Neste Oyj Unsp/Adr

Good day and thank you for standing by. Welcome to the second quarter 2024 NSDI Corporation earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Anssi. Please go ahead.

Thank you. Good afternoon, ladies and gentlemen. Welcome to this conference call to discuss Neste's half-year results published this morning. I am Anssi Tammilehto, head of Neste IR, and here with me on the call are President and CEO Matti Lehmus, CFO Martti Alaherkonen, and the business unit heads, Carl Nyberg of Renewable Products, and Markku Korveranta of Oil Products. We will be referring to the presentation that can be found on our website, and as always, please pay attention to the disclaimer, since we will be making forward-looking statements in this call. With these remarks, I would like to hand over to our president and CEO, Matti Lehmus, to start with the presentation. Matti, please go ahead.

Thank you, and good afternoon also on my behalf. It's great to have you all participating in the call. We had a challenging quarter as the market in renewables weakened further, both in the US and in Europe. At the same time, I want to emphasize that our operational performance was solid and we completed the major Corvo turnaround as planned. We keep focusing on the execution of our strategy and leveraging our competitive advantages to support our performance in this challenging market environment. So, moving to the first slide, our group comparable EBITDA was 240 million euros in the second quarter, clearly below last year's performance of 784 million euros. Our planned nine-week major turnaround in Porvoo, of course, had an impact on the results, But another key factor was the weakening of the renewable products sales margin to $382 per ton compared to $800 per ton a year ago. Compared to the first quarter of the year, Middle East-led prices, US bioticket and renewable credit prices, as well as renewable spot premiums in Europe, decreased further. At the same time, waste and residue feedstock average prices increased slightly as feedstock demand continued to be robust. As a result of the rapidly changed market conditions, the second quarter comparable sales margin also includes a one-off valuation loss in our biotickets and credit inventories, totaling €36 million, which is equivalent to minus $40 per tonne in the comparable sales margin. Our year-on-year sales volumes were basically flat in renewable products, impacted by the preparation for the upcoming turnarounds at our refineries in Rotterdam and Singapore. We continued our efforts, to grow the sustainable aviation fuel sales, and we expect our SAF sales to grow clearly in the third and fourth quarter. In oil products, the comparable EBITDA in the second quarter totaled 62 million euros, as sales volumes were affected by the earlier mentioned Volvo major turnaround. We currently estimate that the second quarter will be the weakest quarter of the year for Neste in terms of results, and cash flow to be substantially positive in the second half of the year. Let us now turn to the market environment during the quarter. The summary of key market indicators illustrates clearly the weakness of the renewables market in the quarter. In the U.S., the average ring credit price weakened by 13% versus the previous quarter and by 66% versus a year ago. Also, diesel prices decreased, as, for example, the European diesel reference price was 7% lower compared to the previous quarter, whereas the average cost for our relevant feedstocks increased by approximately 4% quarter on quarter. On a positive note, certain market drivers in renewables improved slightly towards the end of the quarter, such as, for example, RINS. In oil products, product margins strengthened versus the previous quarter for gasoline, whereas seasonally, on the other hand, the diesel margin weakened over 30%. So while the current market environment is challenging, our strategy remains very clear, and we continue our full focus on the key elements to support value creation. This includes leveraging our competitive advantages in feedstock, the growth in the most attractive market segments, and sales optimization based on our strong global market position. And finally, a strong focus on leveraging our economies of scale for efficiency and long-term competitiveness. Also for the short term, our priorities are very clear. They include SAF sales growth, ramp up of our new production capacity, and continued actions to improve our cost efficiency and cash flow. These words I now hand over to Carl Nyberg, who will go through the renewable product segment review. Karl, please.