second quarter results 2016 - appspot.com · group financials q2/16 7 meur q2/2016 q2/2015 revenue...

Second Quarterresults 2016

Matti Lievonen, President & CEO

28 July 2016

Agenda

28 July 2016 2

1 Q2/16 Group financials

2 January-June 2016 review

3 Q2/16 Segment reviews

4 Current topics

5 Appendix

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.

28 July 2016 3

Strong second quarter

4

• Comparable EBIT EUR

282 million

• Good operational

performance at the

refineries

• Renewable Products

continued to deliver strong

profits

• Solid cash flow

• Strong balance sheet

28 July 2016

Solid performance reflected infinancial targets

5

0

10

20

30

40

50

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

25.2

0

5

10

15

20

25

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

19.1

ROACE, rolling 12 months, % Leverage, %

28 July 2016

Q2/16Group financials

Group financials Q2/16

7

MEUR Q2/2016 Q2/2015

Revenue 2,927 2,605

Comparable EBITDA 374 161

IFRS EBITDA 372 146

Comparable operating profit 282 78

Oil Products 149 14

Renewable Products 119 54

Oil Retail 23 22

Others (incl. eliminations) -9 -11

IFRS operating profit 280 63

Cash flow before financing activities 346 14

Comparable earnings per share, EUR 0.84 0.21

28 July 2016

Q2/15 Volumes Referencemargin

Additionalmargin

Fx changes Fixed costs Others Q2/16

Strong additional margin and good operational performance

8

Group comparable EBIT Q2/15 vs. Q2/16, MEUR

78

+45 -41

+196 -10 282-7 +21

28 July 2016

January-June 2016Review

H1 result clearly higher than in 2015

10

• Refining margins lower compared

to H1/2015

• Higher additional margin due to

good operational performance and

favorable sales structure

• Major turnaround at Porvoo

refinery in Q2/2015

• Successful margin management

and feedstock optimization in

Renewable Products

28 July 2016

Group financials H1/16

11

MEUR H1/2016 H1/2015

Revenue 5,234 5,348

Comparable EBITDA 636 454

IFRS EBITDA 714 457

Comparable operating profit 457 293

Oil Products 235 170

Renewable Products 199 96

Oil Retail 45 39

Others (incl. eliminations) -22 -12

IFRS operating profit 534 296

Cash flow before financing activities 420 -69

Comparable earnings per share, EUR 1.41 0.80

28 July 2016

H1/15 Volumes Referencemargin

Additionalmargin

Fixed costs Fx changes Others H1/16

+49

457

High additional margin in normalized refining market environment

12

Group comparable EBIT H1/15 vs. H1/16, MEUR

293

+243

-97

-27-2 -2

28 July 2016

Q2/16Segment reviews

Good operational performance reflected in Oil Products’ result

14

Comparable EBIT, MEUR

• Comparable EBIT 149 MEUR

(14 MEUR)

• Sales volume 3.7 Mton (1.9)

• Share of Baltic Sea area sales

59% (79%)

• Urals’ share of feed 69%

(66%)

• Investments 89 MEUR (180

MEUR)

• RONA* 20.4% (16.4%)

0

40

80

120

160

200

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

MEUR Q2/16 Q2/15 2015

Revenue 1,916 1,675 7,467

Comparable EBIT 149 14 439

Net assets 2,451 2,547 2,320

28 July 2016

* Comparable RONA rolling 12 months

Result boosted by higher volumes and additional margin

15

Oil Products comparable EBIT Q2/15 vs. Q2/16, MEUR

28 July 2016


Additionalmargin


14

+68 -39

+99 -3 149-2

+11

Spread between gasoline and diesel narrowed

16

Product margins (price differential vs. Brent),

USD/bbl

-30

-20

-10

0

10

20

30

Jan-14 Jan-15 Jan-16

Diesel Gasoline Heavy Fuel Oil

-4

-3

-2

-1

0

Jan-14 Jan-15 Jan-16

Urals vs. Brent price differential,

USD/bbl

28 July 2016

Total refining margin maintained at good level

17

0

2

4

6

8

10

12

14

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

Reference margin

Additional margin

Total refining margin, USD/bbl

• Total refining margin USD

11.19/bbl (10.83)

