35
Third Quarter results 2016 Matti Lievonen, President & CEO 25 October 2016
Third Quarterresults 2016
Matti Lievonen, President & CEO
25 October 2016
Agenda
25 October 2016 2
1 Q3/16 Group financials
2 January-September 2016 review
3 Q3/16 Segment reviews
4 Current topics
5 Appendix
Disclaimer
The following information contains, or may be deemed to contain, “forward-looking statements”. These
statements relate to future events or our future financial performance, including, but not limited to,
strategic plans, potential growth, planned operational changes, expected capital expenditures, future
cash sources and requirements, liquidity and cost savings that involve known and unknown risks,
uncertainties and other factors that may cause Neste Corporation’s or its businesses’ actual results,
levels of activity, performance or achievements to be materially different from those expressed or
implied by any forward-looking statements. In some cases, such forward-looking statements can be
identified by terminology such as “may”, “will”, “could”, “would”, “should”, “expect”, “plan”, “anticipate”,
“intend”, “believe”, “estimate”, “predict”, “potential”, or “continue”, or the negative of those terms or other
comparable terminology. By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in the future.
Future results may vary from the results expressed in, or implied by, the following forward-looking
statements, possibly to a material degree. All forward-looking statements made in this presentation are
based on information presently available to management and Neste Corporation assumes no obligation
to update any forward-looking statements. Nothing in this presentation constitutes investment advice
and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any
securities or otherwise to engage in any investment activity.
25 October 2016 3
High financial performance continued
4
• Comparable EBIT EUR
264 million
• Solid cash flow
• Renewable Products
continued to deliver strong
profits
• Good operational
performance
• Lower refining margin in Oil
Products
25 October 2016
Financial targets well achieved
5
0
10
20
30
40
50
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
21.4
0
5
10
15
20
25
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
18.6
ROACE, rolling 12 months, % Leverage, %
25 October 2016
Q3/16Group financials
Group financials Q3/16
7
MEUR Q3/2016 Q3/2015
Revenue 3,034 3,023
Comparable EBITDA 357 368
IFRS EBITDA 411 245
Comparable operating profit 264 281
Oil Products 120 178
Renewable Products 124 75
Oil Retail 25 27
Others (incl. eliminations) -6 0
IFRS operating profit 319 158
Cash flow before financing activities 147 249
Comparable earnings per share, EUR 0.80 0.89
25 October 2016
Q3/15 Volumes Referencemargin
Additionalmargin
Fx changes Fixed costs Others Q3/16
Support from strong additional margin
8
Group comparable EBIT Q3/15 vs. Q3/16, MEUR
281 -2 -121 +134 -13264
-1-14
25 October 2016
January-September 2016Review
Record high nine-month comparable EBIT
10
• Oil Products reference margin
materially lower compared to
1-9/2015
• Higher additional margin in Oil
Products due to good operational
performance and favorable sales
structure
• Successful margin management,
sales allocation and feedstock
optimization in Renewable
Products
25 October 2016
Group financials 1-9/16
11
MEUR 1-9/2016 1-9/2015
Revenue 8,268 8,372
Comparable EBITDA 993 822
IFRS EBITDA 1,125 702
Comparable operating profit 721 574
Oil Products 355 348
Renewable Products 323 171
Oil Retail 70 67
Others (incl. eliminations) -27 -12
IFRS operating profit 853 454
Cash flow before financing activities 567 180
Comparable earnings per share, EUR 2.21 1.69
25 October 2016
1-9/15 Volumes Referencemargin
Additionalmargin
Fx changes Fixed costs Others 1-9/16
+48
721
High additional margin in normalized refining market environment
12
Group comparable EBIT 1-9/15 vs. 1-9/16, MEUR
574
+377
-218
-41-1-18
25 October 2016
Q3/16Segment reviews
Solid performance in Oil Products
14
Comparable EBIT, MEUR
• Comparable EBIT 120 MEUR
(178 MEUR)
• Sales volume 3.9 Mton (3.6)
• Share of Baltic Sea area sales
56% (67%)
• Urals’ share of feed 74%
(64%)
• Investments 49 MEUR (126
MEUR)
• RONA* 18.2% (18.7%)
