2010-07-29 08:00:00 CEST
2010-07-29 08:03:03 CEST
REGULATED INFORMATION
Neste Oil - Interim report (Q1 and Q3)
Neste Oil's interim report for January - June 2010
Stock Exchange Release
Neste Oil Corporation
29 July 2010 at 9 am (EET)
Neste Oil's interim report for January - June 2010
- Major turnaround at Porvoo resulted in a second-quarter comparable operating
profit of EUR 5 million (Q2/2009: 47 million)
Second quarter in brief:
· Comparable operating profit declined to EUR 5 million (Q2/2009: 47
million) due to a scheduled six-week maintenance turnaround at the Porvoo
refinery
· IFRS operating profit of EUR -63 million (Q2/2009: 118 million), impacted
by a EUR 58 million capital loss resulting from the dismantling of the Neste Oil
Pension Fund
· Total refining margin of USD 7.35/bbl (Q2/2009: 7.87)
· Net cash from operations of EUR 243 million (Q2/2009: 223 million)
· Investments totaled EUR 374 million (Q2/2009: 210 million)
President & CEO Matti Lievonen:"We carried out the largest turnaround in our history at the Porvoo refinery
during April and May. It naturally had a negative impact on our profitability
during the second quarter. Looking ahead, I'm confident that the turnaround will
secure smooth runs for Porvoo for the next five years.
Our refining margin looks likely to increase from current levels towards the end
of the year, as the turnaround has been completed and economic growth is
expected to continue, having a positive impact on demand for diesel in
particular. This will benefit our Oil Products business, which is likely to have
a stronger second half. The high level of inventories in many markets will limit
the extent of this benefit, however.
Our capital projects in Singapore and Rotterdam are proceeding according to
plan, and we expect the new Singapore renewable diesel plant to start production
in the fourth quarter. We are excited to bring more of this high-quality
renewable diesel to market, particularly as many of our employees, including
myself, have been using 100% NExBTL renewable diesel in their cars since the
early summer and have experienced the low emissions, high performance, and other
excellent properties this fuel offers first hand."
Further information:
Matti Lievonen, President & CEO, tel. +358 10 458 11
Ilkka Salonen, CFO, tel. +358 10 458 4490
Investor Relations, tel. +358 10 458 5132
News conference and conference call
A press conference in Finnish on the second quarter results will be held today,
29 July 2010, at 11:30 am EET at the company's headquarters, Keilaranta 21,
Espoo.http://www.nesteoil.com will feature English versions of the presentation
materials. A conference call in English for investors and analysts will be held
on 29 July 2010 at 3:00 pm Finland / 1:00 pm London / 8:00 am New York. The
call-in numbers are as follows: Europe: +44 (0)20 3140 8286, US: +1
718 354 1152, using access code 1946718. The conference call can be followed at
company's website. An instant replay of the call will be available for one week
at +44 (0)20 7111 1244 for Europe and +1 347 366 9565 for the US, using access
code 1946718#.
NESTE OIL FINANCIAL STATEMENTS, 1 JANUARY - 30 JUNE 2010
Quarterly figures are unaudited, full year figures are audited
Figures in parentheses refer to the corresponding period for 2009, unless
otherwise stated.
KEY FIGURES
EUR million (unless otherwise noted)
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009
-------------------------------------------------------------------------------
Revenue 2,576 2,592 2,725 5,301 4,645 9,636
Operating profit before depreciation -1 174 155 154 324 569
Depreciation, amortization,
and impairments 62 56 58 120 111 234
Operating profit -63 118 97 34 213 335
Comparable operating profit * 5 47 88 93 103 116
Profit before income tax -70 109 88 18 190 296
Earnings per share, EUR -0.20 0.35 0.25 0.05 0.58 0.86
Investments 374 210 190 564 384 863
Net cash from operating activities 243 223 374 617 240 177
30 June 30 June 31 Dec
2010 2009 2009
-------------------------------------------------------------------------------
Total equity 2,175 2,144 2,222
Interest-bearing net debt 1,926 1,409 1,918
Capital employed 4,159 3,660 4,257
Return on capital employed pre-tax (ROCE), % 1.9 12.5 9.0
Return on average capital employed after tax
(ROACE)**, % 2.1 8.8 2.5
Return on equity (ROE), % 1.4 13.9 10.2
Equity per share, EUR 8.45 8.34 8.64
Cash flow per share, EUR 2.41 0.94 0.69
Equity-to-assets ratio, % 36.1 41.3 39.1
Leverage (Net debt to capital), % 47.0 39.7 46.3
Gearing, % 88.6 65.7 86.3
* Comparable operating profit is calculated by excluding inventory gains/losses,
capital gains/losses, and unrealized changes in the fair value of oil and
freight derivative contracts from the reported operating profit. Inventory
gains/losses include changes in the fair value of all trading inventories.
** Rolling 12 months
The Group's second-quarter result
Neste Oil's second-quarter sales in 2010 totaled EUR 2,576 million (2,592
million). The Group's comparable operating profit of EUR 5 million (47 million)
was negatively impacted by a scheduled six-week maintenance turnaround at the
Porvoo refinery. The impact of the turnaround is estimated to be EUR 65 million
compared to the projected figure of EUR 50 million published in late April. This
difference was due to stronger margins in May and a few of days of additional
downtime at the refinery.
Oil Products' second-quarter comparable operating profit was EUR -3 million (37
million), Renewable Fuels' EUR -23 million (-6 million) and Oil Retail's EUR 13
million (14 million). Others segment's comparable operating profit totaled EUR
16 million (-2 million), of which profits from associated companies and joint
ventures was EUR 20 million (9 million).
The Group's second-quarter IFRS operating profit was EUR -63 million (118
million). The majority of this figure, totaling EUR 58 million, was accounted
for by the transfer of the pension liabilities of the Neste Oil Pension Fund to
insurance companies. In addition, inventory losses totaled EUR 42 million.
Pre-tax profit was EUR -70 million (109 million), profit for the period EUR -50
million (89 million) and earnings per share EUR -0.20 (0.35).
The Group's January-June 2010 results
Neste Oil's sales during January-June 2010 totaled EUR 5,301 million (4,645
million). The comparable operating profit was EUR 93 million (103 million),
which includes EUR 47 million from an insurance compensation payment received in
February and EUR 65 million of lost revenue resulting from the Porvoo refinery
maintenance turnaround in April and May.
Oil Products' six-month comparable operating profit was EUR 55 million (101
million), Renewable Fuels' EUR -40 million (-13 million), Oil Retail's EUR 19
million (26 million), and Others' EUR 59 million (-13 million). Profits from
associated companies and joint ventures totaled EUR 12 million (2 million).
