Neste reports second quarter loss as biofuels market suffers downturn

Neste reported its first net loss since 2014 in the second quarter of this year, as the Finnish refiner grappled with a downturn in the global biofuels market and prolonged outages at its Porvoo refinery.
In a July 25 earnings statement, Neste announced a net loss of €144 million for Q2, marking its first negative profit since Q4 2014 and the largest loss in over a decade.
This result was a stark contrast to the €162 million profit recorded in Q1 2024, indicating that the company's returns had fallen to their lowest expected levels for the year.
As the largest biofuels producer by capacity in Europe, Neste has been significantly impacted by the challenging market conditions in the renewable sector.
The company faced intense competition from cheaper imports, which led to a pause in investment for large-scale bio-refining projects by rival companies. Additionally, in the United States, Fulcrum BioEnergy faced financial difficulties.
The July 25 statement highlighted a substantial decline in Neste's renewable fuels business for Q2, with the comparable sales margin dropping to $382 (€352) per metric ton from $800 (€738) per metric ton the previous year. Consequently, the company revised its maximum expected sales margin for 2024 downward from $650 per metric ton to $580 (€535) per metric ton.
The company's earnings were hurt by lower European biodiesel spot prices and reduced incentives in the US, coupled with rising feedstock costs due to increased biodiesel production.
While soybean and palm oil prices slightly decreased, the cost of used cooking oil, a key feedstock, rose both in the EU and North America. On July 24, Platts, a division of S&P Global Commodity Insights, assessed used cooking oil (UCO) FOB ARA costs at $1,080 (€996) per metric ton, an increase of $5 (€4.60) per metric ton from the previous month and $127 (€117) per metric ton from the previous year.
To manage these rising costs, Neste decreased the proportion of waste and residue inputs in its processing mix to 88% in Q2, down from 96% in the same period last year. Additionally, lower prices for US biotickets and renewable credits under the Low Carbon Fuel Standard resulted in a loss of approximately €36 million ($39 million) for the quarter.
The company expects these prices to remain below 2023 levels for the remainder of the year.