Neste Capital Markets Day 2016: Creating the next wave of profitable growth - dividend policy revised

Neste Corporation
Stock Exchange Release
14 September 2016 at 1.30 pm. (EET)

Neste Capital Markets Day 2016: Creating the next wave of profitable growth - dividend policy revised

Neste is holding a Capital Markets Day 2016 in London today, 14 September, featuring presentations by senior management on subjects such as the company's strategy, market outlook and the next steps for profitable growth.

Strategy - ready to take concrete steps in creating the next wave of profitable growth

Neste's success in strategy is based on its unique competitive advantages. The strategic objectives remain unchanged: be the Baltic Sea champion and grow in the global renewables markets. The strategy sets the direction for the company's ambition to grow and create shareholder value. A strong brand helps reaching these goals, and according to a recent survey Neste's brand value has increased markedly.

The company is determined to generate strong cash flow to support investments in growth and productivity, to optimize debt, and to ensure favorable dividend distribution.

Baltic Sea champion

Neste is the leader in low carbon solutions for traffic fuels in the Baltic Sea market. This has been reached by differentiation in customer offerings and by becoming the benchmark in asset quality, as well as continuous focus on operational excellence. It has a unique offering combining both fossil and renewable products. Neste will continue to develop premium products and tailor-made solutions, and focus on customer experience through customer service design and digitalization.

Neste continues its efforts to enhance additional refining margin. The target for additional margin has been raised from the earlier USD 5.0/bbl to above USD 5.5/bbl on average. That will be achieved by performance improvement actions focusing on reliability, and by continuous asset development including the strategic One Refinery concept and productivity investments. Furthermore, we will carefully manage safety and have a disciplined baseload maintenance approach.

Global renewables growth

Neste is the global leader in the renewable diesel market, and is committed to developing significant business from outside road traffic renewable product markets by 2020. Neste has developed unique competitive advantages in flexible feedstock supply, global supply chain, and low-carbon renewable drop-in solutions tailored to customers. The company has built a strong waste and residue feedstock position globally and intends to develop that further by commercial and technological solutions.

Neste sees great potential in many new renewable product applications such as renewable jet fuel and bio-based chemicals, where it can provide distinct advantages to its customers by decreasing their carbon footprint. Neste has already announced a partnership with IKEA to deliver renewable, bio-based plastics, and continues discussions with some other leading global brand owners as well. Neste targets to have 20% of its renewable business sales volume from these new applications by 2020.

During the last three years Neste has increased its renewable diesel capacity from 2.0 to 2.6 million tons/a with minor investments.  Neste's ambition is to increase its renewable products capacity further to maintain its global market leadership in drop-in solutions. The company is exploring different options for the new capacity increase program, and will give more information during the first quarter of 2017.

Financial targets

Neste's most important financial targets are leverage and ROACE after tax, and they remain unchanged. The leverage target is 25-50%, and the long-term ROACE target 15%.

Neste's dividend policy has been revised. The company will distribute at least 40% of the company's comparable net profit for the year in the form of dividends. The previous policy was to distribute at least one third of the comparable net profit.

Short-term outlook

Neste expects Oil Products' reference margin to be somewhat lower in the second half of 2016 than in the first half of the year, as global product inventories are currently on a high level. The Porvoo refinery is expected to run at high utilization rate with no major maintenance shutdowns scheduled.

Renewable Products' reference margin is expected to remain at approximately the average level of the year 2015, and the additional margin is expected to remain strong. Utilization rates of our renewable diesel production facilities are expected to be high.

In Oil Retail the sales volumes and unit margins are expected to follow the previous years' seasonality pattern.

The year has continued well, and we are confident that the year 2016 will be another successful one for Neste.

CMD presentation material in English will be available at www.neste.com/investors from around 2.30 p.m. (EET) onwards.

The event can also be followed online at www.neste.com/investors from 2.30 p.m. (EET) onwards.

A replay will be available after the event at www.neste.com/investors.

Neste Corporation

Osmo Kammonen
Senior Vice President, Communications and Brand Marketing

Further information: Jyrki Mäki-Kala, CFO, tel. +358 10 458 4098

Neste in brief

Neste (NESTE, Nasdaq Helsinki) creates sustainable choices for the needs of transport, businesses and consumers. Our global range of products and services allows customers to lower their carbon footprint by combining high-quality renewable products and oil products to tailor-made service solutions. We are the world's largest producer of renewable diesel refined from waste and residues, and we are also bringing renewable solutions to the aviation and plastics industries. We want to be a reliable partner, whose expertise, R&D and sustainable practices are widely respected. In 2015, Neste's net sales stood at EUR 11 billion, and we were on the Global 100 list of the 100 most sustainable companies in the world. Read more: neste.com/en