• Additional margin USD 5.60/bbl

(2.13)

• Additional margin positively

impacted by good operational

performance and favorable sales

structure

• Porvoo average utilization rate

97% (28%)

• Refinery production costs USD

3.8/bbl (8.0)

28 July 2016

Excellent result for Renewable Products

18

0

50

100

150

200

250

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

Comparable EBIT, MEUR• Comparable EBIT 119 MEUR (54

MEUR)

• Sales volume 485 kton (554); share of

North America 41% (37%)

• Rotterdam turnaround completed with

35 MEUR negative EBIT impact

• Additional margin supported by

successful sales allocation and US

Blender’s Tax Credit

• Share of waste and residues

feedstock 93% (67%)

• Investments 37 MEUR (11 MEUR)

• RONA* 28.2% (15.8%)

MEUR Q2/16 Q2/15 2015

Revenue 596 583 2,372


Net assets 1,735 1,814 1,884

28 July 2016



Additionalmargin


Result supported by strong additional margin

Renewable Products comparable EBIT Q2/15 vs. Q2/16, MEUR

19

54

-2

-2

-25

0+97 -3

28 July 2016

119

400

600

800

1,000

1,200

1,400

Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16

Soybean Rapeseed Palm oil Animal fat

0

100

200

300

400

500


20

European biodiesel margins recovering

20

FAME RED Seasonal vs. Palm oil price*

differential, USD/ton

Vegetable oil and animal fat prices**, USD/ton

* Including $70/ton freight

**Quotations in NWE, source: Oil World

28 July 2016

0

50

100

150


Biomass-based diesel (D4)

Conventional renewable fuel (D6)

-200

0

200

400

600

800


Favorable US market

21

Biodiesel RIN, US cent /galSME vs. Soybean oil price differential, USD/ton

28 July 2016

Strong additional margin

22

0

100

200

300

400

500

600

700

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

Reference margin Additional margin

Renewable Products margins, USD/ton

• Reference margin almost at

same level year-on-year

• Additional margin supported

by successful sales

allocation and margin

management and US

Blender’s Tax Credit

• Optimized feedstock mix

• Low production costs

28 July 2016

Another strong quarter for Oil Retail

23

Comparable EBIT, MEUR

• Comparable EBIT 23

MEUR (22 MEUR)

• Sales volumes increased

particularly in Baltic markets

• Weaker ruble had EUR 2

million negative impact

• Investments 6 MEUR (5

MEUR)

• RONA* 46.9% (31.2%)

0

10

20

30

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

MEUR Q2/16 Q2/15 2015

Revenue 886 976 3,748


Net assets 192 226 184

28 July 2016


Sales volumes continued to increase

24

Oil Retail comparable EBIT Q2/15 vs. Q2/16, MEUR

Q2/15 Volumes Unit margin Fx changes Fixed costs Others Q2/16

22+2 +1

-1 23-2

+1

28 July 2016

Current topics

Outlook for 2016

28 July 2016 26

• Year has continued well

• We are confident that

year 2016 will be

another successful one

for Neste

Segment outlook for 2016

28 July 2016 27

Reference margin Utilization rate

Expected to be somewhat lower in the second half

of 2016 as global product inventories are currently

on a high level.

Porvoo refinery expected to run at high utilization

rate. No scheduled major maintenance outages.

Reference margin Utilization rate

Expected to remain at approximately the average

level of year 2015. Additional margin is expected to

remain strong.

Utilization rates expected to be high.

Oil Products

Renewable Products

Oil RetailUnit margins and sales volumes

Expected to follow previous years’ seasonality

pattern.

