MOSCOW (MRC) -- Finnish energy company Neste warned of a drop in sales and profit for the third quarter as it deals with higher feedstock and crude oil prices as well as planned refinery maintenance, sending its shares down more than 5%, reported Reuters.
Major sources of biofuel feedstock such as waste and residue have seen a steady increase in prices, given the growing emphasis on renewable energy globally. A rise in crude oil prices due to production cuts by the OPEC+ countries and recovering demand driven by the vaccine rollouts is also expected to weigh on its refining business.
The company, however, reported a rise in second-quarter operating profit, which rose to EUR463 million (USD546.2 million) from EUR208 million a year ago on gains in inventory valuations.
The company's revenue also rose 17% to EUR3.02 billion, while analysts had expected it to drop to 2.55 billion euros.
While oil products accounted for just EUR8 million, renewable products, such as biodiesel and aviation fuel, turned an operating profit of EUR443 million.
However, when cleared from inventory valuation gains, comparable operating profit for renewable products fell 5.5% from a year earlier to EUR241 millions.
The oil product unit saw its operating profit fall to EUR8 million from EUR40 million due to a 12-week maintenance turnover at Neste's oil refinery in Porvoo in southeast Finland.
It also said a turnaround at Neste's Singapore refinery will cut operating profit by EUR90 million and a catalyst change at its Rotterdam facility will lower operating profit by EUR50 million.
As MRC informed earlier, Neste and LyondellBasell has recently announced a long-term commercial agreement under which LyondellBasell will source Neste RE, a feedstock from Neste that has been produced from 100% renewable feedstock from bio-based sources, such as waste and residue oils and fats. This feedstock will be processed through the cracker at LyondellBasell’s Wesseling, Germany, plant into polymers and sold under the CirculenRenew brand name.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
Neste (Helsinki) creates solutions for combating climate change and accelerating a shift to a circular economy. The company refines waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for plastics and other materials. The company is the world’s leading producer of renewable diesel and sustainable aviation fuel, developing chemical recycling to combat the plastic waste challenge. In 2020, Neste's revenue stood at EUR 11.8 billion, with 94% of the company’s comparable operating profit coming from renewable products.