Oil refining company Neste suffered a significant decline in sales of traditional oil products last year due to the pandemic, but sales of renewable products increased.
On Friday, a partially state-owned energy company announced a decline in fourth-quarter earnings. However, the decline was not as bad as analysts had expected, according to a Reuters survey.
Nevertheless, its share price fell due to weaker forecasts.
Neste’s renewable energy unit generated 94 percent of the Group’s results last year, but on Friday the company announced that it expects first-quarter gross margin to decline.
This is partly due to the limited use of waste and residues as raw materials.
Neste’s comparable operating profit in October-December fell by more than half to EUR 380 million from 781 million a year earlier. Renewable products accounted for EUR 338 million of the profit.
Comparable operating profit for the full year decreased from EUR 2 billion to EUR 1.4 billion.
CEO: Renewable products “highly flexible”
"Despite the challenges and disruptions caused by the Covid-19 pandemic, 2020 was a success for Neste in many ways," managing director Peter Vanacker said in a press release.
"Renewable products proved to be very flexible with increased sales volumes and strong sales margins. Petroleum products suffered from a historically weak refining market due to the destruction of global demand and oversupply of Covid-19. These developments accelerated the need to improve the long-term competitiveness of our processing industry, and restructuring measures, including the closure of the Naantali refinery, were decided," he added.
The company announced that it would close a plant near Turku last November.
Net sales for the fourth quarter fell to three billion euros from more than four billion in the previous year. The company blamed lower crude oil prices and lower sales volumes of petroleum products.
Full-year net sales decreased by almost a third to EUR 11.8 billion, compared to EUR 15.8 billion in 2019.
The state owns about 45 percent of the company’s shares, less than half of the previous year. In early 2019, the government sold approximately EUR 100 million worth of shares, transferring the money to a newly established state tasked with improving and expanding the countryโs rail network.
That year, Neste was the largest single producer of tax revenue, paying EUR 224 million to the Treasury.
Source: The Nordic Page