Neste's Interim Report for January-March 2017 - Seite 2

In Marketing & Services our sales volumes continued at the previous year's first quarter level, but unit margins were clearly lower particularly in Russia and Finland due to competition. The segment generated a comparable operating profit of EUR 11 million (22 million).

Neste expects Oil Products' reference refining margin to be on average similar to that in 2016. Our Porvoo refinery is expected to run at a high utilization rate and to have normal planned unit maintenance. A major two month turnaround at the Naantali unit is scheduled for the third quarter.

Renewable Products' reference margin is expected to be higher than the average level of the year 2016. Neste continues to optimize sales margin by volume allocation between the core markets, and we have attractive markets in Europe. Sales volumes of the renewable diesel delivered as 100% to end-users are expected to continue growing and be close to 25% of the total sales volumes in 2017. The vegetable oil market is expected to remain volatile, and we aim to expand the use of lower quality waste and residue feedstock further. Utilization rates of our renewable diesel facilities are expected to stay high.

In Marketing & Services the sales volumes and unit margins are expected to improve towards the summer period, supported by the previous years' seasonality pattern, and internal actions.

Our strategy implementation is proceeding well, we continue to focus on our customers and growth initiatives, and will be completing the already announced strategic investments in 2017. Therefore, we are confident that the year 2017 will be another successful one for Neste."

The Group's first-quarter 2017 results

Neste's revenue in the first quarter totaled EUR 3,071 million (EUR 2,306 million). The increase mainly resulted from higher oil price. The Group's comparable operating profit was EUR 204 million (EUR 175 million). Oil Products improved its result clearly from the first quarter of 2016, mainly thanks to higher additional margin. Renewable Products was able to maintain its comparable operating profit at the same level as in the corresponding period last year. Renewable Products' additional margin was lower than last year, mainly due to expiry of the US BTC, but it was compensated by stronger reference margin and optimized sales allocation. Marketing & Services had clearly lower comparable operating profit compared to the first quarter of 2016, and it was negatively impacted by lower unit margins. The Others segment's comparable operating profit was also lower compared to the first quarter of 2016, mainly due to Nynas' lower results.