Bli medlem
Bli medlem

Du är här

2017-02-07

Neste Oyj: Neste's Financial Statements Release for 2016

Neste Corporation

Financial Statements Release
7 February 2017 at 9 am (EET)
Neste's Financial Statements Release for 2016

Continued successful strategy implementation and record-high financial results
2016 - dividend proposed to be increased by 30% to EUR 1.30 per share

2016 in brief:

* Comparable operating profit totaled EUR 983 million (EUR 925 million)
* IFRS operating profit totaled EUR 1,155 million (699 million)
* Oil Products' total refining margin was USD 10.38/bbl (USD 11.79/bbl)
* Renewable Products' comparable sales margin was USD 348/ton (USD 299/ton)
* Cash flow before financing activities totaled EUR 834 million (EUR 480
million)
* Return on average capital employed (ROACE) was 16.9% (16.3%)
* Leverage ratio was 15.4% at the end of December (31.12.2015: 29.4%)
* Comparable earnings per share were EUR 3.10 (EUR 2.84)
* The Board of Directors will propose a dividend of EUR 1.30 per share
(1.00), totaling EUR 332 million (EUR 256 million).

Fourth quarter in brief:

* Comparable operating profit totaled EUR 262 million (EUR 352 million)
* IFRS operating profit totaled EUR 302 million (EUR 245 million)
* Oil Products' comparable operating profit was EUR 98 million (EUR 91
million)
* Renewable Products' comparable operating profit was EUR 146 million (EUR
231 million)
* Oil Retail's comparable operating profit was EUR 19 million (EUR 17
million)
* Cash flow before financing activities was EUR 267 million (EUR 300
million).

President&CEO Matti Lievonen:

"Neste had another successful year in 2016, as we posted a comparable
operating profit of EUR 983 million compared to EUR 925 million in 2015. For
the first time Renewable Products had the largest full-year profit
contribution, which reflects the continuing strategic transformation of the
company. I am very pleased to note that all business areas improved their
result from the previous year. We also generated strong cash flow and further
strengthened our balance sheet. All key financial indicators showed
improvement, and the return on average capital employed after tax reached
16.9%, which was over the long term target level of 15%.

Oil Products posted a comparable operating profit of EUR 453 million (EUR 439
million). Our reference margin averaged USD 4.9/bbl, which was USD 2.9/bbl
lower than the exceptionally high level in 2015. Global oil product supply
and demand were reasonably balanced, but high product inventories limited the
upside on refining margins. Oil Products' additional margin was increased to
USD 5.5/bbl level, which was USD 1.5/bbl higher than in 2015. This resulted
from operational performance and successful leveraging of contango
opportunities, with sales volumes back on track after the Porvoo refinery
turnaround year 2015.

Renewable Products recorded a full-year comparable operating profit of EUR 469
million (EUR 402 million). Reference margin and additional margin averaged
higher than in 2015. Our sales volumes reached 2.22 million tons, only 2%
below the previous year, despite of the scheduled major turnaround
implemented at the Rotterdam refinery in the second quarter. A slightly
higher share of the sales volume was allocated to the North American market
compared to 2015. In the US market the Environmental Protection Agency (EPA)
finalized increased volume mandates for biomass-based diesel for 2017 and
2018 in November 2016. Feedstock optimization continued, and the share of
waste and residue feedstocks was successfully expanded to 78% of total
renewable inputs in 2016. Acquisition of a new feedstock pretreatment
facility in the Netherlands will further enhance our capability to process
lower quality wastes and residues.

In Oil Retail we were able to increase profits by growing sales volumes and
improving unit margins particularly in the Baltic markets. The segment
continued to improve its performance and generated a full-year comparable
operating profit of EUR 90 million (EUR 84 million).

Crude oil and renewable feedstock price changes, as well as supply and demand
balances, will be reflected in the oil and renewable product markets. Crude
oil prices are expected to increase moderately as crude oil supply and demand
is expected to become more balanced.

Neste expects Oil Products' reference refining margin to be quite similar to
that in 2016 on average. Our Porvoo refinery is expected to run at a high
utilization rate as only normal unit maintenances are planned. A major two
month turnaround at the Naantali unit is scheduled for the third quarter. We
are targeting at least USD 5.5/bbl additional margin after mid-2017 as the
ongoing strategic investments are completed.

Renewable Products' reference margin is expected to be at approximately the
average level of the year 2016. Neste continues to optimize sales allocation
based on the total margin, and we have new attractive markets in Europe. For
example, Norway has set a biofuel target in traffic growing from 7.5% in 2017
to 20% in 2020. California continues to be an important market for Neste.
Sales volumes of the renewable diesel delivered as 100% to end-users are
expected to continue growing from 15% in 2016 to 25% of the total renewable
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. The completed acquisition of the new feedstock
pretreatment and storage facility in the Netherlands will support this goal.
A new nameplate capacity of 2.6 million tons is effective 1 January, 2017,
and utilization rates of our renewable diesel facilities are expected to be
high.

