Neste release Group’s Financial Report for January–June 2021
Revenue in the first six months totaled EUR 6,155 million (5,842 million). The change in revenue resulted from higher sales prices, which had a positive impact of approx. EUR 3.5 billion, and lower sales volumes, which had a negative impact of approx. EUR 2.9 billion. A weaker US dollar had a negative impact of approx. EUR 300 million on the revenue.
The Group’s comparable operating profit was EUR 542 million (663 million). Renewable Products’ six-month comparable operating profit was EUR 580 million (644 million), mainly due to the weaker US dollar than in the corresponding period of 2020. Oil Products’ comparable operating profit was EUR -66 million (14 million), mainly due the weak refining market and the scheduled Porvoo refinery maintenance. Marketing & Services comparable operating profit was EUR 35 million (27 million), as a result of lower fixed costs and higher unit margins compared to the first half of 2020. The Others segment’s comparable operating profit was EUR -8 million (-25 million).
The Group’s operating profit was EUR 920 million (405 million), which was impacted by inventory valuation gains of EUR 382 million (losses of 166 million), and changes in the fair value of open commodity and currency derivatives totaling EUR -6 million (-91 million). Profit before income taxes was EUR 880 million (400 million), and net profit EUR 806 million (362 million). Comparable earnings per share were EUR 0.62 (0.76), and earnings per share EUR 1.05 (0.47).
The Group’s second-quarter 2021 results
Neste’s revenue in the second quarter totaled EUR 3,022 million (2,572 million). The change in revenue resulted from higher sales prices, which had a positive impact of approx. EUR 3.0 billion, and lower sales volumes mainly due to the Porvoo refinery major turnaround, which had a negative impact of approx. EUR 2.5 billion. Additionally, a weaker US dollar had a negative impact of approx. EUR 100 million on the revenue compared to the same period last year.
The Group’s comparable operating profit was EUR 241 million (255 million). Renewable Products’ comparable operating profit was EUR 287 million (314 million), mainly due to the weaker US dollar and lower sales volumes compared to the second quarter of 2020. Oil Products’ comparable operating profit was EUR -58 million (-60 million), mainly due to the Porvoo refinery turnaround. Marketing & Services comparable operating profit was EUR 18 million (19 million). The Others segment’s comparable operating profit was EUR -7 million (-16 million).
The Group’s operating profit was EUR 463 million (208 million), which was impacted by inventory valuation gains of EUR 207 million (127 million), and changes in the fair value of open commodity and currency derivatives totaling EUR 14 million (-172 million). Profit before income taxes was EUR 465 million (197 million), and net profit EUR 431 million (161 million). Comparable earnings per share were EUR 0.31 (0.26), and earnings per share EUR 0.56 (0.21).
Outlook
Visibility in the global economic development still remains low due to the COVID-19 pandemic. As a consequence, we expect volatility in the oil products and renewable feedstock markets to remain high. Based on our current estimates and a currency hedging rate of approximately 80%, Neste’s effective EUR/US dollar rate is expected to be within a range of 1.17-1.20 in the third quarter of 2021.
Sales volumes of renewable diesel in the third quarter are expected to be lower than in the previous quarter due to the large scheduled maintenance at the Singapore refinery that includes some tie-in work with the new facility under construction. Waste and residue markets are anticipated to remain tight as their demand continues to be robust. Our third-quarter sales margin is expected to remain healthy, but to be lower than in the second quarter. Utilization rates of our renewables production facilities are forecast to remain high, except for the scheduled seven-week maintenance turnaround at the Singapore refinery, which started in July. We also plan for a four-week catalyst change at the Rotterdam refinery in the fourth quarter of 2021. The Singapore turnaround is currently estimated to have a negative impact of approximately EUR 90 million, and the Rotterdam catalyst change a negative impact of approximately EUR 50 million on the segment’s comparable operating profit.
Oil Products’ third-quarter market demand will continue to be depressed as a result of the COVID-19 pandemic. As the market is seen to be generally over-supplied, the reference margin is expected to remain low and volatile. Approximately EUR 20 million of the negative result impact of the Porvoo refinery major turnaround is expected to materialize in the third quarter.
In Marketing & Services, the sales volumes and unit margins are expected to follow the previous years’ seasonality pattern in the third quarter. The COVID-19 pandemic is anticipated to have some negative impact on the demand and sales volumes.
Neste estimates the Group’s full-year 2021 cash-out capital expenditure to be approximately EUR 1.2 billion, excluding M&A.
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