The IFRS operating profit during January-June was EUR 34 million (213 million)
and was negatively impacted by the transfer of the Neste Oil Pension Fund and
inventory losses; an inventory gain of EUR 141 million was recorded in the first
half of 2009. Pre-tax profit amounted to EUR 18 million (190 million), profit
for the period EUR 14 million (150 million), and earnings per share EUR 0.05
(0.58).
Given the capital-intensive nature of its business, Neste Oil uses return on
average capital employed after tax (ROACE) as its primary financial target.
ROACE figures are based on comparable results. As of the end of June, the
rolling twelve-month ROACE was 2.1% (2009 financial year: 2.5%)
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009
--------------------------------------------------------------------------------
COMPARABLE OPERATING PROFIT 5 47 88 93 103 116
- inventory gains/losses -42 65 16 -26 141 261
- changes in the fair value of open
oil derivatives 27 6 -7 20 -31 -43
- capital gains/losses -53 0 0 -53 0 1
OPERATING PROFIT -63 118 97 34 213 335
Cash flow, investments, and financing
Neste Oil Group's net cash from operating activities between January and June
was strong at EUR 617 million (240 million), resulting from release of funds
from working capital and a EUR 85 million positive impact related to the
transfer of Neste Oil Pension Fund's liabilities to insurance companies.
Investments totaled EUR 564 million in the first half (384 million), of which
EUR 110 million was related to the major maintenance turnaround at the Porvoo
refinery. Oil Products' capital spending was EUR 212 million (94 million),
Renewable Fuels' EUR 278 million (273 million), and Oil Retail's EUR 15 million
(10 million). Others' investments totaled EUR 59 million (7 million), of which
EUR 51 million related to a non-cash purchase of the company's head office
building. This transaction was part of the transfer of Neste Oil Pension Fund's
liabilities.
Interest-bearing net debt was EUR 1,926 million as of the end of June compared
to EUR 1,918 at the end of 2009. Net financial expenses between January and June
were EUR 16 million (23 million). The average interest rate of borrowings at the
end of June was 2.2%, and the average maturity 3.6 years.
The equity-to-assets ratio was 36.1% (31 Dec 2009: 39.1%), the leverage ratio
47.0% (31 Dec 2009: 46.3%), and the gearing ratio 88.6% (31 Dec 2009: 86.3%).
The Group's cash and cash equivalents and committed, unutilized credit
facilities amounted to EUR 1,196 million as of the end of the June (31 Dec
2009: 1,407 million). The company issued a EUR 300 million bond, with a maturity
of 5 years and coupon of 4.875% at the end of June. The proceeds were received
in early July. Neste Oil's loan agreements contain no financial covenants.
In accordance with its hedging policy, Neste Oil has hedged the majority of its
net foreign currency exposure for the next 12 months, mainly using forward
contracts and currency options. The most important hedged currency is the US
dollar.
Strategy implementation
Neste Oil continued to implement its clean fuel strategy during the first half
of 2010. The company's capital projects consist of new plants designed to
increase production of renewable diesel and high-quality base oil.
Strategic projects
Construction of the two major 800,000 t/a renewable diesel plants in Singapore
and Rotterdam is proceeding according to plan. Finalizing construction work is
now under way and commissioning has started at the Singapore plant, with
start-up there planned during the fourth quarter. The Rotterdam plant is
proceeding well and is expected to start up towards the end of the first half of
2011. The Singapore plant is on-budget at EUR 550 million, while the Rotterdam
plant is expected to come in under its EUR 670 million budget.
Neste Oil has a 45% stake in a JV that is building a 400,000 t/a base oil plant
in Bahrain. The project is proceeding on-schedule and on-budget, and the plant
is scheduled to be completed in the second half of 2011. Neste Oil's share of
the investment cost is EUR 130 million.
Other
On 30 June, Neste Oil announced that it has sold its Portuguese subsidiary Neste
Oil Portugal S.A., owning a gasoline component ETBE plant in Sines, to the
Portuguese company Repsol Polimeros LDA. Neste Oil booked a small capital gain
from the transaction to its second-quarter IFRS operating profit.
Market overview
Crude oil prices increased in early April to their highest level since the fall
2008, supported by expectations for an accelerating economic recovery and
stronger oil demand. Brent Dated remained at close to USD 85/bbl until an
evolving eurozone debt crisis and sell-off in global equity markets pushed
prices down sharply in May. Prices recovered to some extent in June, with Brent
Dated rising from USD 70/bbl to USD 75/bbl towards the end of the quarter. Price
differentials between heavier and lighter crude narrowed in May and June, driven
by lower exports of Russian crude and stronger demand for medium sour
feedstocks.
Refining margins decreased in April, despite lower product supply caused by the
refinery maintenance season. Margins recovered in May as a result of cheaper
crude and growing demand for diesel in the US and China.
Gasoline margins declined during the quarter, despite the start of the US summer
driving season. High crude oil prices pulled them down in April, although
gasoline prices, reflecting limited supply, were the highest in 18 months.
Margins recovered slightly in early May, but a softer gasoline market, due to
high inventory levels and the general weakness of the commodities market,
subsequently resulted in lower margins.
Margins for middle distillates strengthened to their highest level since early
2009 on the back of increasing demand. Refinery maintenance outages in April
limited middle distillate supply and kept prices high. Prices fell back in May
with rising refinery utilization rates, but a downturn in crude oil prices
improved margins. Fuel oil margins weakened during the quarter due to high
Russian supply.
The price differential between various biofeedstocks was very narrow during the
second quarter, mainly due to weather-related worries. Differentials have
widened since, thanks to increased production of palm oil. The price premium of
high-quality renewable diesel compared to conventional biodiesel remained
healthy.
Gasoline demand on the retail market in Finland and Baltic Rim has been lower,
while demand for diesel and other products for industrial and commercial
transportation use has continued to increase.
Based on good transport demand oil tanker freight markets showed some positive
development during the quarter but crude freights are expected to weaken again
as vessel supply remains ample.
Key drivers
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009 July 10 July 09
Reference refining
margin, USD/bbl 5.23 3.63 4.20 4.65 4.33 3.14 3.63 2.26
Neste Oil total
refining margin,
USD/bbl 7.35 7.87 7.83 7.58 8.65 7.35 n.a. n.a.
