Neste’s Q1 revenue drops to €4.8bn
Finnish renewable fuels company Neste saw its revenue decline in the first quarter of 2024 owing to lower market prices.
Revenue for the quarter reached €4.8bn, down from €5.3bn in the same period last year. Revenue from renewable product sales also dipped slightly, landing at €1.7bn compared to €1.8bn in Q1 2023. Moreover, the company also witnessed a significant drop in Renewable Products’ EBITDA from €415m to €242m.
“Our focus was on defending margins in a more challenging market as the market situation in renewable diesel was clearly weaker in the first quarter of 2024 compared to the previous year. In oil products the refining margin remained healthy, although somewhat lower compared to previous year’s corresponding period,” said Matti Lehmus, president and CEO, Neste.
A key factor behind the decline in profitability was the significant drop in renewable product sales margins, falling from $945/ton to $562/ton in Q1.
In the quarter, the company produced a total of 933,000 tons of renewable diesel, 167,000 tons of sustainable aviation fuel (SAF) followed by 35,000 tons of other products. Against the production, the company sold 788,000 tons of renewable diesel, 41,000 tons of SAF and 20,000 tons of other products. Of this, the company reports showed nearly 51% of the RD and SAF sales were in the European region followed by 49% in North America.
This was attributed to an influx of new renewable diesel capacity entering the market. Although Neste saw growth in the US market, low Renewable Identification Number (RIN) D4 prices took a toll on margins there. Weaker market conditions in Europe further compounded the issue.
On the production front, Neste achieved its target of ramping up SAF production at its Singapore facility. However, ongoing constraints at the Martinez facility limited overall output and impacted site economics. Despite this, Neste’s production facilities maintained an average utilisation rate of 88% throughout the quarter.
Looking ahead, Neste anticipates a rise in SAF sales throughout 2024. The company remains confident despite the current market challenges and is actively taking steps to mitigate margin pressures.
The company said that renewable products’ total sales volume is expected to increase from 2023 and to reach approximately 4.4Mt in 2024, out of which SAF sales volume is expected to be 0.5–1.0Mton. Renewable Products’ full-year 2024 average comparable sales margin is expected to be in the range of $600–800/ton.
On feedstocks, it said the outlook for pricing remains uncertain, although some positive signs emerged in March.