Neste posts rise in operating profit

Finnish renewable diesel producer Neste has posted a 6% rise in full-year operating profit to €983 million, compared to €925 million in 2015, helped by strong demand for its renewable products.

In its 2016 full-year financial statement, the company stated that its renewable products business recorded a full-year comparable operating profit of €469m, compared to €402m in 2015.

Speaking about its renewable products division, president and CEO, Matti Lievonen, said: “Our sales volumes reached 2.22 million tons, only 2% below the previous year, despite of the scheduled major turnaround implemented at the Rotterdam refinery in the second quarter. A slightly higher share of the sales volume was allocated to the North American market compared to 2015.

“In the US market the Environmental Protection Agency (EPA) finalised increased volume mandates for biomass-based diesel for 2017 and 2018 in November 2016. Feedstock optimisation continued, and the share of waste and residue feedstocks was successfully expanded to 78% of total renewable inputs in 2016. Acquisition of a new feedstock pretreatment facility in the Netherlands will further enhance our capability to process lower quality wastes and residues.”

He added: “For the first time renewable products had the largest full-year profit contribution, which reflects the continuing strategic transformation of the company. I am very pleased to note that all business areas improved their result from the previous year.

“We also generated strong cash flow and further strengthened our balance sheet. All key financial indicators showed improvement, and the return on average capital employed after tax reached 16.9%, which was over the long term target level of 15%.”

Elsewhere, the company’s oil products division posted a comparable operating profit of €453 million (€439 million).

The company’s reference margin averaged USD 4.9/bbl, which was USD 2.9/bbl lower than the exceptionally high level in 2015. Global oil product supply and demand were reasonably balanced, but high product inventories limited the upside on refining margins.

Oil products' additional margin was increased to USD 5.5/bbl level, which was USD 1.5/bbl higher than in 2015. This resulted from operational performance and successful leveraging of contango opportunities, with sales volumes back on track after the Porvoo refinery turnaround year 2015.

This story was written by Liz Gyekye, editor of Biofuels International.