Neste Capital Markets Day 2023
(Oilandgaspress) Neste Corporation is holding its Capital Markets Day 2023 in London tomorrow, 20 June 2023, featuring presentations on company strategy, market outlook and value creation.
Financial targets unchanged
Neste’s long-term financial targets are Comparable ROACE after tax as well as the leverage ratio. The target for Comparable ROACE after tax is over 15%, while the leverage target is below 40%. At the end of Q1/2023, Neste’s Comparable ROACE after tax was 31.8% and the leverage ratio 18.7%, both well within the targeted levels.
Updated dividend policy
Neste’s dividend policy has been updated as follows: “Neste’s target is to pay a competitive and over time growing dividend.” The former dividend policy was that the company distributes at least 50% of the company’s comparable net profit for the year in the form of dividends.
Neste will continue to focus on strong cash flow generation as well as maintaining a strong balance sheet and strategic flexibility to take advantage of growth opportunities. These growth opportunities as well as Neste’s ongoing investments and financial position will be taken into account when deciding on the dividend level, targeting an optimized value creation.
Continuous progress in strategy execution
The demand for renewable products is expected to grow substantially by 2030 and beyond, driven by higher climate ambitions and supportive regulation.
The key elements in Neste’s updated strategy going forward are:
- Continued growth investments in renewable feedstock and renewable and circular solutions production capacity;
- Accelerated growth in Renewable Aviation and Renewable Polymers and Chemicals businesses;
- Enhanced product and feedstock flexibility and value creation by optimization of the flexible business model; and
- Increased focus on driving efficiency and long-term competitiveness.
Neste maintains its ambitious sustainability vision and has progressed well towards its sustainability targets.
Three strong renewable businesses
In Renewable Road Transportation, Neste continues to be the global leader in renewable diesel. The global renewable diesel demand has potential to exceed 30 million tons/a by 2030.
In Renewable Aviation, Neste is well positioned to maintain its leading position in the growing sustainable aviation fuel (SAF) market. Neste expects the global SAF demand to reach 15 million tons/a by 2030 (previous estimate >12 million tons/a). Neste will support market growth with 1.5 million tons/a of SAF production capability available in early 2024 and increasing to 2.2 million tons/a in 2026. Thereafter Neste sees further opportunities to expand its SAF production capability at its existing refineries and over the longer term through its innovation platforms.
In Renewable Polymers and Chemicals, there is a significant market opportunity for renewable and recycled feedstocks for polymers and chemicals within Neste’s chosen industry segments. The demand for these is expected to reach 17 million tons/a by 2030. Neste is expanding its global presence and working together with production partners and brand owners globally.
Continued growth in renewable feedstock and production platform Neste’s global renewable feedstock and production platform has been substantially strengthened through organic growth as well as investments and acquisitions in the last two years. Going forward, Neste will continue to grow its platform globally.
Neste expects the global waste and residue oils and fats availability to grow to over 40 million tons/a by 2030.
Efficiency and long-term competitiveness: New targets for Neste Excellence
Significant progress has been made with the Neste Excellence program. By the end of 2022, EBIT improvements totaling EUR 464 million were realized through the Neste Excellence program, with the year 2018 acting as the base year.
The new improvement target for the Neste Excellence program is to create over EUR 350 million of additional value by the end of 2026, compared to the year 2022 acting as the new base year. The program focuses on following four levers: 1) Digital and data-driven Neste program; 2) End-to-end process excellence program; 3) Production excellence; as well as 4) Business model optimization.
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