Neste's Interim Report for January-March 2016

Neste Corporation
Interim Report
27 April 2016 at 9 am. (EET)

Neste's Interim Report for January-March 2016

Good start for the year - renewables continued strong performance and refining market followed normal seasonality

First quarter in brief:

· Comparable operating profit totaled EUR 175 million (Q1/2015: EUR 215 million)
· IFRS operating profit totaled EUR 254 (Q1/2015: EUR 233 million)
· Oil Products' total refining margin was USD 10.49/bbl (Q1/2015: USD 11.66/bbl)
· Renewable Products' comparable sales margin was USD 288/ton (Q1/2015: USD 205/ton)
· Cash flow before financing activities was EUR 73 million (Q1/2015: EUR -83 million)
· Return on average capital employed (ROACE) was 16.0% over the last 12 months (2015: 16.3%)
· Leverage ratio was 28.3% at the end of March (31.12.2015: 29.4%)

President & CEO Matti Lievonen:

"The year has started well despite the volatile market environment. Optimization of our global operations and margin management have played a key role as our internal improvement actions. Neste recorded a comparable operating profit of EUR 175 million during the first quarter, compared to EUR 215 million in the corresponding period last year, impacted by a lower Oil Products' reference margin.

Oil Products posted a comparable operating profit of EUR 86 million, compared to EUR 156 million in the first quarter of 2015. Reference margin averaged USD 4.9/bbl during the first quarter, some USD 2.6/bbl lower than a year ago, which had a EUR 56 million negative profit impact year-on-year. Gasoline margins continued as the main driver of the reference margin, while diesel margins were flat. On the average gasoline margins were high for the season, but volatile during the quarter. We have continued to build crude oil and product contango inventories during the first quarter. Overall maintenance costs increased mainly due to the earlier announced production limitations at the Porvoo refinery.

Renewable Products recorded a comparable operating profit of EUR 80 million, compared to EUR 42 million in the first quarter of 2015. Renewable Products' average reference margin remained at the same level as in the corresponding period last year. We were able to increase our additional margin significantly by successful margin management and by capturing a high share of the US Blender's Tax Credit. Sales volumes were higher than in the corresponding period last year, and a larger share of the sales were allocated to North America. The share of waste and residue feedstock was again high, 75% of total renewable inputs, in the first quarter.