€600 million overrun in Rotterdam? Who is responsible for this? Why wasn’t the dividend payment suspended? It’s damn stupid to pay a dividend that has to be paid, if not directly, then indirectly with debt.
At least Malinen can now get to his favorite pastime, which is handing out pink slips and “streamlining”. It’s a bit scary whether there will be anyone competent left to work there, if/when we ever get back on a growth path?
If the rule of thumb about buying when there’s blood in the streets holds true, then Neste is certainly bleeding exemplarily. Whether the patient survives the operation is another matter.
Uh, what do you mean “without batting an eye”?? That is a massive additional cost, which will certainly affect the valuation that has been noted both on this forum and in the media. And apparently Neste also views it very negatively. So, definitely not “without batting an eye”:
Well, this isn’t relevant but since you asked. I was making a point. We complain about strikes, the impact of which is about 5% compared to the cost overruns of an investment lasting years.
Then another question can be raised about where the Finnish state-majority-owned facility is making a billion-euro investment. Porvoo was not good enough, and now it’s being done in Rotterdam, and costs are spiraling. At the same time, jobs are being cut in Finland.
As for salary costs, I think, I don’t know, that salaries in Finland are lower than in the Netherlands.
And yeah yeah, an international company makes investments where it sees fit, etc. etc., market economy, yeah yeah.
I want at least the option to criticize the company’s actions when it cuts jobs from Finland and wastes billions on an investment in Europe for a product whose demand and price are falling.
This will still turn out well in about two years. Policy helps by raising the blending mandate in the Nordic countries already this year. Demand for aviation fuel is likely to grow at least in Europe, boosted by the green wave. The US market will clarify and calm down as new and upcoming tariffs favor local (Martinez). The dividend should have been skipped now. It too will surely return to its former level in a couple of years. Now we are at the bottom or close to it. By the end of the year, there will already be a greener new outlook… The patient will reap the harvest of the impatient over time.
This is likely due to the Finnish government’s budget entry: “[The general starting point for the dividend policy of state-owned companies] is that state-owned companies and associated companies pay dividends that, measured by the dividend ratio, correspond to the normal level of listed companies.”
So now, nearly €100M is being siphoned from Neste to the state’s cash shortage, as this has already been budgeted and it’s not politically easy to start looking for savings elsewhere again.
Completely agree. Regulation will increase demand, and when margins are kept reasonable, it will certainly have a positive impact on Neste. Dividend distribution in this situation is not a good idea.
I think Neste has reason to be concerned about both: both the massive cost overruns of investments and the continuous rise in labor costs of an already weakly profitable business. These are not mutually exclusive problems. The owner has reason/right to be annoyed about both.
Trump’s drill-baby-drill and Russia’s potential return to free oil markets (Isn’t that what Trump wants in his peace brokering?) could strongly lower crude oil prices further, while the economy cools down
Trump’s policies are not very environmentally friendly, subsidies for green fuel a question mark
French and German economies in disarray, the EU is unlikely to raise its green targets
The year 2025 looks very difficult - at the same time as demand falters (regulation and economy), more capacity is entering the market.
Turnaround at best (!) in 2026. For monitoring, but not for the portfolio.
I certainly don’t see any positive development this year or next. It is already known that raw material markets (UCO and palm oil-based products) are under severe price pressure because new players are constantly entering, and Neste has no competitive advantage in procurement.
Furthermore, if crude oil prices fall, it also lowers the margins of renewable products, and when Russian oil returns to the market (by 2026 at the latest), this year might be the last chance for Neste.
Well, time will tell what happens to Neste, but everything indicates that HVO diesel will soon become a bulk market similar to oil products, and the margins in that game are not huge.
Could you also provide justification, on what basis do you justify the claim “no competitive advantage in procurement”? Is this again on the level of a Kauppalehti ranter’s guesswork, or are procurement channels/partnerships supposedly public information?
Even if some ceasefire/peace were to emerge in Ukraine this year, it would not necessarily remove these sanctions, e.g., regarding oil prices. Since no war reparations are received from Russia, the EU, at least, will not approve the lifting of sanctions except in the long term.
I would personally say that Russian oil will not return to Europe for a long time! The US and the EU will surely strike a deal in this trade war. The EU could commit to buying oil from the US.
Neste states on its own pages that it only acquires certified raw materials, meaning an ISCC certificate is required for supplying raw materials to Neste. From the ISCC website, it can be seen that Neste has only one “collection point” in Asia, for example, and it is in China for UCO. This means almost all raw materials are acquired from Asia through an intermediary because there is no own “collection point” for raw materials. This is largely the same for all producers, and there is no difference for Neste compared to other large companies.
Another observation is that Neste’s procurement policy has a payment term of 60 days, which certainly eliminates many raw material suppliers because many cannot afford to wait that long, while some buyers offer payment on significantly better terms. Of course, larger operators with a “trader with storage” certificate can sell to Neste, but they take their own cut, whereas if there were a wide network of “collection point” companies, raw materials could be obtained directly without intermediaries.
Well, time will tell how it goes, but I myself believe that Trump/Putin will get some kind of deal where energy sanctions are lifted under some conditions, and if that happens, Russian oil may not fully return to Europe, but buyers will certainly be found if only the supply chain can be made “legal”.
It is, of course, the case that something cannot return if it has never left:
After everything seen in the last three years, I wonder about some people’s belief that Europe would act somehow morally and honorably in its Russia trade policy in the future.
Last time I looked at Neste, the gasoline hose billionaire Mika Anttonen had bought a lot of shares and we were rubbing our hands together in satisfaction. Today, one might feel schadenfreude that someone else’s portfolio has a bigger loss than one’s own.
This is embarrassing for us bulls, as first the problem is that Russian goo might soon return to Europe, and when it has already returned here, the problem is an immoral Europe. Everyone is against us, oh dear.
The quality of crude oil from Russia is not suitable for nearly all refineries – Neste had a good position previously, but it’s difficult to see trade policy returning to its previous state. Time will tell.
Should Neste consider splitting the company? Oil products separately and renewables separately. State ownership could potentially be reduced to zero in the renewables business. A possible parallel listing for renewables. This way, it would be possible to gain resources for the long game of renewables and much greater strength. The technology, however, seems to be in order, and so does the network. Many companies can be found worldwide with very high valuations based on future prospects.
Alright, I’ve emptied my entire Neste portfolio. To minimize losses. 5.24M shares traded today, so someone found them acceptable, and good luck to them going forward:
dividend distribution for the next two years remains close to zero; I’m looking for returns
the share price is still not at its bottom
EBITDA and earnings per share are not impressive even after cost-saving measures.
High price of bio-raw materials and index rise in 2025-26,
Increased competition in bio and predicted decrease in margin level in bio
43% state ownership and lazy owner guidance
Benefit from bio first-mover advantage lost
low factory utilization rate
inaccuracy of sales forecast
abandoning hydrogen initiatives to streamline production
i.e.,
Lack of confidence in the operational management’s ability to transform the strategy into profitable operations.
Greenness is an ecological act, but it cannot take precedence over business. Neste’s business is not marketing greenness; the company’s task is to generate value.
In my opinion, now is the worst possible time to start sorting this out. In legacy oil, the Russia situation might improve in the medium term, and in renewables, hopefully, we are at the bottom of the price cycle.
Indeed, at this price, my mind starts wondering what the EPS was in the record year and if there could still be a return to that, e.g., within the next 5 years.