Bloomberg News

Neste Oil Shares Jump Most in Six Years on Renewable Fuels

October 25, 2011

(Updates with CEO comment in last paragraph.)

Oct. 25 (Bloomberg) -- Neste Oil Oyj, Finland’s only oil refiner, advanced the most in 6 1/2 years in Helsinki trading, boosted by the improved outlook for its renewable fuels unit.

Neste Oil rose as much as 19 percent, the most since April 2005, and traded at 9.17 euros as of 12:46 p.m. local time.

Sales at its renewables unit will increase more than 50 percent in the fourth quarter from the third, the Espoo, Finland-based refiner said today in an earnings statement.

Renewable diesel volumes were “stronger than expected,” said Timo Heinonen, an analyst at Carnegie Investment Bank AB in Helsinki. “Guidance for the fourth quarter on the renewable fuels was strong. They’re heading in the right direction.”

The refiner started Europe’s biggest renewable diesel facility in Rotterdam last month, which will make about 800,000 tons of fuel a year using vegetable oil and waste fat. With the startup, the 1.5 billion-euro ($2.1 billion) investment program aimed at increasing production capacity “is in its final stage,” the company said Sept. 20.

Neste Oil had a break-even net result in the third quarter, missing the 22 million-euro average net income estimate of seven analysts surveyed by Bloomberg. The stock is down 23 percent this year, giving the company a market capitalization of 2.3 billion euros.

Higher Sales

Sales of the NExBTL renewable diesel rose to 177,000 metric tons last quarter from 102,000 metric tons in the same period a year ago.

Even so, the renewable fuel unit’s third-quarter operating loss was 57 million euros, compared with a loss of 12 million euros in the same period a year earlier. The unit is likely to remain unprofitable for the rest of the year, Neste Oil said in a statement.

Neste Oil also operates a renewable diesel plant in Singapore and two plants in Porvoo, Finland. The fuel helps lower greenhouse-gas emissions by 40 percent to 80 percent compared with regular diesel, the company said.

“The diesel market looks set to be seasonally strong, while the gasoline market is likely to be weaker” for the rest of this year, Matti Lievonen, Neste’s president and chief executive officer, said in the statement. “Our short-term view of the spread between Brent and Urals crude is somewhat softer than earlier this year,” he said, referring to the price difference between the oil grades.

--With assistance from Lananh Nguyen in London. Editors: Alex Devine, Stephen Cunningham.

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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