Slide 1: Challenging market conditions impacting margins, initial progress on cost savings
1 Challenging market conditions impacting Place and crop your margins, initial progress image here on cost savings Heikki Malinen, President & CEO Martti Ala-Härkönen, CFO October 24, 2024
Slide 2: Disclaimer
2 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 3: Agenda
3 Agenda 1. Current topics and focus areas President & CEO Heikki Malinen Place and crop your 2. Q3 financials & performance image here CFO Martti Ala-Härkönen 3. Outlook President & CEO Heikki Malinen 4. Q&A
Slide 4: Current topics and focus areas
4 Current topics and focus areas
Slide 5: Key messages
5 Key messages 1. Neste is strongly positioned to benefit from green transition 2. Performance in the current market environment not satisfactory Place and crop your image here 3. More focus required on stronger revenue generation, cost competitiveness, capital discipline and ramping up capacities o
Slide 6: My early observations
6 My early observations Strengths Areas of concern ● Neste’s long-term fundamentals favorable ● Financial performance, cost competitiveness and capital discipline ● Feedstock supply and pre-treatment ● Fragmented investment and development portfolio ● RD & SAF market leader with global presence ● Ra
Slide 7: Level of performance in the current market environment is unsatisfactory
7 Level of performance in the current market environment is unsatisfactory Comparable EBITDA by quarter, MEUR and Selected Renewable Diesel (HVO) sales price quotes, USD/t Comparable ROACE, R12M, % MEUR % Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Source: Argus
Slide 8: Full potential analysis launched
8 Full potential analysis launched 1. Objective to enable strong performance and competitiveness in different market conditions Place and crop your image here 2. A wide range of areas to be assessed e.g. costs, investment and development portfolio and commercial operations 3. Going forward, we will
Slide 9: Neste to withdraw from investing into a 120 MW electrolyzer at Porvoo refinery
9 Neste to withdraw from investing into a 120 MW electrolyzer at Porvoo refinery We still aim to utilize renewable hydrogen in Porvoo. Why? What next? ● The company’s challenging market ● Evaluation of alternative pathways for Place and crop your conditions and financial performance securing renewab
Slide 10: Q3 financials & performance
10 Q3 financials & performance
Slide 11: Challenging market conditions impacting margins, initial progress on cost savings
11 Challenging market conditions impacting margins, initial progress on cost savings Group comparable Comparable sales Total refining EBITDA, EUR m margin, USD/ton margin, USD/bbl • Result in Q3/24 reflects the further weakened market both in Renewable Products and Oil Products 293 (1,047) 341(912)
Slide 12: Key market environment drivers in Q3/2024
12 Key market environment drivers in Q3/2024 Avg, Change, % vs. Change, % Q3/24 Q2/24 vs. Q3/23 • The Q3 comparable sales margin in Macro Crude oil price (USD/bbl) 80.2 -6 -8 Renewable Products was affected by drivers1) (comparison y-o-y): Diesel price (USD/ton) 721 -8 -20 • a substantial decrease i
Slide 13: Focus on efficiency, NWC optimization and balance sheet strength to continue
13 Focus on efficiency, NWC optimization and balance sheet strength to continue Fixed cost Net working capital Strong balance efficiency optimization sheet and liquidity ● Q3/24 comparable fixed costs ● Q3/24 change in NWC EUR 143 ● Q3/24 liquid funds and committed EUR 16 million lower y-o-y (-268)
Slide 14: Q3/24 cash flow impacted by weak EBITDA and higher capex
14 Q3/24 cash flow impacted by weak EBITDA and higher capex, cash flow high focus area in Q4/24 Cash flow before financing Cash out investments, Net working capital, EUR activities, EUR million EUR million million and in days outstanding
Slide 15: Q3/24 result reflects the challenging renewable and oil product market conditions
15 Q3/24 result reflects the challenging renewable and oil product market conditions Group Comp. EBITDA, by segment, Q3/24 vs. Q3/23 Group Comp. EBITDA, by driver, Q3/24 vs. Q3/23
Slide 16: Renewable Products: Market environment continued to weaken in Q3/24