Urals-Brent price
differential, USD/bbl -1.80 -0.94 -1.35 -1.58 -1.05 -0.81 -1.11 -0.43
NWE Gasoline margin,
USD/bbl 11.11 12.84 11.75 11.43 9.62 9.26 8.7 10.7
NWE Diesel margin,
USD/bbl 14.79 9.98 11.25 13.02 12.68 11.18 12.8 8.7
NWE Heavy fuel oil
margin, USD/bbl -10.46 -8.61 -6.91 -8.68 -8.69 -7.44 -10.3 -5.6
Brent Dated crude oil,
USD/bbl 78.31 58.79 76.24 77.27 51.60 61.51 75.23 64.06
USD/EUR, market rate 1.27 1.36 1.38 1.33 1.33 1.39 1.27 1.41
USD/EUR, hedged 1.38 1.44 1.35 1.36 1.44 1.41 n.a. n.a.
Crude freights, WS
points (TD7) 119 74 122 121 78 81 106 73
--------------------------------------------------------------------------------
Production and sales
Neste Oil's total production in the second quarter was 2.2 million tons (3.4
million), of which NExBTL renewable diesel accounted for 0.1 million tons (0.0
million). Production was low due to a planned six-week maintenance turnaround at
the Porvoo refinery in April and May. The turnaround was the largest in the
refinery's history and involved close to a million man-hours of work and some
2,500 people from outside contractors.
Neste Oil's production, by plant (1,000 t)
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009
Porvoo refinery 1,499 2,725 2,899 4,399 5,577 11,520
Naantali refinery 632 557 571 1,203 1,130 2,438
Beringen polyalfaolefin plant 8 8 8 16 15 35
Edmonton iso-octane plant (Neste Oil's
share) 60 60 48 108 126 256
NExBTL plants 50 39 70 120 76 219
The Porvoo refinery operated at an average capacity utilization rate of 51%
(79%) during the quarter as a result of the maintenance turnaround. The
utilization rate of the Naantali refinery was 86% (84%).
The proportion of Russian Export Blend in Neste Oil's total refinery input was
70% (58%) during the second quarter, resulting from the low use of other crude
and feedstocks at Porvoo during the turnaround. Refinery production costs
totaled USD 5.6/bbl (5.5).
Sales suffered from limited production during the quarter. To compensate for
lost volumes, almost the entire volume of stored product, 450,000 tons, was sold
during the quarter.
Neste Oil's sales from in-house production, by product category (1,000 t)
4-6/10 % 4-6/09 % 1-3/10 % 1-6/10 % 1-6/09 % 2009 %
Motor gasoline 747 27 1,294 35 1,080 29 1,827 28 2,234 31 4,218 30
Gasoline
components 74 3 92 3 46 1 120 2 157 2 270 2
Diesel fuel 1,043 37 1,181 32 1,508 41 2,551 40 2,487 35 5,228 37
Jet fuel 83 3 137 4 139 4 223 3 286 4 613 4
Base oils 76 3 73 2 76 2 153 2 130 2 257 2
Heating oil 134 5 131 4 267 7 401 6 354 5 631 4
Heavy fuel oil 166 6 346 9 212 6 378 6 700 10 1,300 9
LPG 51 2 83 2 92 2 143 2 142 2 220 2
NExBTL
renewable
diesel 72 2 43 1 41 1 112 2 74 1 209 1
Other products 339 12 286 8 270 7 609 9 532 8 1,232 9
--------------------------------------------------------------------------------
TOTAL 2,785 100 3,666 100 3,730 100 6,517 100 7,096 100 14,178 100
Neste Oil's sales from in-house production, by market area (1,000 t)
4-6/10 % 4-6/09 % 1-3/10 % 1-6/10 % 1-6/09 % 2009 %
Finland 1,628 59 1,854 51 2,017 54 3,645 56 3,714 53 7,580 53
Other Nordic
countries 568 20 512 14 575 15 1,143 18 1,048 15 2,210 16
Other Europe 402 14 610 16 923 25 1,326 20 1,168 16 2,488 18
USA & Canada 178 6 627 17 170 5 349 5 1,099 15 1,686 12
Other
countries 9 1 63 2 45 1 55 1 66 1 214 1
--------------------------------------------------------------------------------
TOTAL 2,785 100 3,666 100 3,730 100 6,517 100 7,096 100 14,178 100
SEGMENT REVIEWS
Neste Oil's businesses are grouped into four reporting segments: Oil Products,
Renewable Fuels, Oil Retail, and Others.
Oil Products
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009
Revenue, MEUR 2,064 2,091 2,272 4,336 3,673 7,631
Comparable operating profit, MEUR -3 37 58 55 101 105
IFRS operating profit, MEUR -18 105 65 47 211 318
Total refining margin, USD/bbl 7.35 7.87 7.83 7.58 8.65 7.35
Oil Products' comparable operating profit for the second quarter came in at EUR
-3 million compared to EUR 37 million during the same quarter in 2009. Lower
profitability resulted from the maintenance turnaround at the Porvoo refinery.
The total refining margin of USD 7.35/bbl in the second quarter was close to the
USD 7.87/bbl recorded during the same quarter in 2009.
The base oils business was supported by improvement in demand and margins, and
gasoline components related to normal seasonality. Profitability of the oil
tanker chartering business improved year-on-year due to higher freight rates.
Oil Products' comparable return on net assets was 4.0% (7.9%) in the second
quarter.
Renewable Fuels
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009
Revenue, MEUR 60 38 36 96 62 182
Comparable operating profit, MEUR -23 -6 -17 -40 -13 -29
IFRS operating profit, MEUR -19 -2 -15 -34 -12 -24
-------------------------------------------------------------------------
Renewable Fuels' comparable operating profit was EUR -23 million in the second
quarter, compared to EUR -6 million in the same quarter of 2009. This resulted
from costs related to preparation work for the start-up of the new Singapore
plant and building up operations in Rotterdam according to plan. In addition,
renewable diesel margins were under pressure in the second quarter due to very
narrow price differentials between biofeedstocks. The price premium of
high-quality renewable diesel remained healthy. Sales volumes increased despite
the Porvoo turnaround thanks to inventory stored earlier in the year.
Renewable Fuels' comparable return on net assets was -7.4% (-5.5%) in the second
quarter.
Oil Retail
4-6/10 4-6/09 1-3/10 1-6/10 1-6/09 2009
Revenue, MEUR 884 727 849 1,733 1,418 2,998
Comparable operating profit, MEUR 13 14 6 19 26 50
IFRS operating profit, MEUR 14 13 6 20 25 50
Total sales volume*, 1,000 m3 973 965 1,034 2,006 1,987 4,002
- gasoline station sales, 1,000 m3 341 370 295 636 699 1,405
- diesel station sales, 1,000 m3 347 326 332 679 646 1,331
- heating oil, 1,000 m3 143 145 221 363 359 714
- heavy fuel oil, 1,000 m3 70 61 103 173 151 287
* includes both station and terminal sales
Oil Retail's second-quarter comparable operating profit was EUR 13 million
compared to EUR 14 million in the same period in 2009. Sales volumes were flat
year-on-year, with lower gasoline sales compensated for by higher diesel sales.
