Third quarter results Matti Lievonen, President & CEO 26 October 2017

Transcription

1 Third quarter results 2017 Matti Lievonen, President & CEO 26 October 2017

2 Agenda 1. Q3/17 Group financials 2. January-September 2017 review 3. Q3/17 Segment reviews 4. Current topics 5. Appendix 2

3 Disclaimer The following information contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures, future cash sources and requirements, liquidity and cost savings that involve known and unknown risks, uncertainties and other factors that may cause Neste Corporation s or its businesses actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as may, will, could, would, should, expect, plan, anticipate, intend, believe, estimate, predict, potential, or continue, or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. All forward-looking statements made in this presentation are based on information presently available to management and Neste Corporation assumes no obligation to update any forward-looking statements. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities or otherwise to engage in any investment activity. 3

4 Excellent quarter strong performance in all business areas Comparable EBIT 350 MEUR Excellent result in Renewable Products Oil Products good result supported by healthy refining market and operational performance Marketing & Services continued to improve its performance 4

5 Strong performance visible in financial targets ROACE, rolling 12 months, % Leverage, % Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 0 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 5

6 Q3/17 Group financials

7 Group financials Q3/17 improvement in all key figures MEUR Q3/2017 Q3/2016 Revenue 3,229 3,034 Comparable EBITDA EBITDA Comparable operating profit Oil Products Renewable Products Marketing & Services Others (incl. eliminations) -5-6 Operating profit Cash flow before financing activities Comparable earnings per share, EUR

8 Reference margins and operations boosting the result Group comparable EBIT Q3/16 vs. Q3/17, MEUR * Q3/16 Volumes Reference margin Additional margin Fx changes Fixed costs Others Q3/17 8 *Including -45 MEUR from US Blender s Tax Credit (BTC) in Q3/16

9 January- September 2017 review

10 Cumulative comparable EBIT higher than in 2016 Stronger reference margin in both Oil Products and Renewable Products Sales volumes 19% higher in Renewables Lower additional margins impacted results 10

11 Group financials 1-9/17 comparable operating profit growth 10% from 2016 MEUR 1-9/ /2016 Revenue 9,580 8,268 Comparable EBITDA 1, EBITDA 1,148 1,125 Comparable operating profit Oil Products Renewable Products Marketing & Services Others (incl. eliminations) Operating profit Cash flow before financing activities Comparable earnings per share, EUR

12 Higher reference margins and sales volumes contributed to strong nine-month result Group comparable EBIT 1-9/16 vs. 1-9/17, MEUR * /16 Volumes Reference margin Additional margin Fx changes Fixed costs Others 1-9/17 12 *Including -131 MEUR from BTC in 1-9/16

13 Q3/17 Segment reviews

14 Strong results in Oil Products Oil Products comparable EBIT, MEUR Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 MEUR Q3/17 Q3/ Revenue 2,045 1,961 7,395 Comparable EBIT Net assets 2,538 2,443 2,424 Comparable EBIT 158 MEUR (120 MEUR) Sales volume 3.6 Mton (3.9 Mton) Porvoo average utilization rate 97% (92%) Urals share of feed 66% (74%) Investments 61 MEUR (49 MEUR) Comparable RONA* 20.0% (18.2%) * Last 12 months 14

15 Supportive refining market driving strong results Oil Products comparable EBIT Q3/16 vs. Q3/17, MEUR Q3/16 Volumes Reference margin Additional margin Fx changes Fixed costs Others Q3/17 15

16 Higher product margins supported by healthy demand Product margins (price differential vs. Brent), USD/bbl Jan-14 Jan-15 Jan-16 Jan-17 Urals vs. Brent price differential, USD/bbl Jan-14 Jan-15 Jan-16 Jan Diesel Gasoline Heavy Fuel Oil

17 Total refining margin boosted by high reference margin Total refining margin, USD/bbl Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Reference margin Additional margin Total refining margin USD 11.96/bbl (9.40) Reference margin USD 7.21/bbl (3.85) Additional margin USD 4.76/bbl (5.55) Porvoo average utilization rate 97% (92%) Naantali major two-month turnaround during Q3 Refinery production costs USD 4.0/bbl (3.7) 17

18 Excellent result in Renewable Products Comparable EBIT, MEUR Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 MEUR Q3/17 Q3/ Revenue ,690 Comparable EBIT Net assets 1,870 1,803 1,811 Comparable EBIT 171 MEUR (124 MEUR) Additional margin USD 256/ton (245) without US Blender s Tax Credit Sales volume 637 kton (544 kton); share of North America 27% (35%) Share of waste and residues feedstock 77% (79%) Investments 22 MEUR (18 MEUR) Comparable RONA* 27.0% (31.0%) * Last 12 months 18

