR Comments • Sales volume 955 (957) kt, impacted by the preparation for the upcoming maintenance shutdowns in H2/24. Sales to Europe ~49% (60%) and North America ~51% (40%) • Solid operational
Slide 9: Renewable Products: Short-term focus areas
9 Renewable Products: Short-term focus areas Full capacity Value capture ramp-up and Continued through SAF sales driving efficiency feedstock end-to-end volume growth through Neste growth optimization Excellence • Continuous optimization • Grow SAF customer • Ramp-up of Singapore 2nd line • Continue
Slide 10: SAF market shifting towards mandates and incentives
10 SAF market shifting towards mandates and incentives SAF mandates in ~30 place or expected countries by 2025 and states 2024 market SAF incentives 18 based on and programs countries, voluntary by 2025 states, demand airports
Slide 11: Leading the way in sustainable aviation together with customers and partners across the globe
11 Leading the way in sustainable aviation together with customers and partners across the globe Neste’s unique SAF platform enables global supply for customers Recently launched United Airlines Air France–KLM All Nippon Airways Neste Impact Air Canada British Airways Air New Zealand offers a real,
Slide 12: Oil Products: Porvoo major turnaround impacted Comparable EBITDA in Q2
12 Oil Products: Porvoo major turnaround impacted Comparable EBITDA in Q2 Comparable EBITDA Q2/24 vs. Q2/23, MEUR Comments • Porvoo refinery's major turnaround completed safely, on budget and on schedule • Planned impact on Q2 sales volume and comparable EBITDA. Customer deliveries successfully cond
Slide 13: Oil Products: Short-term focus areas
13 Oil Products: Short-term focus areas Solid operational performance and Porvoo Driving efficiency cash flow Transformation through Neste generation Excellence • Maintain high utilization rates at • Progress in transformation • Continued to improve the Porvoo refinery portfolio planning with review
Slide 14: Marketing & Services: Comparable RONA improved
14 Marketing & Services: Comparable RONA improved Comparable EBITDA, Q2/24 vs. Q2/23, MEUR Comments • Comparable EBITDA EUR 24 (29) million, impacted by slightly lower sales volumes and unit margins y-o-y • Neste’s market shares continued to be strong • Comparable RONA strong and improving to 32.2%
Slide 15: Group financials
15 Place and crop your Group financials image here and send to back
Slide 16: Short-term focus on efficiency and cash flow generation
16 Short-term focus on efficiency and cash flow generation Efficiency Solid cash flow New sustainable Efficient risk improvements generation funding secured management • Three green bonds with • Active business-driven long maturities (EUR 1.6 hedging • Neste Excellence program creating value bn) and
Slide 17: Q2/24 result reflects the weak renewables market and the Porvoo refinery major turnaround
17 Q2/24 result reflects the weak renewables market and the Porvoo refinery major turnaround Q2 expected to be the weakest quarter of the year for Neste Group comparable EBITDA, by segments, Q2 Group comparable EBITDA, by driver, Q2
Slide 18: H1/24 result impacted by clearly weaker renewables market
18 H1/24 result impacted by clearly weaker renewables market Group comparable EBITDA, by segments, H1 Group comparable EBITDA, by driver, H1 Group’s Renewable Oil Marketing Others Group’s Group’s Sales Sales Currency Fixed Others Group’s comparable Products Products & Services including comparable c
Slide 19: Solid financial position
19 Solid financial position Comparable ROACE, after tax, Leverage, net debt to capital, % rolling 12 months % Financial target <40% Financial target >15%
Slide 20: Q2/24 cash flow impacted by weak EBITDA, cash flow expected to be substantially positive in H2/24
20 Q2/24 cash flow impacted by weak EBITDA, cash flow expected to be substantially positive in H2/24 Cash flow before financing Cash out investments, Net working capital, EUR activities, EUR million EUR million million and in days outstanding
Slide 21: Outlook
21 Place and crop your Outlook image here and send to back
Slide 22: Market outlook and guidance for 2024