The restrictions placed on air traffic in Europe in April had a negative impact
on jet fuel sales.
In May, Neste Oil closed a deal to acquire 22 unmanned fuel stations in
Lithuania, bringing the number of Neste Oil stations in Lithuania to 59 and the
company's share of the local market to approximately 15%.
Oil Retail's comparable return on net assets was 12.4% (16.1%) in the second
quarter.
Shares, share trading, and ownership
Neste Oil's shares are traded on NASDAQ OMX Helsinki Ltd. The share price closed
the second quarter at EUR 11.95. At its highest during the quarter, the share
price reached EUR 13.77, while at its lowest the price stood at EUR 11.13.
Market capitalization was EUR 3.1 billion as of 30 June 2010. An average of 1.1
million shares were traded daily, representing 0.4% of the company's shares.
Neste Oil's share capital registered with the Company Register as of 30 June
2010 totaled EUR 40 million, and the total number of shares outstanding is
256,403,686. The company does not hold any of its own shares, and the Board of
Directors has no authorization to buy back company shares or to issue
convertible bonds, share options, or new shares.
As of the end of June, the Finnish State owned 50.1% (50.1%) of outstanding
shares, foreign institutions 16.6% (15.0%), Finnish institutions 20.3% (20.6%),
and Finnish households 12.9% (14.3%).
Personnel
Neste Oil employed an average of 5,093 (5,328) employees in the first half, of
which 1,457 (1,293) are based outside Finland. As of the end of June, the
company had 5,183 employees (5,547), of which 1,469 (1,330) are located outside
Finland.
Health, safety, and the environment
The main indicator for safety performance used by Neste Oil - total recordable
injury frequency (TRIF, number of cases per million hours worked) for all work
done for the company, combining the company's own personnel and contractors -
stood at 4.9 (2.8) at the end of June 2010. The target for 2010 is below 3. Lost
workday injury frequency (LWIF) stood at 3.1 (2.0). The target is below 1.
The TRIF recorded for the turnaround at the Porvoo refinery, 13.3,
was unsatisfactory but was an improvement on the 18.8 recorded during the
previous turnaround in 2005. Involving 1,055,000 working hours and average daily
staff levels of 3,200-3,300, the turnaround was one of the largest in
Europe. Safety training was given for 5,600 people in Finland and service
providers' home countries before the turnaround, and 5,000 reported safety
observation tours were carried out during the project. Implementation
of best safety procedures across the company will continue to be in central
priority during the second half of 2010.
Annual General Meeting
Neste Oil's Annual General Meeting (AGM) was held on 15 April in Helsinki. The
AGM adopted the company's financial statements and consolidated financial
statements for 2009 and discharged the Supervisory Board, the Board of
Directors, and President & CEO from liability for 2009. The AGM also approved
the Board of Directors' proposal regarding the distribution of the company's
profit for 2009. A dividend of EUR 0.25 per share was paid on 27 April.
In accordance with the proposal made by the AGM Nomination Committee, the AGM
confirmed the membership of the Board of Directors at eight members, and the
following were re-elected to serve until the end of the next AGM: Mr Timo
Peltola, Mr Mikael von Frenckell, Mr Michiel Boersma, Ms Ainomaija Haarla, Ms
Nina Linander, Mr Hannu Ryöppönen and Mr Markku Tapio. Ms Maija-Liisa Friman was
elected as a new member. Mr Timo Peltola will continue as Chairman and Mr Mikael
von Frenckell as Vice Chairman. The AGM decided to keep the remuneration paid to
Board members unchanged.
The AGM confirmed that the Supervisory Board shall comprise seven members and
the following members were re-elected: Ms Heidi Hautala (Chairman), Mr Kimmo
Tiilikainen (Vice Chairman), Mr Esko Ahonen, Mr Timo Heinonen, Mr Markus
Mustajärvi and Ms Anne-Mari Virolainen. Ms Miapetra Kumpula-Natri was elected
for the first time. Members are all Finnish Members of Parliament, with the
exception of Ms Heidi Hautala, who is a Member of the European Parliament. No
changes were made to the remuneration paid to the Supervisory Board. A proposal
to dissolve the Supervisory Board was not accepted.
In accordance with a proposal by the Board of Directors, Ernst & Young Oy,
Authorized Public Accountants, were appointed as the company's Auditor, with
Authorized Public Accountant Anna-Maija Simola as Responsible Auditor, until the
end of the next AGM. Payment for their services shall be made in accordance with
their invoice.
In accordance with a proposal by the Board of Directors, Subsection 1 of Section
11 of the Articles of Association has been amended and now requires that the
invitation to an AGM should be made at least three weeks prior to a meeting and
at least nine days prior to the record date set for the meeting as defined in
Subsection 2 of Section 2 of Chapter 4 of the Companies Act.
Following a proposal by the Prime Minister's Office, representing the Finnish
State, the AGM decided to establish a Nominations Committee to prepare proposals
covering the members of the Board of Directors and their remuneration for
consideration by the next AGM. The Nomination Committee comprises
representatives of the Company's three largest shareholders and shall also
include, as an expert member, the Chairman of the Board. The right to appoint
the shareholder representatives on this Committee will lie with the three
shareholders holding the largest number of votes associated with all the
company's shares on 1 November preceding the AGM. The Chairman of the Board of
Directors will be responsible for convening the Committee, and the Committee's
members will appoint a Chairman from among themselves. The Nominations Committee
will present their proposal to the Board of Directors by 1 February prior to the
AGM at the latest.
Potential short-term and long-term risks
The oil market has been and is expected to continue to be very volatile. Oil
refiners are exposed to a variety of political and economic trends and events,
as well as natural phenomena that affect the short- and long-term supply of and
demand for the products that they produce and sell.
The largest uncertainty over the short term continues to be the pace of the
recovery of the world economy, which is likely to have a material impact on the
demand for petroleum products generally and diesel fuel in particular.
Sudden and unplanned outages at Neste Oil's production units or facilities
continue to represent a short-term operational risk.
Rapid and large changes in feedstock and product prices may lead to significant
inventory gains or losses, or change in working capital. These may have a
material impact on the company's IFRS operating profit and net cash from
operations.
Over the longer term, access to funding and rising capital costs, as well as
challenges in procuring and developing new competitive and reasonably priced raw
materials, may impact the company's growth plans.
