OREANDA-NEWS. Neste Oil's Interim Report for January-March 2015.

Excellent start for the year as a result of strong refining market and good internal performance.

First quarter in brief:

  • Comparable operating profit totaled EUR 215 million (Q1/2014: EUR 50 million)
  • Total refining margin was USD 11.66/bbl (Q1/2014: USD 8.44/bbl)
  • Renewable Products' comparable sales margin was USD 205/ton (Q1/2014: USD 182/ton)
  • Net cash from operations totaled EUR -185 million (Q1/2014: EUR -178 million)
  • Return on average capital employed (ROACE) was 12.6% (2014: 10.1%)
  • Full-year 2015 guidance revised upwards on 21 April

President & CEO Matti Lievonen:

“The year has started positively in a very favorable refining margin environment. We are also pleased with the internal performance in all our business areas. Neste Oil recorded a strong comparable operating profit of EUR 215 million during the first quarter, compared to the EUR 50 million during the corresponding period last year.

Oil Products generated a high comparable operating profit of EUR 156 million, compared to EUR 32 million in the first quarter of 2014. Neste Oil's reference margin strengthened during the first quarter, and averaged USD 7.5/bbl. Reference margin ended USD 4.1/bbl higher than in the corresponding period last year. Gasoline margins were particularly strong, supported by weak crude oil market, good demand, contango storage building, strikes and refinery outages in the US. Our Porvoo refinery operated at a high utilization rate, and preparations for the major turnaround proceeded according to plan.

Renewable Products recorded a comparable operating profit of EUR 42 million, compared to EUR 12 million in the first quarter of 2014. Renewable Products' reference margin remained clearly below the levels seen during the corresponding period last year. We were able to maintain our additional margin at a good level by successful margin management and feedstock flexibility. Weaker euro also had a positive effect on our result. Our sales volume increased by 5% from the first quarter of 2014. After successful debottlenecking in 2014, we have increased our renewable diesel nameplate production capacity from 2.0 million to 2.4 million tons per year, which has also lead to lower production costs.
Oil Retail's markets continued competitive, but we were able to increase profits by introducing new products, such as low sulphur marine fuel, and by improving margins particularly in Northwest Russia. The segment generated a comparable operating profit of EUR 17 million, higher than the EUR 14 million booked in the first quarter of 2014.

As a result of the strong performance during the first quarter and based on the current market outlook for the remainder of the year, Neste Oil revised its guidance on 21 April, and now estimates the Group's full-year 2015 comparable operating profit to remain robust and to be higher than that reached in 2014. Previously Neste Oil expected the full-year comparable operating profit to remain robust, although probably lower than that reached in 2014.

On 1 April the Annual General Meeting decided the company name to be Neste Corporation from the beginning of June. Therefore, this will be the last interim report under Neste Oil name. During the recent years our company has changed remarkably, and the new name reflects this change. We are moving forward."

The Group's first-quarter 2015 results

Neste Oil's revenue in the first quarter totaled EUR 2,744 million (EUR 3,510 million). The decrease mainly resulted from lower overall sales prices due to the oil price decline. All segments improved their result from the first quarter of 2014, and the Group’s comparable operating profit came in at EUR 215 million (EUR 50 million). Oil Products' result was positively impacted by reference refining margins, which were clearly higher than in the first quarter of 2014. Also Renewable Products improved as a result of successful margin management, feedstock optimization and favorable USD/EUR exchange rate. Oil Retail's result was positively impacted by higher margins, particularly in Northwest Russia. The Others segment recorded a higher comparable operating profit compared to the first quarter of 2014.

Oil Products’ first-quarter comparable operating profit was EUR 156 million (32 million), Renewable Products’ EUR 42 million (12 million), and Oil Retail’s EUR 17 million (14 million). The comparable operating profit of the Others segment totaled EUR 3 million (-11 million).

The Group’s IFRS operating profit was EUR 233 million (50 million), which was impacted by inventory losses totaling EUR 76 million (3 million), changes in the fair value of open oil derivatives totaling EUR 18 million (5 million), and non-recurring items totaling EUR 77 million (-2 million), mainly related to the capital gain from the disposal of the Porvoo electricity grid. Pre-tax profit was EUR 205 million (33 million), profit for the period.