Neste scales back in renewables

During its annual results presentation, Finland’s Neste announced a performance improvement programme that will, among other things, change its focus in renewables. The company said that this was the result of a “significantly changed market environment and weakened financial performance”, in addition to a comprehensive full potential analysis that started in October 2024. 

Neste will continue to develop its current raw material base, sourcing novel vegetable oils and researching lignocellulosic feedstocks. However, it will scale down investments in the development of algae and the Power-to-X process, which seeks to produce fuels and raw materials for the petrochemical industry. It will now focus on renewable fuels rather than renewable and circular polymers and chemical activities. 

In addition, the focus of the ongoing transformation of the Porvoo refinery is now to be on energy-efficiency and renewable hydrogen; other elements of this may be postponed. As part of this, the company is considering simplifying its commercial models and streamlining its sales channels for renewables to accelerate sales growth.  

“Our current financial performance is weak and not sustainable. Therefore, we must take urgent action to reset various parts of our company,” said president and CEO Heikki Malinen (pictured). He added that full-year comparable EBITDA of €1,252 million in 20204, down by 63.8% on 2023, “is not satisfactory, nor sustainable”. 

Within this, Renewable Products was hit by global overcapacity and many new competitors, resulting in a decline in renewable fuel sales prices and intensified demand for waste and residue raw materials. In addition, the weakening fossil diesel price had a further negative impact on sales prices. Thus, although sales volumes grew by 8.8% to 3.7 million tonnes, comparable EBITDA fell by 73% to €514 million. 

The overall goal of the programme is to achieved a €350 million EBITDA run rate improvement by the end of 2026, €250 million from operational costs. Cost savings of €65 million/year will be sought by improved internal efficiency and a simpler operating model. Some 600 jobs in the Oil Products and Renewable Products business areas, 75% of them in Finland, will be cut.