The implementation of biofuel legislation in the EU and other key market areas
may influence the speed at which the demand for these fuels develops. Risks also
include any problems or delays in completing the company's NExBTL renewable
diesel investments or failure to capture the anticipated benefits from these
investments. Over the longer term, failure to protect Neste Oil's proprietary
technology or the introduction and implementation of competing renewable fuel
technologies or hybrid and electric engines may have a negative impact on the
company's results.
The key market drivers for Neste Oil's financial performance are international
refining margins, the price differential between Russian Export Blend (REB) and
Brent crude, and the USD/EUR exchange rate.
For more detailed information on Neste Oil's risks and risk management, please
refer to the company's Annual Report and Financial Statements for 2009.
Outlook
As the company has stated in its previous outlooks published in February and
April, it expects the market environment to remain challenging throughout 2010.
It seems, however, that the diesel market could be stronger during the second
half than the first, as a result of increasing demand fuelled by economic
growth. According to an International Energy Agency forecast published in July,
global oil demand is estimated to grow by 2.1% or 1.8 million barrels a day in
2010 compared to 2009.
Refining margins have been lower in July compared to the second quarter.
Increasing demand and seasonal support for middle distillates are set to provide
support for refining margins. Diesel and middle distillates are expected to be
the strongest part of the barrel, but high inventories in the US and Europe will
probably continue to limit the margin upside. The outlook for gasoline margins
is softer through the second half, due to the seasonal weakening of demand and
relatively high inventories. Relative to crude price differentials, Neste Oil
expects the Urals discount to Brent to average between USD 1.0-2.0/bbl during
the rest of the year.
The utilization rate at the Porvoo refinery was slightly lower than normal in
July, due to a trial related to new catalysts. This resulted in some technical
difficulties, which have been overcome by now.
In consequence of improving diesel demand and higher refinery utilization after
the turnaround in spring, the Oil Products business is anticipated to have
stronger second half of the year compared to the first half.
Neste Oil's renewable diesel plant in Singapore is anticipated to come on-stream
during the fourth quarter.
In the Oil Retail business, the declining trend in gasoline demand is expected
to continue. Demand for diesel will continue to be supported by higher
commercial use of the fuel.
The Group's fixed costs are estimated to be similar to those in 2009.
The Group's cash investments are expected to be around EUR 920 million (870
million) in 2010, of which strategic investments will account for EUR 580
million (670 million), maintenance investments EUR 310 million (160 million),
and productivity investments EUR 30 million (40 million).
Reporting date for third-quarter results
Neste Oil will publish its third-quarter results for 2010 on 29 October 2010 at
approximately 9:00 a.m. EET.
Espoo, 28 July 2010
Neste Oil Corporation
Board of Directors
The preceding 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
Oil 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 forward-looking
statements, possibly to a material degree. All forward-looking statements made
in this report are based on information presently available to management and
Neste Oil Corporation assumes no obligation to update any forward-looking
statements. Nothing in this report constitutes investment advice and this report
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.
NESTE OIL GROUP
JANUARY- JUNE 2010
Unaudited
CONSOLIDATED INCOME
STATEMENT
MEUR
Note Last 12
4-6/2010 4-6/2009 1-6/2010 1-6/2009 1-12/2009 months
Revenue 3 2 576 2 592 5 301 4 645 9 636 10 292
Other income 11 7 64 14 29 79
Share of profit
(loss) of associates
and joint
ventures 3 20 9 12 2 20 30
Materials and
services -2 349 -2 195 -4 734 -3 823 -8 167 -9 078
Employee benefit
costs -145 -83 -226 -162 -301 -365
Depreciation,
amortization and
impairments 3 -62 -56 -120 -111 -234 -243
Other expenses -114 -156 -263 -352 -648 -559
Operating profit -63 118 34 213 335 156
Financial income and
expenses
Financial income 2 3 4 4 10 10
Financial expenses -10 -8 -22 -25 -44 -41
Exchange rate and
fair value gains and
losses 1 -4 2 -2 -5 -1
Total financial
income and expenses -7 -9 -16 -23 -39 -32
Profit before income
taxes -70 109 18 190 296 124
Income tax expense 20 -20 -4 -40 -71 -35
Profit for the period -50 89 14 150 225 89
Profit attributable
to:
Owners of the parent -51 88 13 148 221 86
Non-controlling
interests 1 1 1 2 4 3
-50 89 14 150 225 89
Earnings per share
from profit
attributable to the
owners
of the parent basic
and
diluted (in euro per
share) -0,20 0,35 0,05 0,58 0,86 0,33
STATEMENT OF
COMPREHENSIVE INCOME
4-6 4-6 1-6 1-6 1-12 Last 12
MEUR 2010 2009 2010 2009 2009 months
Profit for the period -50 89 14 150 225 89
Other comprehensive
income for the
period,
net of tax:
Translation
differences 18 2 44 -3 9 56
Cash flow hedges
recorded in equity -31 21 -44 -4 3 -37
transferred to income
statement 12 10 8 30 15 -7
Net investment hedges -1 0 -2 0 0 -2
Hedging reserves in
associates and joint
ventures 1 -2 1 -2 -2 1
Other comprehensive
income for the
period,
net of tax -1 31 7 21 25 11
Total comprehensive
income for the period -51 120 21 171 250 100
Total comprehensive
income attributable
to:
Owners of the parent -52 119 20 169 246 97
Non-controlling
interests 1 1 1 2 4 3
-51 120 21 171 250 100
CONSOLIDATED BALANCE
SHEET
30 June 30 June 31 Dec
MEUR Note 2010 2009 2009
ASSETS
Non-current assets
Intangible assets 5 47 51 48
Property, plant and
equipment 5 3 658 2 937 3 235
Investments in
associates and joint
ventures 280 163 216
Non-current
receivables 5 2 3
Pension assets 1 108 111
Deferred tax assets 26 14 11
Derivative financial
instruments 6 21 16 3
Available-for-sale
financial assets 4 1 1
Total non-current
assets 4 042 3 292 3 628
Current assets
Inventories 1 064 752 1 148
Trade and other
receivables 828 916 757
Derivative financial
instruments 6 39 134 50
