Finland’s Neste boosted by strong refining margins

By Essi Lehto

HELSINKI (Reuters) – Finnish energy company Neste on Thursday posted higher-than-expected second-quarter results as volatile energy markets drove up refining profits, but warned of slightly lower oil product margins and renewable products sales volumes ahead.

“The war in Ukraine has had a significant impact on international energy markets, leading to volatile and significantly higher oil product and natural gas prices in Europe,” CEO Matti Lehmus said in a statement.

Neste’s shares rose by 10% in early morning trade.

Its April-June operating profit rose 66% to 769 million euros ($785.61 million), beating the 700.8 million euro forecast by seven analysts polled by Refinitiv.

Operating profit at Neste’s oil division jumped to 571 million euros from 8 million last year when profitability was weighed down by pandemic restrictions and maintenance at Neste’s Porvoo refinery.

After Moscow’s invasion of Ukraine, Neste said it would pull back from buying Russian crude. Its use of Russian oil decreased to 12% from 70% a year earlier and from 45% in the previous quarter.

Its comparable sales margin for renewables rose 24% to $865 per tonne and Neste said it expects it to be between $775 and $850 in the third quarter.

“The outlook for Q3 and the solid performance in renewables will raise expectations,” Inderes analyst Petri Gostowski said.

($1 = 0.9789 euros)

(Reporting by Essi Lehto, editing by Terje Solsvik and Jason Neely)