Neste's Interim Report for January-March 2017

Neste Corporation
Interim Report
27 April 2017 at 9 am (EET)

Neste's Interim Report for January-March 2017

Good start of the year - comparable operating profit up 17% year-on-year

First quarter in brief:

· Comparable operating profit totaled EUR 204 million (EUR 175 million)
· IFRS operating profit totaled EUR 271 (EUR 254 million)
· Oil Products' total refining margin was USD 11.00/bbl (USD 10.49/bbl)
· Renewable Products' comparable sales margin was USD 286/ton (USD 288/ton)
· Cash flow before financing activities was EUR -25 million (EUR 73 million)
· Return on average capital employed (ROACE) was 16.6% over the last 12 months (2016: 16.9%)
· Leverage ratio was 15.3% at the end of March (31.12.2016: 15.4%)

President & CEO Matti Lievonen:

"The year has started well as Oil Products delivered improved results and Renewable Products successfully maintained its comparable operating profit at last year's first quarter level. Neste recorded a comparable operating profit of EUR 204 million during the first quarter, compared to EUR 175 million in the corresponding period of 2016. Cash flow was impacted by the temporary effect of building profitable contango inventories.

Oil Products posted a comparable operating profit of EUR 126 million, compared to EUR 86 million in the first quarter of 2016. Reference margin, which reflects the refining market, averaged USD 4.9/bbl during the quarter. It was practically same as in the corresponding period last year. However, we were able to increase our additional margin to USD 6.1/bbl, which had a positive impact of EUR 20 million on the results year-on-year. Sales volumes and the use of Russian crude oil increased.

Renewable Products recorded a comparable operating profit of EUR 80 million, which was the same as in the first quarter of 2016. Renewable Products' comparable sales margin was maintained at the first quarter 2016 level despite the expiry of the US Blender's Tax Credit (BTC) at the end of 2016. Sales margin was optimized by volume allocation between our core markets. Sales volumes were 543,000 tons, a 2% increase on volume compared to the corresponding period last year. Sales volumes are typically lowest in the first quarter. The temporary administrative freeze of the US biofuel mandates for 2017 ended in March, and the growing mandates were reconfirmed. Clearly higher share, approx. 82% of sales volumes were allocated to Europe during the first quarter. Renewable diesel production facilities operated at a high 99% utilization rate. Feedstock optimization continued and the share of waste and residue feedstock was 72% of total renewable inputs.