Cash and cash
equivalents 58 107 117
Total current assets 1 989 1 909 2 072
Total assets 6 031 5 201 5 700
EQUITY
Capital and reserves
attributable to the
owners
of the parent
Share capital 40 40 40
Other equity 2 2 123 2 094 2 170
Total 2 163 2 134 2 210
Non-controlling
interests 12 10 12
Total equity 2 175 2 144 2 222
LIABILITIES
Non-current
liabilities
Interest-bearing
liabilities 1 735 1 158 1 590
Deferred tax
liabilities 326 308 328
Provisions 19 26 22
Pension liabilities 36 10 10
Derivative financial
instruments 6 20 31 15
Other non-current
liabilities 1 2 0
Total non-current
liabilities 2 137 1 535 1 965
Current liabilities
Interest-bearing
liabilities 249 358 445
Current tax
liabilities 4 9 5
Derivative financial
instruments 6 144 135 83
Trade and other
payables 1 322 1 020 980
Total current
liabilities 1 719 1 522 1 513
Total liabilities 3 856 3 057 3 478
Total equity and
liabilities 6 031 5 201 5 700
CONSOLIDATED STATEMENT OF CHANGES
IN TOTAL EQUITY
Attributable to equity holders of the
Company
Share Reserve Fair Translation Re- Non- Total
ca- fund value diffe- tained cont- equity
pital and rences ear- rolling
other nings inte-
MEUR reserves rests
Total equity at 1
January 2009 40 10 -7 -54 2 182 8 2 179
Dividend paid -205 -205
Share-based
compensation -1 -1
Transfer from
retained earnings 1 -1 0
Changes in
non-controlling
interests 0 0
Total comprehensive
income for the period 24 -3 148 2 171
Total equity at 30
June
2009 40 11 16 -57 2 124 10 2 144
Share Reserve Fair Translation Re- Non- Total
ca- fund value diffe- tained cont- equity
pital and rences ear- rolling
other nings inte-
MEUR reserves rests
Total equity at 1
January 2010 40 11 9 -45 2 195 12 2 222
Dividend paid -64 -1 -65
Share-based
compensation -3 -3
Transfer from
retained earnings 2 -5 3 0
Changes in
non-controlling
interests 0 0
Total comprehensive
income for the period -35 42 13 1 21
Total equity at 30
June
2010 40 13 -31 -3 2 144 12 2 175
CONDENSED
CONSOLIDATED CASH
FLOW STATEMENT
4-6 4-6 1-6 1-6 1-12
MEUR 2010 2009 2010 2009 2009
Cash flow from
operating
activities
Profit before
taxes -70 109 18 190 296
Adjustments,
total 147 53 233 161 268
Change in working
capital 150 92 337 -132 -450
Cash generated
from operations 227 254 588 219 114
Finance cost, net 19 -23 33 -9 20
Income taxes paid -3 -8 -4 30 43
Net cash
generated from
operating
activities 243 223 617 240 177
Capital
expenditure -349 -210 -522 -384 -816
Acquisition of
shares in
subsidiaries -8 - -8 - -
Acquisition of
associates and
joint ventures -17 - -31 - -47
Acquisition of
other shares - - -3 - 0
Proceeds from
sales of shares
in subsidiaries 6 - 6 - -
Proceeds from
sales of fixed
assets - 2 1 5 7
Change in other
investments 30 -5 22 -61 -29
Cash flow before
financing
activities -95 10 82 -200 -708
Net change in
loans and other
financing
activities 160 256 -80 457 975
Dividends paid to
the owners of
the parent -64 -205 -64 -205 -205
Net increase
(+)/decrease (-)
in cash
and cash
equivalents 1 61 -62 52 62
KEY FINANCIAL
INDICATORS
30 June 30 June 31 Dec Last 12
2010 2009 2009 months
Capital employed,
MEUR 4 159 3 660 4 257 4 159
Interest-bearing
net debt, MEUR 1 926 1 409 1 918 -
Capital expenditure
and investment in
shares, MEUR 564 384 863 1 043
Return on average
capital employed,
after tax, ROACE % - - 2,5 2,1
Return on capital
employed,
pre-tax, ROCE % 1,9 12,5 9,0 4,2
Return on equity,
% 1,4 13,9 10,2 4,2
Equity per share,
EUR 8,45 8,34 8,64 -
Cash flow per
share, EUR 2,41 0,94 0,69 2,17
Equity-to-assets
ratio, % 36,1 41,3 39,1 -
Leverage ratio, % 47,0 39,7 46,3 -
Gearing, % 88,6 65,7 86,3 -
Average number of
shares 255 913 686 255 903 686 255 903 960 255 908 919
Number of shares
at the end of
the period 255 913 686 255 903 686 255 913 686 255 913 686
Average number of
personnel 5 093 5 328 5 286 -
NOTES TO THE CONDENSED
CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
AND ACCOUNTING POLICIES
The interim report has been prepared in accordance with IAS 34, Interim
Financial Reporting, as adopted by EU. The accounting policies adopted are
consistent with those of the Group's annual financial statements for the year
ended 31 December 2009, with the exception of the following changes due to the
adoption of the new and revised IFRS standards and IFRIC interpretations.
- IFRS 3 (revised), Business combinations. Neste Oil applies the revised
standard to business combinations taking place on or after 1 January 2010.
- IAS 27 (revised),
Consolidated and
Separate Financial
Statements
- IAS 39 (amendment) Financial
Instruments: Recognition and Measurement -
Eligible hedged items
- IFRS 2 (amendment)
Share-based Payment - Group
cash-settled transactions
- IFRIC 17
Distributions of
Non-cash Assets to
Owners
- Annual
improvements
2009.
The above mentioned amendments do not have a material impact on
the reported income statement, balance sheet or notes.
2. TREASURY
SHARES
In 2007 Neste Oil entered into an agreement with a third party service provider
concerning the administration of the share-based management share performance
arrangement for key management personnel. As part of the agreement, the service
provider purchased a total of 500,000 Neste Oil shares in February 2007 in
order to hedge part of Neste Oil's cash flow risk in relation to the possible
future payment of the rewards, which will take place partly in Neste Oil shares
and partly in cash during 2013. Despite the legal form of the hedging
arrangement, it has been accounted for as if the share purchases had been
conducted directly by Neste Oil, as required by IFRS 2, Share based payments
and SIC-12, Consolidation - Special purpose entities.
The consolidated balance sheet and the consolidated changes in total equity
reflect the substance of the arrangement with a deduction amounting to EUR 12
million in equity. This amount represents the consideration paid for the shares
by the third party service provider. As at 30 2010 June there were 490,000
shares accounted for as treasury shares.
3. SEGMENT
INFORMATION
Neste Oil's operations are grouped into four segments: Oil Products, Renewable
Fuels, Oil Retail and Others. Group administration, shared service functions as
well as Research and Technology, Neste Jacobs, Nynas AB and also as of Q2/2010
NSE Biofuels Oy are included in the Others segment. The comparative figures
have been adjusted accordingly.
