Neste Oil's Interim Report for January-March 2014

Neste Oil Corporation
Interim Report
25 April 2014 at 9 a.m. (EET)

Neste Oil's Interim Report for January-March 2014

Satisfactory performance in a weak market. Full-year guidance revised.

First quarter in brief:

· Comparable operating profit totaled EUR 55 million (Q1/2013: EUR 135 million)
· Total refining margin was USD 8.44/bbl (Q1/2013: USD 11.54/bbl)
· Renewable Fuels' reference margin was USD 206/ton (Q1/2013: USD 365/ton)
· Renewable Fuels' additional margin was USD 146/ton (Q1/2013: USD 66/ton)
· Net cash from operations totaled EUR -178 million (Q1/2013: EUR -105 million)
· Return on average capital employed (ROACE) was 10.7% (2013: 11.8%)
· Leverage ratio was 34.2% as of the end of March (31.12.2013: 30.0%)

President & CEO Matti Lievonen:

"The year started with a weak market situation, but Neste Oil's good operational performance has continued, resulting in reasonable additional margins for the Oil Products and Renewable Fuels businesses. We recorded a comparable operating profit of EUR 55 million during the first quarter compared to EUR 135 million in the corresponding period last year. The main reason for this decline was an approx. 45% reduction in reference margins at both Oil Products and Renewable Fuels.

Oil Products' reference refining margin was seasonally low during the first quarter, and European demand for petroleum products remained soft and imports continued at high levels. The reference margin averaged USD 3.3/bbl compared to USD 6.3/bbl in the first quarter of 2013, which was unusually strong for the early part of the year. Oil Products' result was also impacted by the planned five-week maintenance outage on production line 4 at Porvoo. Despite the outage, our additional margin averaged USD 5.1/bbl. Oil Products recorded a comparable operating profit of EUR 33 million compared to EUR 111 million in the first quarter of 2013.

Renewable Fuels encountered a difficult market situation, particularly in the US, where uncertainties related to biofuel regulation had a negative impact on prices and demand. Sales volumes were reallocated accordingly, and the proportion of product going to North America was reduced to 27%. The profitability of our European business was impacted by an unusually narrow price differential between palm oil and rapeseed oil. Our NEXBTL renewable diesel refineries operated at high utilization rates, particularly in Singapore and Rotterdam. We increased our usage of waste and residues to 62% of our total renewable inputs, which was important as palm oil prices increased. Renewable Fuels recorded a comparable operating profit of EUR 15 million compared to EUR 26 million in the first quarter of 2013.