Neste Oyj Unsp/Adr

Good afternoon, everybody. Welcome to discuss Neste's Q4 results that were published this morning. My name is Jukka Miettinen, MVP for Investor Relations at Neste. Here with me, we have our President and CEO, Heikki Malinen, and our CFO, Eeva Sipilä. We are referring to the presentation that was launched today on our website early this morning. In the presentation, we will go through the key highlights, for example, our Q4 financial performance and the status of our key focus areas, including the performance improvement program and the progress towards our financial targets. We will be also discussing the key regulatory developments, key opportunities and uncertainties in the market, as well as the outlook. We will have time for discussions with all of you. And please pay attention to the disclaimer as we will be making forward-looking statements in this call. With these remarks, I would like to hand over to our president and CEO, Heikki Malinen. Heikki, please.

Thank you, Jukka. Good morning, good afternoon to everybody. Welcome also to this call on my behalf. Really looking forward to discussing with you about 2025 results, the last quarter, and also how this year will work. okay so let's start with a couple of slides here first i want to show you i'm going to start with i want to start with discussing the key figures but before i do that let me just make a few comments to provide you with a bigger picture and how i see the situation that missed after having been in charge of the company now for a bit over one year and a quarter i think overall if we look at 2025 we had a good year we have been able to achieve a financial turnaround compared to where we were just a few years ago. I'm very pleased about the fact that in 2025, all of our businesses performed better. Each of them had their own successes. I wanna highlight in the area of RP specifically that we were able to increase our volumes from 3.7 to 4.1 million tons of sales. In OP, I'm specifically pleased by the operational performance of the Portable Refinery. If you look at the utilization of the OP business, which is mainly Porvo, we achieved 90% in the fourth quarter, which actually is one of the best years we've had operationally in Porvo's history. And we were luckily, of course, then able to capture the cracks, the spiking cracks in the fourth quarter. Marketing and sales, we rarely talk about that, but still they were able to improve their results by 10%, and they actually launched some very exciting new retail concepts here in the Finnish market, which have been received very well by retail and business consumers. We also met our financial targets for 2025. I was especially pleased that the performance improvement program that Eva will go through in more detail performed really well. In fact, it performed better than I expected. I've done a number of these during my career, and I was really positively surprised how well the Neste team delivered on multiple areas very systematically, quickly, and very efficiently. So a big hats off to the Neste team for what they did. On the regulatory front, the year was filled with all kinds of rumors and expectations, but in the end, I think the tailwinds are supporting this. They're both in Europe, gradually in the United States as well with the RBO, and then we're starting to see initial green sprouts, so to speak, when it comes to SAF in Asia. And last but not least, I think overall where we are today, we have a good foundation then to perform better in 2026. But then looking at Neste in a bit more detail, I always start with safety. This is the number one subject here in the company. Every meeting starts with safety. On the left-hand side, you can see our total recordable injury frequency rates. This really is people's safety calculated per one million tons. We were at one million hours. We were able to reduce it a bit. We have a long way to go here. I think we have all the means and tools and skills to bring this down. We just need more system and discipline. But I'm not happy with the number. We can do much better. On the right-hand side, we see process safety, which in the past has been pretty tough for Neste in some areas. But overall, if you look at last year, we made good progress. We are not yet at first quartile, we need to go lower, but still I'm very pleased with how the year ended. 0.9 is a big improvement from the past. And one piece of information which is not shown in the slide but which I want to mention specifically is that in the Rotterdam Capacity Growth Project, our expansion, we actually have had a very good safety year as well, good progress. And considering how large an undertaking Rotterdam is, and we have thousands of people on the site. So far we've done well. Of course, the work continues. Then a few numbers from last year, 2025. Our comparable EBITDA was 1,683,000. uh over 400 million improvement vis-a-vis the previous year i was very pleased with that on the other hand you can see the term the sales margins on renewable products 411 dollars per ton we were impacted by the terms term deals from the fourth quarter of 2024 they did impact that number in the second half and in the final quarter we saw prices rise but uh we did that have that overhang as we often do when we turn a part of the business annually and then on the right hand side maybe i want to highlight the soft volume we doubled it to 867 000 tons Pretty much, I would say, at the level which is sort of reasonable given the amount of volume being sold overall. As we know, the renewable, let's say the soft mandates have not risen as rapidly as we had hoped, but still over 800,000 delivered to our customers. Then on the fourth quarter, shown on the bottom left-hand side, our EBITDA for the fourth quarter was €601 million. We had a very strong finish to the year on multiple fronts. As I said, all of our businesses performed better than the year before, and so, of course, we're very pleased with that. Free cash flow in the last quarter was exceptionally strong, $809 million. Eva will talk about the balance sheet further. I think overall I can say as far as the balance sheet is concerned that 40% Our leverage that we set at the beginning of the year as an absolute cap, well, I think looking at the number, we can say that we're clearly now in much better shape than we were in the past. Maybe I thought we were in clear waters, but clearly, you know, the direction of travel is very positive. So good on that front. The work continues, of course, into this year. We have a number of major things we are working on. The performance improvement program, as discussed already, and Eva goes through in more detail, delivered 376 million euros. So we actually achieved on a run rate basis more than what we had set out as a target for the two-year program. So we've really done extremely well. What I want to do here is now that we will – report to you we're actually going to continue this program for another year for 26 and then we will in 27 move more into continuous improvement type of a mode in we're not setting new public targets for this year, but we will continue reporting to you on a quarterly basis how the work continues. What I can say is that after having observed the work for one year, I see there's still good potential to raise that number even more. So you will then get reports on a quarterly basis and we'll then see where we end up after 2026, what the total final tally is. Rotterdam is a big undertaking. I go there almost every six weeks. During my last visit, I was impressed by the good work people are doing there. It's very, very busy, very intense. A lot of people there. They're making good progress. But as I said, 2027 is then the big year for the startup. And then finally, operationally, we continue the work to increase our own production, to make more advancements there, and also to be commercially successful. And then, of course, gradually get ready for the Rotterdam launch in 27. So those are some topics on the agenda of the company. We will be happy to discuss these with you in a moment when we get to the Q&A. Now let me hand it over to Eva to talk about the financials. Thank you.

