Wednesday, April 24, 2013

Neste Oil Corporation
Stock Exchange Release
24 April 2013 at 9 a.m. (EET)

Neste Oil’s Interim Report for January-March 2013

• Strong first-quarter comparable operating profit of EUR 135 million (Q1/2012: EUR 79 million)
• Renewable Fuels recorded a clearly positive comparable operating profit of EUR 26 million (Q1/2012: EUR -2 million)

First quarter in brief:

• Comparable operating profit was EUR 135 million (Q1/2012: EUR 79 million)
• IFRS operating profit was EUR 86 million (Q1/2012: EUR 191 million)
• Total refining margin was USD 11.54/bbl (Q1/2012: USD 8.95/bbl)
• Net cash from operations was EUR -105 million (Q1/2012: EUR -353 million)
• Investments totaled EUR 34 million (Q1/2012: EUR 48 million)
• Leverage ratio was 44.0% (Q1/2012: 49.4%)

President & CEO Matti Lievonen:

“Neste Oil had a good start to the year and recorded a strong result during the first quarter. The Group’s comparable operating profit was EUR 135 million.

Oil Products had a solid first quarter, thanks to reasonably high refining margins and good operational performance. Refining margins were driven by strong diesel margins; unseasonably high gasoline margins also made a contribution, especially in February and March. Overall, we are pleased with Oil Products’ first-quarter comparable operating profit of EUR 111 million.

Renewable Fuels made very good progress and for the first time recorded a clearly positive comparable operating profit of EUR 26 million. We were able to expand our customer base further and sales allocations were also successful. Price differentials between different vegetable oils remained favorable during the quarter.

Despite ongoing economic uncertainties, which have been reflected in the oil and renewable fuel markets, our guidance remains unchanged. We expect the Group’s full-year comparable operating profit and that of Renewable Fuels to improve from the levels seen in 2012, and be positive at Renewable Fuels.”

The Group’s first-quarter 2013 results

Neste Oil’s revenue totaled EUR 4,258 million in the first quarter compared to EUR 4,454 million during the same period in 2012. This decrease resulted mainly from lower average crude oil prices. The Group’s comparable operating profit came in at EUR 135 million. Comparable operating profit for the corresponding period in 2012 was EUR 79 million. Oil Products’ result was positively impacted by higher refining margins and good productivity. Renewable Fuels recorded a clearly positive comparable operating profit for the first time. Both Oil Retail and the Others segment posted a slightly lower result than in the first quarter of 2012.

Oil Products’ first-quarter comparable operating profit was EUR 111 million (77 million), Renewable Fuels’ EUR 26 million (-2 million), and Oil Retail’s EUR 11 million (15 million). The comparable operating profit of the Others segment totaled EUR -12 million (-7 million); associated companies and joint ventures accounted for EUR -6 million (-6 million) of this figure.

The Group’s IFRS operating profit was EUR 86 million (191 million), which was impacted by inventory losses totaling EUR 35 million (gains of 64 million) and changes in the fair value of open oil derivatives totaling EUR -14 million (3 million). It should also be noted that the result during the corresponding period last year was positively impacted by a one-time capital gain of EUR 45 million. Pre-tax profit was EUR 65 million (169 million), profit for the period EUR 47 million (123 million), and earnings per share EUR 0.18 (0.48).

Given the capital-intensive nature of its business, Neste Oil uses return on average capital employed after tax (ROACE) as its primary financial target. ROACE figures are based on comparable results. As of the end of March, the rolling twelve-month ROACE was 5.9% (2012 financial year: 5.0%).

Outlook

Uncertainties in the global economy have been reflected in the oil, renewable fuel, and renewable feedstock markets, and this volatility is expected to continue. Global oil demand is generally forecasted to grow moderately in 2013, but new refining capacity is likely to put pressure on simple refineries. Complex refiners such as Neste Oil are expected to remain the most competitive. Diesel is projected to be the strongest part of the barrel going forward, and gasoline margins are expected to develop seasonally. The base oil market is likely to remain under pressure, due to sluggish demand in the automotive industry. Vegetable oil price differentials are currently wider than the historical average, and depend on crop outlooks, weather phenomena, and variations in demand for different types of feedstock. Oil retail markets are expected to remain competitive.

Diesel production line 4 at the Porvoo refinery is currently being shut down for maintenance for up to eight weeks. The shutdown will include a four-week regulatory pressure vessel inspection. Gasoline production at the Porvoo refinery was reduced by a three-week unplanned maintenance outage in April.

In Renewable Fuels, the focus will continue to be on sales, feedstock, and production optimization. The segment’s full-year comparable operating profit is expected to improve from that seen in 2012 and be positive.

The Group’s full-year comparable operating profit is expected to improve compared to 2012, assuming that Neste Oil’s reference refining margin remains at the average level of approx. USD 5/bbl typical of the last few years and that Renewable Fuels’ result develops as expected.

Further information:

Matti Lievonen, President & CEO, tel. +358 10 458 11
Matti Piri, Acting CFO, tel. +358 10 458 4960
Investor Relations, tel. +358 10 458 5292

Neste Oil’s Interim Report Q1 2013