0
40
80
120
160
200
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
MEUR Q3/16 Q3/15 2015
Revenue 1,961 2,060 7,467
Comparable EBIT 120 178 439
Net assets 2,443 2,568 2,320
25 October 2016
* Comparable RONA rolling 12 months
Result boosted by higher additional margin in lower refining market
15
Oil Products comparable EBIT Q3/15 vs. Q3/16, MEUR
25 October 2016
Q3/15 Volumes Referencemargin
Additionalmargin
Fx changes Fixed costs Others Q3/16
178+8 -128
+72 -1120
-3 -6
Unseasonally low gasoline margins
16
Product margins (price differential vs. Brent),
USD/bbl
-30
-20
-10
0
10
20
30
Jan-14 Jan-15 Jan-16
Diesel Gasoline Heavy Fuel Oil
-4
-3
-2
-1
0
Jan-14 Jan-15 Jan-16
Urals vs. Brent price differential,
USD/bbl
25 October 2016
High additional margin supported total refining margin
17
0
2
4
6
8
10
12
14
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
Reference margin
Additional margin
Total refining margin, USD/bbl
• Total refining margin USD 9.40/bbl
(13.19)
• Additional margin USD 5.55/bbl
(4.08)
• Additional margin positively
impacted by good operational
performance and favorable sales
structure
• Porvoo average utilization rate
92% (96%), impacted by start of
production line 4 maintenance
• Refinery production costs USD
3.7/bbl (3.1)
25 October 2016
Strong result for Renewable Products
18
0
50
100
150
200
250
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
Comparable EBIT, MEUR• Comparable EBIT 124 MEUR (75
MEUR)
• Sales volume 544 kton (575); share of
North America 35% (34%)
• Additional margin supported by
successful sales allocation and
capturing US biofuel credits
• Share of waste and residues
feedstock 79% (75%)
• Investments 18 MEUR (8 MEUR)
• RONA* 31.0% (17.2%)MEUR Q3/16 Q3/15 2015
Revenue 640 582 2,372
Comparable EBIT 124 75 402
Net assets 1,803 1,689 1,884
25 October 2016
* Comparable RONA rolling 12 months
Q3/15 Volumes Referencemargin
Additionalmargin
Fx changes Fixed costs Others Q3/16
Result supported by high additional margin
Renewable Products comparable EBIT Q3/15 vs. Q3/16, MEUR
19
75 +8
-1
-10
-8+62-2
25 October 2016
124
400
600
800
1,000
1,200
1,400
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Soybean Rapeseed Palm oil Animal fat
0
100
200
300
400
500
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
20
European biodiesel margins improving
20
FAME RED Seasonal vs. Palm oil price*
differential, USD/ton
Vegetable oil and animal fat prices**, USD/ton
* Including $70/ton freight
**Quotations in NWE, source: Oil World
25 October 2016
0
50
100
150
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Biomass-based diesel (D4)
Conventional renewable fuel (D6)
-200
0
200
400
600
800
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Favorable US market supported by mandate volume growth
21
Biodiesel RIN, US cent /galSME vs. Soybean oil price differential, USD/ton
25 October 2016
Strong additional margin
22
0
100
200
300
400
500
600
700
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
Reference margin Additional margin
Renewable Products margins, USD/ton
• Reference margin slightly
higher year-on-year
• Additional margin supported
by successful sales
allocation and margin
management and capturing
US biofuel credits
• Utilization rate 100% (99%)
• Low production costs
25 October 2016
Solid quarter for Oil Retail
23
Comparable EBIT, MEUR
• Comparable EBIT 25
MEUR (27 MEUR)
• Sales volumes increased
particularly in Baltic markets
• Heavy traffic continues to
recover in Finland
• Investments 8 MEUR (7
MEUR)
• RONA* 46.7% (33.6%)
0
10
20
30
Q3/15 Q4/15 Q1/16 Q2/16 Q3/16
MEUR Q3/16 Q3/15 2015
Revenue 925 991 3,748
Comparable EBIT 25 27 84
Net assets 208 190 184
25 October 2016
* Comparable RONA rolling 12 months
Sales volumes increased
24
Oil Retail comparable EBIT Q3/15 vs. Q3/16, MEUR
Q3/15 Volumes Unit margin Fx changes Fixed costs Others Q3/16
27 +1 -1-2
250
0
25 October 2016
Current topics
Outlook for 2016
25 October 2016 26
• Year has continued well
• We are confident that
year 2016 will be
another successful one
for Neste
Segment outlook for 2016
25 October 2016 27
Reference margin Utilization rate
Expected to be somewhat higher in the fourth
quarter than in the third quarter of 2016.
