Neste Oyj - Interim report (Q1 and Q3)

Neste's Interim Report for January-June 2015

Neste Corporation
Interim Report
5 August 2015 at 9 am. (EET)

Neste's Interim Report for January-June 2015

Continuing strong refining market enabled good result despite the scheduled
major turnaround at the Porvoo refinery

Second quarter in brief:

  * Comparable operating profit totaled EUR 78 million (Q2/2014: EUR 86 million)
  * Negative impact of the Porvoo refinery turnaround on comparable operating
    profit was EUR 130 million
  * Total refining margin was USD 10.83/bbl (Q2/2014: USD 8.33/bbl)
  * Renewable Products' comparable sales margin was USD 210/ton (Q2/2014: USD
    200/ton)
  * Net cash from operations totaled EUR 227 million (Q2/2014: EUR 219 million)
January-June in brief:

  * Comparable operating profit totaled EUR 293 million (1-6/2014: EUR 136
    million)
  * Return on average capital employed (ROACE) was 12.5% over the last 12 months
    (2014: 10.1%)
  * Leverage ratio was 40.3% as of the end of June (31.12.2014: 37.9%)
  * Comparable earnings per share: EUR 0.80 (1-6/2014: EUR 0.30)
President & CEO Matti Lievonen:"The second quarter was characterized by a strong refining margin environment,
and the major turnaround at our Porvoo refinery. Neste recorded a comparable
operating profit of EUR 78 million during the second quarter, compared to the
EUR 86 million during the corresponding period last year. As announced on 16
June, the turnaround had a negative impact of approximately EUR 130 million on
comparable operating profit.

Oil Products generated a comparable operating profit of EUR 14 million (EUR 33
million) during the second quarter. Neste's reference margin averaged USD
8.7/bbl, which was more than double that in the same period last year. Gasoline
margins continued particularly high, supported by global demand growth and the
summer driving season. The maintenance turnaround implemented during the second
quarter was the largest in the history of the Porvoo refinery. It has now been
successfully completed and will help ensure the refinery's performance and
safety for the next five years.

Renewable Products recorded a comparable operating profit of EUR 54 million (EUR
32 million) during the second quarter. Renewable Products' additional margin and
a stronger US dollar had a positive effect on the result compared to the same
period last year. Feedstock optimization continued, and the share of waste and
residue feedstocks reached 67% of total inputs. The Porvoo turnaround reduced
renewable diesel production by more than 10% of total production capacity during
the second quarter.

Oil Retail's markets continued competitive, but we were able to increase profits
by higher sales volumes particularly in the Baltic markets, and improving
margins. The segment generated a comparable operating profit of EUR 22 million,
higher than the EUR 20 million booked in the second quarter of 2014.

Global oil demand growth estimates for 2015 have been generally upgraded to
1.3-1.5 million bbl/day, and the forward refining margin outlook for the coming
quarters is stronger than that seen in April. Current crude oil price level
promotes oil product demand, and there seems to be limited upside potential in
oil price.

Our result guidance remains unchanged: Neste estimates the Group's full-year
2015 comparable operating profit to remain robust and to be higher than that
reached in 2014."

The Group's second-quarter 2015 results

Neste's revenue in the second quarter totaled EUR 2,605 million (EUR 4,104
million). The decrease mainly resulted from lower sales volumes due to the
Porvoo refinery turnaround, which had an impact of EUR 1.1 billion, and lower
sales prices caused by the oil price decline, which had a negative impact of EUR
0.7 billion. The change in USD/EUR exchange rate had a positive impact of EUR
0.3 billion on the revenue year-on-year. The Group's comparable operating profit
came in at EUR 78 million (EUR 86 million). Oil Products' result was negatively
impacted by the planned major turnaround at the Porvoo refinery, but positively
impacted by reference refining margins, which were higher than in the second
quarter of 2014. Renewable Products' result improved mainly due to higher
additional margin and a favorable USD/EUR exchange rate. Oil Retail's result was
positively impacted by higher sales volumes and margins year-on-year. The Others
segment recorded a lower comparable operating profit compared to the second
quarter of 2014.

Oil Products' second-quarter comparable operating profit was EUR 14 million (33
million), Renewable Products' EUR 54 million (32 million), and Oil Retail's EUR
22 million (20 million). The comparable operating profit of the Others segment
totaled EUR -14 million (2 million).

The Group's IFRS operating profit was EUR 63 million (70 million), which was
impacted by inventory gains totaling EUR 78 million (2 million), changes in the
fair value of open oil derivatives totaling EUR -91 million (-18 million),
mainly related to hedging of inventories, and non-recurring items totaling EUR
-3 million (0 million). Pre-tax profit was EUR 52 million (48 million), profit
for the period EUR 42 million (39 million), and earnings per share EUR 0.17
(0.15). The Group's effective tax rate was 20% (18%).

