Neste Oil - Interim report (Q1 and Q3)

Neste Oil's Interim Report for January-September 2011

Neste Oil Corporation
Stock exchange release
25 October 2011 at 9.00 am (EET)

Neste Oil's Interim Report for January-September 2011

- Third-quarter comparable operating profit totaled EUR 66 million (Q3/2010: 57
million)
- Renewable Fuels' sales volumes more than doubled compared to the second
quarter


Third quarter in brief:
  * Comparable operating profit came in at EUR 66 million (Q3/2010: 57 million)

  * IFRS operating profit was EUR 15 million (Q3/2010: 143 million), due to
    inventory losses
  * Total refining margin was USD 9.17/bbl (Q3/2010: 7.48)
  * Net cash from operations was EUR -129 million (Q3/2010: 5 million)
  * Investments totaled EUR 67 million (Q3/2010: 190 million), of which EUR 25
    million was spent on Renewable Fuels
  * Leverage ratio was 49.0% (31 Dec 2010: 42.6%)
  * Sales volumes in Renewable Fuels more than doubled compared to the second
    quarter
  * The new renewable diesel plant in Rotterdam commenced production in
    September
  * The new jointly-owned base oil plant in Bahrain was started up after the
    reporting period


President & CEO Matti Lievonen:"We posted a good result for both Oil Products and Oil Retail in the third
quarter, despite uncertainties related to the development of the global economy,
which caused volatility in the oil market. This volatility is expected to
continue, as solutions for the challenges facing world economies have yet to be
found. Looking at the remainder of this year, the diesel market looks set to be
seasonally strong, while the gasoline market is likely to be weaker. Our short-
term view of the spread between Brent and Urals crude is somewhat softer than
earlier this year.

Renewable diesel volumes will continue to grow and we are targeting to increase
them again by over 50% in the fourth quarter, as a result of a wider customer
base and better availability of certified feedstocks. Higher volumes will also
lead to an improvement in Renewable Fuels' fourth-quarter result, although the
segment will remain loss-making during the remainder of 2011.

I am very pleased that we have now completed our major capital projects. Now our
capital expenditure will be focused on maintenance and productivity initiatives.
Our emphasis going forward will be on ramping up sales volumes from our
renewable diesel plants and the new Bahrain base oil plant, and on further
enhancing operational efficiency at our Porvoo and Naantali refineries."


The Group's third-quarter 2011 results
Neste Oil's revenue increased to EUR 4,105 million in the third quarter compared
to EUR 3,065 million for the same period in 2010, as a result of higher oil
prices and higher volumes. The Group's comparable operating profit totaled EUR
66 million compared to EUR 57 million in the third quarter of 2010. The increase
was mainly attributable to a higher total refining margin and higher sales
volumes. Losses at Renewable Fuels had a negative impact.

Oil Products' third-quarter comparable operating result was EUR 84 million (45
million), Renewable Fuels' EUR -57 million (-12 million), and Oil Retail's EUR
23 million (23 million). The comparable operating profit of the Others segment
totaled EUR 15 million (2 million). A profit of EUR 16 million (9 million) was
booked in the Others segment on the basis of Neste Oil's share of the profit of
its affiliate, Nynas AB.

The Group's IFRS operating profit was EUR 15 million (143 million), which was
impacted by inventory losses totaling EUR 48 million (gain of 86 million). The
pre-tax profit was EUR -3 million (136 million), profit for the period EUR 0
million (110 million), and earnings per share EUR 0.00 (0.42).


The Group's January-September 2011 results
Neste Oil's revenue totaled EUR 11,251 million in the first nine months compared
to EUR 8,366 million for the same period in 2010, as a result of higher oil
prices and higher volumes. The Group's nine-month comparable operating profit
totaled EUR 142 million compared to EUR 150 million in the same period in 2010.
In the first nine months of 2011, the result was negatively impacted by a weak
result at Renewable Fuels and a planned five-week maintenance turnaround on the
Diesel Production Line 4 at Porvoo in the second quarter, which had an impact of
EUR 30 million. The nine-month comparable operating profit in 2010 included a
positive impact of EUR 47 million resulting from an insurance compensation
payment and a negative impact of EUR 65 million from the major maintenance
turnaround at the Porvoo refinery.