Capital Markets Day 2016

28 July 2016 28

• Neste will host a Capital

Markets Day in London on

14 September 2016

• The program will cover an

update on Neste's strategy

and businesses. We will

also elaborate on our growth

ambitions.

• More information on

neste.com/investors

We focus on

29

Cash flowRefinery

productivity

Markets and

customersSafety

28 July 2016

Appendix

Renewable Products comparable EBIT calculation

28 July 2016 31

Q2/15 Q3/15 Q4/15 2015 Q1/16 Q2/16

Sales volume, kt 554 575 625 2,267 531 485

Reference margin, $/ton 172 194 209 182 149 168

Additional margin, $/ton 168 176 424 247 270 366

Variable production costs, $/ton 130 130 130 130 130 130

Comparable sales margin, $/ton 210 239 503 299 288 405

Comparable sales margin, MEUR 105 124 288 611 139 174

Fixed costs, MEUR 28 25 33 116 35 28

Depreciations, MEUR 24 24 24 95 24 29

Comparable EBIT, MEUR 54 75 231 402 80 119

Refinery production costs,Porvoo & Naantali

Q2/15 Q3/15 Q4/15 2015 Q1/16 Q2/16

Refined products Million barrels 12.2 27.8 25.4 92.6 25.6 28.2

Exchange rate EUR/USD 1.10 1.11 1.09 1.11 1.10 1.13

Utilities costs

EUR million 33.3 29.8 30.9 130.6 37.1 38.3

USD/bbl 3.0 1.2 1.3 1.6 1.6 1.5

Fixed costs

EUR million 59.6 53.1 63.4 228.2 58.7 60.1

USD/bbl 5.4 2.1 2.7 2.7 2.5 2.4

External cost

sales

EUR million -5.0 -5.8 -5.2 -21.1 -5.7 -3.7

USD/bbl -0.4 -0.2 -0.2 -0.3 -0.2 -0.1

Total

EUR million 88.0 77.2 89.1 337.8 90.1 94.7

USD/bbl 8.0 3.1 3.8 4.0 3.9 3.8

28 July 2016 32

Balance sheet

33

2,953 2,679

4,1414,203

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

30 Jun 16 30 Jun 15

2,004 1,904

1,790 2,253

3,300 2,747

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

30 Jun 16 30 Jun 15

Non-current assets

Current assets

EquityInt-bear. liabilities

Int-free liabilities

Total assets Total equity & liabilities

28 July 2016 33

7,094 6,904 7,094 6,904

Cash flow

MEUR Q2/16 Q2/15 Q1/16 H1/16 H1/15 2015

EBITDA (IFRS) 372 146 341 714 457 1,057

Capital gains/losses -5 2 -10 -14 -77 -77

Other adjustments 156 96 -15 141 60 -27

Change in working capital -50 28 -136 -187 -339 -94

Net finance costs 18 -18 -42 -23 -28 -88

Taxes -16 -28 -21 -37 -30 -27

Net cash generated from operating activities 476 227 117 593 42 743

Capital expenditure -138 -198 -71 -209 -281 -505

Other investing activities 8 -14 28 35 170 241

Cash flow before financing activities 346 14 73 420 -69 480

28 July 2016 34

Liquidity & maturity profile

0

100

200

300

400

500

600

700

2016 2017 2018 2019 2020 2021+

Short-term

Long-term

MEUR

35

• Total liquidity at the end of June 2016

was EUR 2,729 million

• Cash and cash equivalents totalled

EUR 679 million

• Unused committed credit facilities

totalled EUR 1,650 million

• Unused CP programmes (not

committed) totalled EUR 400

million

• Average interest rate was 3.5% and

maturity 3.4 years at the end of June

• No financial covenants in Group’s

existing loan agreements

28 July 2016

The only way is forward.

second quarter results 2016 - appspot.com · group financials q2/16 7 meur q2/2016 q2/2015 revenue...

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