Porvoo production line 4 maintenance brought
forward from spring 2017. Expected negative
EBIT impact approx. EUR 30 million mainly in Q4.
Reference margin Utilization rate
Expected to remain at approximately the average
level of year 2015. Additional margin is expected to
remain strong.
Utilization rates expected to be high.
Oil Products
Renewable Products
Oil RetailUnit margins and sales volumes
Expected to follow previous years’ seasonality
pattern.
We focus on
28
Cash flowRefinery
productivity
Markets and
customersSafety
25 October 2016
Appendix
Renewable Products comparable EBIT calculation
25 October 2016 30
Q3/15 Q4/15 2015 Q1/16 Q2/16 Q3/16
Sales volume, kt 575 625 2,267 531 485 544
Reference margin, $/ton 194 209 182 149 168 209
Additional margin, $/ton 176 424 247 270 366 296
Variable production costs, $/ton 130 130 130 130 130 130
Comparable sales margin, $/ton 239 503 299 288 405 375
Comparable sales margin, MEUR 124 288 611 139 174 183
Fixed costs, MEUR 25 33 116 35 28 33
Depreciations, MEUR 24 24 95 24 29 26
Comparable EBIT, MEUR 75 231 402 80 119 124
Refinery production costs,Porvoo & Naantali
Q3/15 Q4/15 2015 Q1/16 Q2/16 Q3/16
Refined products Million barrels 27.8 25.4 92.6 25.6 28.2 26.8
Exchange rate EUR/USD 1.11 1.09 1.11 1.10 1.13 1.12
Utilities costs
EUR million 29.8 30.9 130.6 37.1 38.3 38.9
USD/bbl 1.2 1.3 1.6 1.6 1.5 1.6
Fixed costs
EUR million 53.1 63.4 228.2 58.7 60.1 54.1
USD/bbl 2.1 2.7 2.7 2.5 2.4 2.3
External cost
sales
EUR million -5.8 -5.2 -21.1 -5.7 -3.7 -3.2
USD/bbl -0.2 -0.2 -0.3 -0.2 -0.1 -0.1
Total
EUR million 77.2 89.1 337.8 90.1 94.7 89.7
USD/bbl 3.1 3.8 4.0 3.9 3.8 3.7
25 October 2016 31
Balance sheet
32
2,786 2,486
4,1104,131
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
30 Sep 16 30 Sep 15
1,880 1,819
1,487 1,933
3,529 2,865
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
30 Sep 16 30 Sep 15
Non-current assets
Current assets
EquityInt-bear. liabilities
Int-free liabilities
Total assets Total equity & liabilities
25 October 2016 32
6,896 6,618 6,8966,618
Cash flow
MEUR Q3/16 Q3/15 Q2/16 1-9/16 1-9/15 2015
EBITDA (IFRS) 411 245 372 1,125 702 1,057
Capital gains/losses -13 0 -5 -27 -77 -77
Other adjustments -18 -62 156 123 -2 -27
Change in working capital -85 208 -50 -271 -131 -94
Net finance costs -40 -50 18 -64 -79 -88
Taxes -50 -20 -16 -86 -50 -27
Net cash generated from operating activities 206 322 476 799 364 743
Capital expenditure -83 -145 -138 -291 -425 -505
Other investing activities 24 72 8 59 242 241
Cash flow before financing activities 147 249 346 567 180 480
25 October 2016 33
Liquidity & maturity profile
0
100
200
300
400
500
600
700
2016 2017 2018 2019 2020 2021+
Short-term
Long-term
MEUR
34
• Total liquidity at the end of September
2016 was EUR 2,573 million
• Cash and cash equivalents totalled
EUR 523 million
• Unused committed credit facilities
totalled EUR 1,650 million
• Unused CP programmes (not
committed) totalled EUR 400
million
• Average interest rate for interest-
bearing liabilities was 3.5%* and
maturity 3.8 years at the end of
September
• No financial covenants in Group
companies’ existing loan agreements
25 October 2016
*Average interest rate for interest-bearing liabilities excluding finance leases was 2.8%
The only way is forward.
