Neste: Q2 sales margin for renewable products sets record

Neste released second quarter financial results on July 28, reporting robust demand for renewable products during the three-month period and record quarterly comparable sales margin of $865 per ton, up from $700 per ton during the second quarter of last year.

The company said the record high sales margin was supported by an exceptionally strong diesel market, good sales performance, and more favorable feedstock prices than anticipated towards the end of the quarter.

The renewable products comparable EBITDA was at EUR 538 million for the second quarter, up from EUR 341 million during same period of last year.

Sales volumes reached 808,000 tons during the quarter, up from 732,000 tons during the second quarter of 2021. Approximately 71 percent of that volume was sold into the European market, with 29 percent sold into the North American market, compared to 61 percent and 39 percent, respectively, during the same quarter of 2021. The company’s renewable diesel capacity operated at 103 percent capacity during the second quarter, up from 96 percent during the same three-month period of last year.

Moving into the third quarter, Neste expects renewable products sales volumes to slow slightly. Waste and residue market are expected to remain tight. The company currently predicts its third quarter sales margin will be in the range of $775 to $850 per ton but cautioned forecasting of quarterly margin remains challenging due to the high market volatility.

Neste in June announced plans to expand its renewable products capacity in Rotterdam by 1.3 million tons per year. The expansion project is expected to boost total capacity at the Rotterdam facility to 2.7 million annually, including 1.2 million tons of sustainable aviation fuel (SAF). The company aims to have the new production unit operational during the first half of 2026.

The ongoing expansion of the Singapore facility is proceeding according to schedule, according to Neste, with startup expected by the end of the first quarter of 2023. Neste is also expanding its renewable diesel operations via a 50/50 joint venture with Marathon Petroleum. That joint venture, announced in March, will convert Marathon’s refinery in Martinez, California, to renewable diesel production. Renewable diesel production at the Martinez refinery is expected to come online by the end of 2023, with full nameplate capacity of 2.1 million tons per year by the end of 2023. Together, these expansion projects are expected to boost Neste’s total renewable projects capacity to 5.5 million tons by the end of next year.

Overall, Neste reported comparable EBITDA of EUR 1.085 billion for the second quarter, up from EUR 377 million during the same period of last year. EBITDA was EUR 927 million, up from 599 million.