The Group's January-June 2015 results

Neste's revenue during the first six months totaled EUR 5,348 million (EUR
7,613 million). The decrease mainly resulted from lower overall sales prices
caused by the oil price decline, which had an impact of EUR 1.9 billion, and
lower sales volumes due to the Porvoo refinery maintenance during the second
quarter, which had a negative impact of EUR 1.1 billion. The change in USD/EUR
exchange rate had a positive impact of EUR 0.7 billion on the revenue year-on-
year. The Group's comparable operating profit came in at EUR 293 million (EUR
136 million). Oil Products' result was positively impacted by reference refining
margins, which were clearly higher than during the first half of 2014. However,
the scheduled major turnaround at the Porvoo refinery negatively impacted the
segment's result during the second quarter. Renewable Products improved as a
result of successful margin management, feedstock optimization and a favorable
USD/EUR exchange rate. Oil Retail's result was positively impacted by increased
sales volumes and margins. The Others segment recorded a lower comparable
operating profit compared to the first half of 2014.

Oil Products' six-month comparable operating profit was EUR 170 million (65
million), Renewable Products' EUR 96 million (44 million), and Oil Retail's EUR
39 million (34 million). The comparable operating profit of the Others segment
totaled EUR -11 million (-9 million).

The Group's IFRS operating profit was EUR 296 million (120 million), which was
impacted by inventory gains totaling EUR 2 million (losses of 1 million),
changes in the fair value of open oil derivatives totaling EUR -73 million (-13
million), mainly related to hedging of inventories, and non-recurring items
totaling EUR 74 million (-2 million), mainly related to the capital gain from
the disposal of the Porvoo electricity grid. Pre-tax profit was EUR 257 million
(81 million), profit for the period EUR 223 million (66 million), and earnings
per share EUR 0.87 (0.25). The Group's effective tax rate was 13% (20%) mainly
due to the tax-exempt items, such as the sale proceeds of the shares of
Kilpilahden Sähkönsiirto Oy, electricity grid company.

Outlook

Developments in the global economy have been reflected in the oil, renewable
fuel, and renewable feedstock markets; and volatility in these markets is
expected to continue.

Global oil demand growth estimates for 2015 have been increased and are
generally at 1.3-1.5 million bbl/d, as especially gasoline demand growth has
been healthy. The forward reference refining margin outlook for the coming
quarters is stronger than that seen in April. While the refining capacity growth
in Asia and the Middle East and ending of the refinery maintenance season are
expected to increase product supply, the transatlantic supply demand balance is
also dependent on demand growth and possible refinery shutdowns. Lifting of the
economic sanctions against Iran could increase the supply of medium heavy crude
oil in the European market in the future.

Vegetable oil price differentials are expected to vary, depending on crop
outlooks, weather phenomena, and variations in demand for different feedstocks,
but no fundamental changes in the drivers influencing long-term average
feedstock price differentials are expected. Feedstock prices have been on a
downward trend, but vegetable oil price differentials have remained narrower
than the historical average. Market volatility in feedstock and oil prices is
expected to continue, which will have an impact on the Renewable Products
segment's profitability.

Crude oil price changes, supply and demand balances, together with uncertainties
related to political decision-making on biofuel mandates, the US Blender's Tax
Credit (BTC) and other incentives will be reflected in the oil and renewable
fuel markets. Reintroduction of the BTC would have a positive impact on Neste's
comparable operating profit, and it is not included in the company's current
result guidance.

Neste's guidance remains unchanged: Neste estimates the Group's full-year 2015
comparable operating profit to remain robust and to be higher than that reached
in 2014.

Further information:

Matti Lievonen, President & CEO, tel. +358 10 458 11
Jyrki Mäki-Kala, CFO, tel. +358 10 458 4098
Investor Relations, tel. +358 10 458 5292



News conference and conference call

A press conference in Finnish on second-quarter 2015 results will be held today,
5 August 2015, at 11:30 a.m. EET at the company's headquarters at Keilaranta
21, Espoo. www.neste.com will feature English versions of the presentation
materials. A conference call in English for investors and analysts will be held
on 5 August 2015 at 3 p.m. Finland / 1 p.m. London / 8 a.m. New York. The call-
in numbers are as follows: Finland: +358 (0)9 6937 9543, rest of Europe: +44
(0)20 3427 1906, US: +1646 254 3362, using access code 6785568. The conference
call can be followed at the company's web site. An instant replay of the call
will be available until 12 August 2015 at +358(0)9 2310 1650 for Finland,
+44(0)20 3427 0598 for Europe and +1 347 366 9565 for the US, using access code
6785568.

Neste in brief

Neste is a pioneer in oil refining and renewable solutions. We provide our
customers with premium-quality products for cleaner traffic and industrial
products based on world-class research. Our sustainable operations have received
recognition in the Dow Jones Sustainability World Index and the Global 100 list
of the world's most sustainable companies, among others. Our net sales for 2014
amounted to approximately EUR 15 billion, and our shares are listed on NASDAQ
Helsinki. Cleaner traffic, energy and life are moved forward by about 5,000
professionals. More information: neste.com/en


[HUG#1943713]

Attachments:

Neste interim report Q2 2015.pdf