16 Renewable Products: Market environment continued to weaken in Q3/24 Comparable EBITDA Q3/24 vs. Q3/23, MEUR Total renewable sales volume, kt and Comparable sales margin, USD/ton Sales volume 999 (883) kt SAF volume 112 (36) kt NA/EU 49/51 (45/55) % Main elements: Diesel price 721 (901) USD/t RIN
Slide 17: Oil Products: Solid operational performance, but product cracks decreased considerably
17 Oil Products: Solid operational performance, but product cracks decreased considerably during Q3 Comparable EBITDA Q3/24 vs. Q3/23, MEUR Total refining margin, USD/bbl (left axis) and utilization rate, % (right axis) Total refining margin 10.6 (26.9) USD/bbl Utilization rate 91 (92) %
Slide 18: Marketing & Services: Q3 Comparable RONA at 29.8 (33.9)%
18 Marketing & Services: Q3 Comparable RONA at 29.8 (33.9)% Comparable EBITDA Q3/24 vs. Q3/23, MEUR Comp. EBITDA, MEUR (left axis) and Comp. RONA (L12M), % (right axis) MEUR %
Slide 19: Financial targets: Comparable ROACE below target level, leverage meeting target
19 Financial targets: Comparable ROACE below target level (>15%), leverage meeting target level (<40%) Comparable ROACE, after tax, rolling 12 months % Leverage, Net debt to capital, % Financial target <40% Financial target >15%
Slide 20: Outlook
Outlook nESTE
Slide 21: Market outlook and guidance for 2024
21 Market outlook and guidance for 2024 Guidance for 2024 Market outlook for 2024 Renewable Products Oil Products ● The uncertainty in the global economic outlook and geopolitical Renewable Products’ total sales volume is expected to increase from 2023 and to Sales volume in 2024 lower than in situa
Slide 22: Opportunities and uncertainties
22 Opportunities and uncertainties Opportunities ● Global macroeconomy improves ● Diesel price recovery Place and crop your ● Effective implementation of climate regulation image here ● Long-term demand growth potential in renewable and circular solutions ● Neste potential Uncertainties ● Geopolitic
Slide 23: Appendix
25 Appendix image herePlace and crop your and send to back
Slide 24: Renewable Products: Key market drivers in the US market
26 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 24 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Source: Opis
Slide 25: W&R and vegetable oil price development
27 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 during Q3 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 1) Source: AF (EU) - Gebrüder Pöhner, UCO (EU) - Argus, SBO (US) - Reute
Slide 26: Oil Products: Key product margins
28 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 Q4 22 Q1
Slide 27: Group financials Q3/24
29 Group financials Q3/24 Comparable EBITDA totaled EUR 293 million (EUR 1,047 million) MEUR Q3/24 Q3/23 Q2/24 1-9/24 1-9/23 2023 Revenue 5,624 5,973 4,642 15,067 16,622 22,926 EBITDA 301 889 119 861 1,876 2,548 Comparable EBITDA 293 1,047 240 1,084 2,661 3,458 Renewable Products 106 545 152 500 1,4
Slide 28: Cash flow impacted by weak EBITDA
30 Cash flow impacted by weak EBITDA MEUR Q3/24 Q3/23 Q2/24 1-9/24 1-9/23 2023 EBITDA 301 889 119 861 1,876 2,548 Capital gains/losses 0 0 0 -3 0 0 Other adjustments -178 190 -23 -208 333 108 Change in net working capital 143 -268 -16 -255 -473 21 Finance cost, net -51 4 -37 -122 -52 -91 Income taxe
Slide 29: Renewable Products' comparable EBITDA calculation
31 Renewable Products’ comparable EBITDA calculation Q3/23 Q4/23 2023 Q1/24 Q2/24 Q3/24 Total RP sales volume kton1 883 870 3,382 849 955 999 Comparable sales margin USD/ton 912 813 863 562 382 341 Comparable sales margin MEUR 741 657 2,699 439 339 310 Fixed costs MEUR -194 -221 -791 -211 -190 200 C
Slide 30: Oil Products' refinery production costs
32 Oil Products’ refinery production costs Q3/23 Q4/23 2023 Q1/24 Q2/24 Q3/24 Refined products million bbls 22.3 22.6 87.5 21.4 10.2 22.2 Exchange rate EUR/USD 1.09 1.08 1.08 1.09 1.08 1.10 MEUR 74.5 74.0 319.8 70.3 46.5 61.4 Utilities costs USD/bbl 3.6 3.5 4.0 3.6 4.9 3.0 MEUR 52.8 57.0 215.1 53.9
Slide 31: Liquidity and maturity profile
33 Liquidity and maturity profile Maturity profile, MEUR Short-term Long-term • Group’s liquidity EUR 2,572 million at the end of September – Liquid funds EUR 922 million – Unused committed credit facilities EUR 1,650 million • Average interest rate for interest-bearing liabilities was 3.6% and matu