Neste Shares Fall as Weak Biofuels Market Hampers Renewables Outlook

By Christian Moess Laursen

Shares in Neste slipped after the Finnish energy company cut its guidance for renewable products as sales prices took a hit from lower diesel prices amid a weak biofuels market in Europe.

The biofuels market leader and oil-refining company said Wednesday that it now expects sales volumes from its renewable products business to be around 3.9 million metric tons for the full year with a possible variation of 5%, and an average comparable sales margin between $360 and $480 per ton.

The previous guidance was for 4.4 million tons with a variation of 10% and a sales margin of $480-$580 a ton.

The downgrade is a result of a substantial decrease in diesel price during the third quarter, hampering sales prices of Neste's renewable products, it said. Stable waste and residue feedstock prices and soft renewable product market-price premiums also hurt sales prices.

Shares traded 5% lower at 16.86 euros in midday trading. They have nearly halved this year as the European biofuels market has weakened significantly since the second half of last year, in part due to China increasing supply to the continent as well as the falling price of renewable fuel credits in the U.S.

Wednesday's guidance cut follows a downgrade to its renewable-fuel margin target in May. In June, British energy majors Shell and BP both delayed investments in biofuels.

Biofuels are made from organic sources like plants, algae or animal waste, and are considered an efficient solution to reduce global emissions.

Neste said it would adjust how much of its production capacity it uses for renewable products depending on the market conditions.

Of its total volumes, sustainable aviation fuels is now guided to be between 350,000 and 550,000 tons, compared with 500,000-700,000 tons.

Write to Christian Moess Laursen at christian.moess@wsj.com

(END) Dow Jones Newswires

September 11, 2024 06:28 ET (10:28 GMT)

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