Oil Products' nine-month comparable operating result was EUR 228 million (100
million), Renewable Fuels' EUR -148 million (-52 million), and Oil Retail's EUR
48 million (42 million). The comparable operating profit of the Others segment
totaled EUR 7 million (61 million). A profit of EUR 21 million (22 million) was
booked in the Others segment on the basis of Neste Oil's share of the profit of
its affiliate, Nynas AB.

The Group's IFRS operating profit was EUR 295 million (177 million), which was
impacted by inventory gains totaling EUR 155 million (60 million). The pre-tax
profit was EUR 255 million (154 million), profit for the period EUR 182 million
(124 million), and earnings per share EUR 0.71 (0.48).

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 September, the
rolling twelve-month ROACE was 3.6% (2010 financial year: 4.6%).


Outlook
The fundamentals of the oil refining market have remained broadly unchanged
since the previous outlook was published in July. There are widespread concerns
about global economic developments. If the situation escalates, it is likely to
impact economic growth and the demand for petroleum products and refining
margins.

The diesel market is expected to be supported by seasonally increasing demand
during the rest of the year, whereas the gasoline market is likely to stay
weaker. The discount of Urals crude to Brent Dated is expected to average around
USD 1.00-1.50 /bbl in the fourth quarter, which is less than earlier in 2011.
Neste Oil has hedged 25% of its Oil Products volumes for 2012 to a USD 4.8/bbl
reference margin level. The estimated discount of Urals to Brent is USD 1.3/bbl
in these transactions.

A four-week maintenance outage took place on Production Line 4 at the Porvoo
refinery in October. As mentioned in previous outlook statements, Oil Products'
full-year 2011 comparable operating profit is expected to be stronger than in
2010.

Sales volumes at Renewable Fuels are expected to increase by over 50% in the
fourth quarter compared to the third quarter. This increase, coupled with lower
unit costs thanks to higher capacity utilization, will lead to a better result
for Renewable Fuels in the fourth quarter compared to the third quarter. The
segment is still expected to remain loss-making for the remainder of 2011,
however.

Oil Retail's full-year performance is likely to be broadly similar to that seen
in 2010.

The Group's fixed costs are estimated to be approximately EUR 650 million in
2011, compared to EUR 575 million in 2010, largely due to higher maintenance and
personnel costs at new plants.

The Group's cash investments are expected to be approximately EUR 300 million
(892 million) in 2011.


New disclosure procedure
Neste Oil follows the new disclosure procedure enabled by Standard 5.2b
published by the Finnish Financial Supervision Authority and hereby publishes
its interim report for January-September 2011 enclosed to this stock exchange
release. Neste Oil's interim report is available in its entirety on the
company's web site at www.nesteoil.com. Neste Oil will follow this procedure in
disclosing interim reports and financial statements in future.


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 5292


News conference and conference call
A press conference in Finnish on the third-quarter results will be held today,
25 October 2011, at 11:30 am EET at the company's headquarters, Keilaranta 21,
Espoo. www.nesteoil.com will feature English versions of the presentation
materials. A conference call in English for investors and analysts will be held
on the same day at 3:00 pm Finnish / 1:00 pm London / 8:00 am New York. The
call-in numbers are as follows: Europe: +44 (0)20 3106 7162, US +1 646 254 3375
(access code: 9884050). The conference call can be followed athttp://www.media-
server.com/m/p/kvok26w7. An instant replay of the call will be available until
31 October 2011 at +44 (0)20 7111 1244 for Europe and +1 347 366 9565 for the US
(access code: 9884050#).

[HUG#1557515]

Attachments:

Neste Oil Interim Report 2011 Q3 2011.pdf