In Oil Retail the sales volumes and unit margins are expected to follow the
previous years' seasonality pattern.

Neste will continue to implement its global renewables growth strategy. The
demand for renewable products is expected to continue growing globally.
Neste's renewables capacity increase program will include both
debottlenecking of the existing production capacity to 3 million tons by
2020, and building of new capacity. We are currently evaluating the
feasibility of options to invest in new production capacity. The options
under review include locations in the US and Singapore.

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 fourth-quarter 2016 results

Neste's revenue in the fourth quarter totaled EUR 3,421 million, approx. 24%
over the EUR 2,759 million reported in the corresponding period last year.
The revenue increase resulted from higher oil price and higher sales volumes.
The Group's comparable operating profit totaled EUR 262 million (EUR 352
million). Oil Products' result was negatively impacted by a lower reference
margin and higher maintenance costs, but positively impacted by higher
additional margin and sales volumes. Renewable Products' result was strong,
but lower compared to the corresponding period last year, when the full-year
US Blender's Tax Credit for 2015 was recorded in the quarter's comparable
operating profit. Oil Retail's result was positively impacted by higher sales
volume and unit margin. The Others segment's comparable operating profit was
lower compared to the fourth quarter of 2015, mainly due to Nynas' lower
result.

Oil Products' fourth-quarter comparable operating profit was EUR 98 million
(91 million), Renewable Products' EUR 146 million (231 million), and Oil
Retail's EUR 19 million (17 million). The comparable operating profit of the
Others segment totaled EUR 2 million (15 million); Nynas accounted for EUR 9
million (22 million) of this figure.

The Group's IFRS operating profit was EUR 302 million (245 million), which was
impacted by inventory gains totaling EUR 51 million (losses of 91 million),
changes in the fair value of open commodity and currency derivatives totaling
EUR -11 million (7 million), mainly related to hedging of inventories. Profit
before income taxes was EUR 297 million (219 million), net profit EUR 262
million (209 million), and earnings per share EUR 1.02 (0.81).

The Group's full-year results for 2016

Neste's revenue in 2016 totaled EUR 11,689 million (EUR 11,131 million). Sales
volumes increased, but the revenue was negatively impacted by a lower average
oil price year-on-year. The Group's comparable operating profit was EUR 983
million (EUR 925 million). Oil Products' result was negatively impacted by
reference margin, which was materially lower than in 2015. However, our
additional margin increased, and the sales volume was higher compared to last
year, which was impacted by the scheduled turnaround at the Porvoo refinery.
Renewable Products operating profit improved as a result of higher reference
margin and additional margin. Oil Retail's result was positively impacted by
increased sales volumes and unit margins. The Others segment recorded a lower
comparable operating profit compared to 2015, mainly due to Nynas' lower
result and higher common corporate costs.

Oil Products' full-year comparable operating profit was EUR 453 million (439
million), Renewable Products' EUR 469 million (402 million), and Oil Retail's
EUR 90 million (84 million). The comparable operating profit of the Others
segment totaled EUR -23 million (2 million); Nynas accounted for EUR 11
million (29 million) of this figure.

The Group's IFRS operating profit was EUR 1,155 million (699 million), which
was impacted by inventory gains totaling EUR 280 million (losses of 263
million), and changes in the fair value of open commodity and currency
derivatives totaling EUR -118 million (-15 million), mainly related to
hedging of inventories. IFRS operating profit was also impacted by capital
gains totaling EUR 23 million (76 million), mainly related to the sale of
Ekokem shares and the sale of Neste's power plant to Kilpilahti Power Plant
Ltd. Profit before income taxes was EUR 1,075 million (634 million), net
profit EUR 943 million (560 million). Comparable earnings per share were EUR
3.10 (2.84), and earnings per share EUR 3.67 (2.18). The Group's effective
tax rate was 12% (12%), which is lower than the Finnish statutory tax rate
20% mainly due to lower taxation in Latvia, Lithuania, Singapore and
Switzerland, where Neste has business operations. Neste's manufacturing
investment in Renewable Products during 2008-2010 in Singapore is subject to
tax exemption for 2010-2023 under the applicable Singapore legislation.

Outlook for 2017

Developments in the global economy have been reflected in the oil, renewable
fuel, and renewable feedstock markets; and volatility in these markets is
expected to continue.
...

Författare Hugin

Tala om vad ni tycker

Tala om vad ni tycker

Ni är just nu inne på en betaversion av nya aktiespararna. Lämna gärna feedback på vad ni tycker i formuläret nedan.