19 Higher sales volumes and margins Renewable Products comparable EBIT Q3/16 vs. Q3/17, MEUR Q3/16 Volumes Reference margin Additional margin Fx changes Fixed costs Others Q3/17 19

20 European biodiesel margins averaged higher year-on-year FAME RED Seasonal vs. Palm oil price* differential, USD/ton 500 Vegetable oil and animal fat prices**, USD/ton 1, , , Jan-14 Jan-15 Jan-16 Jan-17 * Including $70/ton freight **Quotations in NWE, source: Oil World 400 Jan-14 Jan-15 Jan-16 Jan-17 Soybean Rapeseed Palm oil Animal fat

21 US biodiesel margins improved to last year s level SME vs. Palm oil price* differential, USD/ton Biodiesel RIN, US cent /gal Jan-14 Jan-15 Jan-16 Jan-17 * Including $70/ton freight 0 Jan-14 Jan-15 Jan-16 Jan-17 Biomass-based diesel (D4) Conventional renewable fuel (D6)

22 Increase in comparable sales margin driven by high additional margin Renewable Products margin, USD/ton Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Comparable sales margin USD 435/ton (375) Reference margin USD 290/ton (260) Additional margin USD 256/ton (245) High utilization rate 99% (100%) Reference margin Additional margin Comparable sales margin 22

23 Marketing & Services improved performance Comparable EBIT, MEUR Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Comparable EBIT 27 MEUR (25 MEUR) Sales volumes maintained year-on-year Unit margins normalized Investments 8 MEUR (8 MEUR) Comparable RONA* 34.0% (46.7%) MEUR Q3/17 Q3/ Revenue ,552 Comparable EBIT Net assets * Last 12 months 23

24 Marketing & Services back on right track Marketing & Services comparable EBIT Q3/16 vs. Q3/17, MEUR Q3/16 Volumes Unit margins Fx changes Fixed costs Others Q3/17 24

25 Current topics

26 Outlook for 2017 The year has continued well and we expect the year 2017 to be very successful for Neste 26

27 Segment outlook for 2017 Oil Products Margin Reference margin expected to decrease from third quarter peaks, but to continue strong for the season. Average reference margin in 2017 expected to be above previous year s level. Renewable Products Margin Additional margin expected to stay at good level during the fourth quarter. Marketing & Services Unit margins and sales volumes Expected to follow previous years seasonality pattern. Utilization rate Porvoo refinery expected to run at high utilization, except for a scheduled four-week decoking maintenance at Production Line 4 during Q4. Naantali unit turnaround and conversion changes completed mid-october. Utilization rate Utilization rates expected to be high, except for a twoweek shutdown of Singapore refinery due to hydrogen supplier s planned maintenance outage in November. 27

28 We continue to focus on Safety Cash flow Refinery productivity Markets and customers 28

29 Appendix

30 Renewable Products comparable EBIT calculation Q3/16 Q4/ Q1/17 Q2/17 Q3/17 Sales volume, kt , Reference margin, $/ton Additional margin, $/ton Variable production costs, $/ton Comparable sales margin, $/ton Comparable sales margin, MEUR Fixed costs, MEUR Depreciations, MEUR Comparable EBIT, MEUR

31 Refinery production costs, Porvoo & Naantali Q3/16 Q4/ Q1/17 Q2/17 Q3/17 Refined products Million barrels Exchange rate EUR/USD Utilities costs Fixed costs External cost sales Total EUR million USD/bbl EUR million USD/bbl EUR million USD/bbl EUR million USD/bbl

32 Cash flow MEUR Q3/17 Q3/16 Q2/17 1-9/17 1-9/ EBITDA (IFRS) ,148 1,125 1,521 Capital gains/losses Other adjustments Change in working capital Net finance costs Taxes Net cash generated from operating activities ,193 Capital expenditure Other investing activities Cash flow before financing activities

33 Liquidity & maturity profile MEUR Short-term Long-term Total liquidity at the end of September 2017 was EUR 2,546 million Cash and cash equivalents totalled EUR 496 million Unused committed credit facilities totalled EUR 1,650 million Unused CP programmes (not committed) totalled EUR 400 million Average interest rate for interest-bearing liabilities was 3.1%* and maturity 4.8 years at the end of September No financial covenants in Group companies existing loan agreements *Average interest rate for interest-bearing liabilities excluding finance leases was 2.3%

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