Neste’s EBITDA Surpasses Expectations, Dividend Falls Short of Predictions – Shares Plummet

In the last quarter of the previous year, the oil refining company, Liquid, reported a comparable EBITDA of 797 million euros. A consensus of 15 analysts, collected by the information service Vara Research, had predicted that the EBITDA would stand at 784 million euros for the same period. Forecasts varied, with the highest being 873 million euros and the lowest at 703 million euros. For context, the EBITDA for the corresponding period was 894 million euros.

In terms of the comparable sales margin for renewable products, the figure was reported at 813 dollars per ton. Analysts had expected this to be $842 per ton, which is slightly higher than the $755 per ton recorded in the comparison period. The forecasted range was between $810 and $890.

CEO Matti Lehmus attributed the change in comparison to the previous year to the performance of oil products. He noted that while the total refining margin remained at a satisfactory level due to operational efficiency, it did decrease from the previous year to 18.9 dollars per barrel. In the renewable products segment, the company managed to optimize sales and procurement of raw materials in a challenging market environment, resulting in a comparable sales margin of 813 dollars per ton.

Lehmus further reported that the sales volumes of renewable diesel and renewable aviation fuel were in line with the company’s goals, totaling 843,000 tons.

He also explained that the increase in the sales margin of renewable products was primarily due to a rise in the sales margin itself. However, he acknowledged that fixed costs and exchange rates negatively impacted the outcome.

In terms of shareholder returns, the board has proposed that the company distributes a dividend of EUR 1.20 per share. The consensus forecast had expected a dividend of EUR 1.40 per share. In comparison, last year, Neste distributed dividends totaling EUR 1.52 per share for 2022, of which EUR 0.50 was an extra dividend.

Regarding the outlook, Neste anticipates continued uncertainty in the global economic outlook and geopolitical situation. The firm expects that market volatility will persist in both renewable and oil products. Specifically, in the renewable products segment, the prices of biotics and credits have decreased in the early part of 2024 compared to 2023. In contrast, the refining market for petroleum products has remained relatively stable at the beginning of 2024.

As for sales projections, Neste expects that the total sales volume of renewable products will increase from 2023 levels and reach approximately 4.4 (+/- 10%) million tons in 2024. It forecasts the sales volume of renewable jet fuel to be between 0.5 and 1.0 million tons. The average comparable sales margin for the full year 2024 for renewables is estimated to be between $600 and $800 per ton.

Conversely, the total sales volume of oil products in 2024 is projected to be lower than in 2023. This decrease is largely due to a significant shutdown planned for Porvoo in the second quarter. The total refining margin of petroleum products in 2024 is also expected to be lower than that of 2023, according to the company’s release.

In the stock market, Neste’s share price was down by 11.8 percent around 10:30 a.m.

Update at 10:30 a.m.: The information about the share price has been added.