REVENUE Last 12
MEUR 4-6/2010 4-6/2009 1-6/2010 1-6/2009 1-12/2009 months
Oil Products 2 064 2 091 4 336 3 673 7 631 8 294
Renewable Fuels 60 38 96 62 182 216
Oil Retail 884 727 1 733 1 418 2 998 3 313
Others 45 41 94 83 164 175
Eliminations -477 -305 -958 -591 -1 339 -1 706
Total 2 576 2 592 5 301 4 645 9 636 10 292
OPERATING PROFIT Last 12
MEUR 4-6/2010 4-6/2009 1-6/2010 1-6/2009 1-12/2009 months
Oil Products -18 105 47 211 318 154
Renewable Fuels -19 -2 -34 -12 -24 -46
Oil Retail 14 13 20 25 50 45
Others -42 -2 1 -13 -7 7
Eliminations 2 4 0 2 -2 -4
Total -63 118 34 213 335 156
COMPARABLE
OPERATING PROFIT Last 12
MEUR 4-6/2010 4-6/2009 1-6/2010 1-6/2009 1-12/2009 months
Oil Products -3 37 55 101 105 59
Renewable Fuels -23 -6 -40 -13 -29 -56
Oil Retail 13 14 19 26 50 43
Others 16 -2 59 -13 -8 64
Eliminations 2 4 0 2 -2 -4
Total 5 47 93 103 116 106
DEPRECIATION,
AMORTIZATION AND
IMPAIRMENTS Last 12
MEUR 4-6/2010 4-6/2009 1-6/2010 1-6/2009 1-12/2009 months
Oil Products 47 43 89 87 178 180
Renewable Fuels 5 2 10 4 14 20
Oil Retail 8 8 16 15 31 32
Others 2 3 5 5 11 11
Total 62 56 120 111 234 243
CAPITAL EXPENDITURE
AND INVESTMENTS IN
SHARES Last 12
MEUR 4-6/2010 4-6/2009 1-6/2010 1-6/2009 1-12/2009 months
Oil Products 158 51 212 94 198 316
Renewable Fuels 149 150 278 273 619 624
Oil Retail 13 6 15 10 29 34
Others 54 3 59 7 17 69
Total 374 210 564 384 863 1 043
TOTAL ASSETS 30 June 30 June 31 Dec
MEUR 2010 2009 2009
Oil Products 3 734 3 544 3 750
Renewable Fuels 1 389 713 1 065
Oil Retail 562 527 545
Others 371 296 296
Unallocated
assets 174 295 234
Eliminations -199 -174 -190
Total 6 031 5 201 5 700
NET ASSETS 30 June 30 June 31 Dec
MEUR 2010 2009 2009
Oil Products 2 617 2 602 2 943
Renewable Fuels 1 268 591 925
Oil Retail 310 296 305
Others 281 233 249
Eliminations 1 5 1
Total 4 477 3 727 4 423
RETURN ON NET
ASSETS, % 30 June 30 June 31 Dec Last 12
2010 2009 2009 months
Oil Products 3,4 16,4 12,0 5,7
Renewable Fuels -6,3 -5,1 -3,9 -5,0
Oil Retail 13,0 15,5 15,8 14,7
COMPARABLE
RETURN ON NET
ASSETS, % 30 June 30 June 31 Dec Last 12
2010 2009 2009 months
Oil Products 4,0 7,9 4,0 2,2
Renewable Fuels -7,4 -5,5 -4,7 -6,1
Oil Retail 12,4 16,1 15,8 14,1
QUARTERLY
SEGMENT
INFORMATION
QUARTERLY
REVENUE
MEUR 4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
Oil Products 2 064 2 272 1 987 1 971 2 091 1 582
Renewable Fuels 60 36 61 59 38 24
Oil Retail 884 849 791 789 727 691
Others 45 49 44 37 41 42
Eliminations -477 -481 -392 -356 -305 -286
Total 2 576 2 725 2 491 2 500 2 592 2 053
QUARTERLY
OPERATING PROFIT
MEUR 4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
Oil Products -18 65 27 80 105 106
Renewable Fuels -19 -15 -11 -1 -2 -10
Oil Retail 14 6 6 19 13 12
Others -42 43 -11 17 -2 -11
Eliminations 2 -2 -2 -2 4 -2
Total -63 97 9 113 118 95
QUARTERLY COMPARABLE
OPERATING PROFIT
MEUR 4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
Oil Products -3 58 -11 15 37 64
Renewable Fuels -23 -17 -10 -6 -6 -7
Oil Retail 13 6 5 19 14 12
Others 16 43 -11 16 -2 -11
Eliminations 2 -2 -2 -2 4 -2
Total 5 88 -29 42 47 56
QUARTERLY DEPRECIATION,
AMORTIZATION AND IMPAIRMENTS
MEUR 4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
Oil Products 47 42 48 43 43 44
Renewable Fuels 5 5 6 4 2 2
Oil Retail 8 8 8 8 8 7
Others 2 3 3 3 3 2
Total 62 58 65 58 56 55
QUARTERLY
CAPITAL
EXPENDITURE
AND INVESTMENTS
IN SHARES
MEUR 4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
Oil Products 158 54 59 45 51 43
Renewable Fuels 149 129 188 158 150 123
Oil Retail 13 2 10 9 6 4
Others 54 5 6 4 3 4
Total 374 190 263 216 210 174
4. ACQUISITIONS
UAB Neste Lietuva, subsidiary of Neste Oil Group, acquired 100% of the shares
and voting rights of UAB Alexela Oil, which operates 22 unmanned fuel stations
in Lithuania. The acquisition was closed on 28 May 2010. Neste Oil strengthens
its position on the retail market in Lithuania, as the acquisition complements
the company's existing network of 37 stations in the country.
The profit of UAB Alexela Oil included in the Neste Oil's consolidated income
statement 1 January - 30 June 2010 is immaterial. Also, the management
estimates that UAB Alexela Oil's effect on Neste Oil's consolidated revenue or
profit for the period would have been immaterial as at 30 June 2010 had the
acquisition taken place on 1 January 2010.