22 Market outlook and guidance for 2024 Guidance for 2024 specified Market outlook for 2024 Renewable Products Oil Products ● The uncertainty in the global economic outlook and Sales volume expected to increase to Sales volume in 2024 lower than in geopolitical situation continues to create market v
Slide 23: Outlook: Additional information
23 Outlook: Additional information Refinery maintenance schedule 2024 ● In Renewable Products, SAF sales are expected to continue growing toward the end of 2024 Location Q1 Q2 Q3 Q4 ● Renewable Products’ full-year sales volume is impacted by the planned maintenance shutdowns and the ramp-up timeline
Slide 24: Long-term demand outlook supported by regulation
24 Long-term demand outlook supported by regulation AMERICAS EMEA APAC EU Green Deal SAF mandates expected e.g. in Japan, LCFS programs driving Mandate updates New Zealand, Malaysia, demand growth expected as part of India, Australia and RED III implementation South Korea In addition, voluntary dema
Slide 25: Summary: Clear focus areas supporting value creation
25 Summary: Clear focus areas supporting value creation Growth in most Value creation attractive markets Continued focus through competitive and optimization on efficiency advantages in based on strong and long-term feedstock global market competitiveness position Short-term priorities include SAF s
Slide 26: Appendix
26 Place and crop your Appendix image here and send to back
Slide 27: Renewable Products: Key market drivers in the US market
27 Renewable Products: Key market drivers in the US market California Low Carbon Fuel Standard, LCFS credit price, RIN prices, US cent/gal USD/ton Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 • LCFS credit price continued declining during Q2 and has
Slide 28: W&R and vegetable oil price development
28 W&R and vegetable oil price development Selected waste and residue and vegetable oil prices1, USD/ton Comments • Waste and residue prices remained rather stable with a slight upwards trend in Q2 • The downward trend of vegetable oil markets continued in Q2 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 2
Slide 29: Oil Products: Key product margins
29 Oil Products: Key product margins Product margins (price differential vs. Brent), USD/bbl Comments • Gasoline margin drifting down while stocks held steady at levels above last summer • Diesel margin moving downwards with high imports and subdued demand • Volatility expected to continue Q3 22 Q4
Slide 30: Group financials Q2/24
30 Group financials Q2/24 Comparable EBITDA totaled EUR 240 million (EUR 784 million) MEUR Q2/24 Q2/23 Q1/24 H1/24 H1/23 2023 Revenue 4,642 5,351 4,801 9,443 10,649 22,926 EBITDA 119 523 442 561 986 2,548 Comparable EBITDA 240 784 551 791 1,614 3,458 Renewable Products 152 513 242 394 928 1,906 Oil
Slide 31: Cash flow impacted by weak EBITDA
31 Cash flow impacted by weak EBITDA MEUR Q2/24 Q2/23 Q1/24 H1/24 H1/23 2023 EBITDA 119 523 442 561 986 2,548 Capital gains/losses 0 0 -2 -3 0 0 Other adjustments -23 -36 -7 -30 144 108 Change in net working capital -16 3 -382 -398 -205 21 Finance cost, net -37 -33 -34 -71 -56 -91 Income taxes paid
Slide 32: Renewable Products' comparable EBITDA calculation
32 Renewable Products’ comparable EBITDA calculation Q2/23 Q3/23 Q4/23 2023 Q1/24 Q2/24 Total RP sales volume kton1 957 883 870 3,382 849 955 Comparable sales margin USD/ton 800 912 813 863 562 382 Comparable sales margin MEUR 703 741 657 2,699 439 339 Fixed costs MEUR -192 -194 -221 -791 -211 -190
Slide 33: Oil Products' refinery production costs
33 Oil Products’ refinery production costs Q2/23 Q3/23 Q4/23 2023 Q1/24 Q2/24 Refined products million bbls 21.3 22.3 22.6 87.5 21.4 10.2 Exchange rate EUR/USD 1.09 1.09 1.08 1.08 1.09 1.08 MEUR 68.9 74.5 74.0 319.8 70.3 46.5 Utilities costs USD/bbl 3.5 3.6 3.5 4.0 3.6 4.9 MEUR 55.6 52.8 57.0 215.1
Slide 34: Liquidity and maturity profile
34 Liquidity and maturity profile Maturity profile, MEUR Short-term Long-term • Group’s liquidity EUR 2,423 million at the end of June – Liquid funds EUR 823 million – Unused committed credit facilities EUR 1,600 million • Average interest rate for interest-bearing liabilities was 3.7% and maturity