Assets and liabilities
of UAB Alexela Oil
Acquired Acquired
MEUR fair value book value
Intangible and tangible
assets 6 5
Current assets 3 3
Cash and cash
equivalents 0 0
Total assets 9 8
Trade and other payables 1 1
Total liabilities 1 1
Acquired net assets 8 7
Purchase consideration 8
Goodwill 0
Purchase consideration
settled in cash 8
Cash and cash
equivalents in UAB
Alexela Oil 0
Cash outflow on
acquisition 8
5. CHANGES IN INTANGIBLE ASSETS
AND PROPERTY,
PLANT AND EQUIPMENT AND CAPITAL
COMMITMENTS
CHANGES IN INTANGIBLE ASSETS AND
PROPERTY,
PLANT AND EQUIPMENT 30 June 30 June 31 Dec
MEUR 2010 2009 2009
Opening balance 3 283 2 726 2 726
Depreciation,
amortization and
impairments -120 -111 -234
Capital expenditure 523 384 820
Disposals -1 -5 -21
Increases through
business combinations 6 0 0
Translation differences 14 -6 -8
Closing balance 3 705 2 988 3 283
CAPITAL COMMITMENTS 30 June 30 June 31 Dec
MEUR 2010 2009 2009
Commitments to purchase property,
plant and equipment 331 539 431
Total 331 539 431
Capital commitments include EUR 121 million future commitments related to
energy and utility supply agreements, which will be accounted for as finance
leases.
6. DERIVATIVE
FINANCIAL
INSTRUMENTS
30 June 2010 30 June 2009 31 Dec 2009
Interest rate and
currency derivative
contracts and
share forward
contracts Nominal Net Nominal Net Nominal Net
fair fair fair
MEUR value value value value value value
Interest rate
swaps 577 0 474 -16 723 -13
Forward foreign
exchange
contracts 1 747 -102 1 611 28 1 759 -7
Currency
options
Purchased 79 -3 121 -1 115 -1
Written 69 -5 88 2 114 2
Share forward
contracts - - 9 -5 9 -4
Oil and freight
derivative
contracts Volume Net Volume Net Volume Net
million fair million fair million fair
bbl value bbl value bbl value
Meur Meur Meur
Sales contracts 17 4 35 -59 18 -32
Purchase
contracts 7 1 29 34 7 10
Purchased
options 2 -12 2 -9 1 -8
Written options 2 13 2 8 1 8
The fair values of derivative financial instruments subject to public trading
are based on market prices as of the balance sheet date. The fair values of
other derivative financial instruments are based on the present value of cash
flows resulting from the contracts, and, in respect of options, on evaluation
models. The amounts also include unsettled closed positions. Derivative
financial instruments are mainly used to manage the Group's currency, interest
rate and price risk.
7. RELATED
PARTY
TRANSACTIONS
Details of transactions between the Group and associates/joint ventures are
disclosed below.
1-6 1-6 1-12
Transactions carried
out with associates
and joint ventures 2010 2009 2009
Sales of goods
and services 35 21 70
Purchases of
goods and
services 22 21 48
Receivables 32 10 23
Financial
income and
expenses 0 0 0
Liabilities 6 4 2
8. CONTINGENT
LIABILITIES
30 June 30 June 31 Dec
MEUR 2010 2009 2009
Contingent
liabilities
On own behalf
for commitments
Real estate
mortgages 26 26 26
Pledged assets 2 2 2
Other
contingent
liabilities 40 45 48
Total 68 73 76
On behalf of
associates and
joint ventures
Guarantees 4 6 4
Other
contingent
liabilities 4 2 2
Total 8 8 6
On behalf of
others
Guarantees 14 19 18
Total 14 19 18
Total 90 100 100
30 June 30 June 31 Dec
MEUR 2010 2009 2009
Operating lease
liabilities
Due within one
year 72 98 82
Due between one
and five years 158 182 166
Due later than
five years 118 137 120
Total 348 417 368
The Group's operating lease commitments primarily relate to time charter
vessels, land and office space. In 2008 the lease commitments included
operating leases contained in hydrogen supply agreements. Based on updated
information the hydrogen supply agreements have been reassessed in 2009 and
will be accounted for as take-or-pay contracts. The previous years figures
concerning operating lease liabilities have been restated accordingly.
Other
contingent
liabilities
Neste Oil Corporation has a collective contingent liability with Fortum Heat
and Gas Oy of the demerged Fortum Oil and Gas Oy's liabilities based on the
Finnish Companies Act's Chapter 17 Paragraph 16.6.
CALCULATION OF KEY FIGURES
CALCULATION OF KEY FINANCIAL INDICATORS
Operating profit = Operating profit includes the revenue from the sale of goods
and services, other income such as gain from sale of shares or non-financial
assets, share of profits (loss) of associates and joint ventures, less losses
from sale of shares or non-financial assets, as well as expenses related to
production, marketing and selling activities, administration, depreciation,
amortization, and impairment charges. Realized and unrealized gains or losses on
oil and freight derivative contracts together with realized gains and losses
from foreign currency and oil derivative contracts hedging cash flows of
commercial sales and purchases that have been recycled in the income statement,
are also included in operating profit.
Comparable operating profit = Operating profit -/+ inventory gains/losses -/+
gains/losses from sale of shares and non-financial assets - unrealized change in
fair value of oil and freight derivative contracts. Inventory gains/losses
include the change in fair value of all trading inventories.
Return on equity, (ROE) % = 100 x (Profit before taxes - taxes) / Total equity
average
Return on capital employed, pre-tax (ROCE) % = 100 x (Profit before taxes +
interest and other financial expenses) / Capital employed average
Return on average capital employed, after-tax (ROACE) % = 100 x (Profit for the
period (adjusted for inventory gains/losses, gains/losses from sale of shares
and non-financial assets and unrealized gains/losses on oil and freight
derivative contracts, net of tax) + minority interest + interest expenses and
other financial expenses related to interest-bearing liabilities (net of tax)) /
Capital employed average
Capital employed = Total assets - interest-free liabilities - deferred tax
liabilities -provisions
Interest-bearing net debt = Interest- bearing liabilities - cash and cash
equivalents
Leverage ratio, % = 100 x Interest- bearing net debt / (Interest- bearing net
debt + Total equity)
Gearing, % = 100 x (Interest bearing net debt / Total equity)
Equity-to assets ratio, % = 100 x Total equity / (Total assets - advances
received)
Return on net assets, % = 100 x Segment operating profit / Average segment net
assets
Comparable return on net assets, % = 100 x Segment comparable operating profit /
Average segment net assets
Segment net assets = Property, plant and equipment, intangible assets,
investment in associates and joint ventures including shareholder loans, pension
assets, inventories and interest-free receivables and liabilities allocated to
the business segment, provisions and pension liabilities
CALCULATION OF SHARE-RELATED INDICATORS
Earnings per share (EPS) = Profit for the period attributable to the equity
holders of the company / Adjusted average number of shares during the period
Equity per share = Shareholder's equity attributable to the equity holders of
the company/ Adjusted average number of shares at the end of the period
Cash flow per share = Net cash generated from operating activities / Adjusted
average number of shares during the period
[HUG#1434687]
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