Good afternoon on my behalf as well. And I'll start with the renewables market. This slide shows the reference margin development of renewable diesel. And as you can clearly see, the fourth quarter was better than the previous quarters of 2025. We had a bit of a sliding down effect during the quarter and then a small sort of jump at the year end, quite typical in a way that some late buying tightening the market, which again then typically also in early January of this year has then eased back significantly. So in this sort of supportive market environment, our EBTA on a comparable basis reached €601 million. In renewable products, we had a maintenance-heavy quarter, but higher sales volumes and margins offset the higher net production costs. In oil products, solid utilization and the November spike in gas oil market prices supported profitability. And finally, marketing and services, we saw a nice sales volume increase in Finland and Estonia. Looking at the sort of full year 2025, so we reached almost 1.7 billion in comparable EBITDA and really thanks to higher sales volume and lower costs as you see from the right hand side graph. Like Heikki already mentioned, all the business areas improved from the previous year and we're very pleased with that. The performance improvement program, indeed, one year ahead of schedule, so exceeding €350 million by the end of 2025 instead of the original target, which was only end of this current year. Very pleased with that. Of the 376 million, that is the run rate. In the P&L of 2025, there is 172 million that have come through. And this is just purely from the fact that, obviously, the... The run rate is ahead as the program started after a few months into the year and then getting sort of all activities ramped up and before there is that annual effect it comes then over the coming quarters. Like Heikki said, very pleased with the amount of activities and kind of actions and the overall engagement of the Neste team in improving our competitiveness, so we're absolutely pushing forward. 75% of what we've achieved so far has come really from cost reduction and the big elements being general procurement and logistics. And then 25% coming from margin and volume optimization. Then a bit more detail into the quarterly performance by segment. So starting with renewable products. So indeed, despite significant maintenance activities in the quarter, the sales volume reached 1.1 million tons, and our commercial team worked very hard for this. The comparable EVTA came pretty close to the third quarter level, which was always going to be a tough target since that was one of more sort of solid operations. But as you can well see, so sales volumes, margins supporting, and then really the maintenance costs visible in fixed costs dragging the result down. So no sort of surprises there per se. Moving to oil products, high utilization. We're very proud of this. And especially now in Q4, this was really worth a lot of money for us because the market prices in diesel cracks really went up to – to almost $30 a barrel, and of course, there being agile and really on top of the market and being able to leverage that opportunity was very important in reaching the $321 million for the quarter. And indeed, our refining margin of over $20 is something we're very pleased. And it did require, as I said, quite a spike in the market price. But good, really good work from the team here. And with all the volatility that we can expect to continue in the global oil markets, I think this agility... continues to be something that we're focusing a lot on in our performance management. Marketing and services also did well. 28 million unit margins were seasonally weaker, and then the fixed costs were also higher. We have a bit more higher investments ongoing in IT, and then also the new retail wheelie concept here in the Finnish retail market. But good work on the sales volumes from the team. supporting the result on to the other direction. Moving then to cash flow, and this certainly increased markedly. Obviously, improved results helped, but also a lot of good work on the networking capital side. 809 million was the cash flow for the quarter, and this then resulted in a full year cash flow before financing activities of 759 million euros. And this really despite cash out investments being 260 million in the quarter, so a bit higher than the previous two quarters. The Rotterdam expansion and then the additional maintenance work behind that slightly higher figure. And as we said earlier, the Rotterdam investment will keep our investment level high also in 26. And then we have the Porvo refinery turnaround coming up every two and a half years. And this is now the time it comes. And so that, of course, adds. adds to the capex, but we are guiding on cash-out investments to be between 1 and 1.2 billion euros. So I would say very well in line with what we said a year back. And still on the networking capital, so maybe a few points. So on the inventory side, you'll remember we were very clear that fourth quarter will be one of reduced inventories as we really push out the pre-maintenance buildup that we had to do in Q3, which hurt cash flow at that time. succeeded in that. But in addition, we had a lot of focus on AP and also AR, and I think, again, the SORDER team did very well on that, and we're certainly very pleased with the outcome. And this then leads to us being well on track with our financial targets. So as Heike already mentioned, leverage is clearly now below the 40%. And the other financial target on the performance improvement also being accomplished. Now, work continues on both of these areas, and we have a lot of things we kind of need to do still at Neste to improve, but a successful delivery in any case for 2025. And with that, handing back to you, Heikki.

Thank you, Eva. So let's then talk a bit about regulatory matters. On this list, there's a lot of text here. Sorry for that. We wanted to give you a full compendium of all the things we see happening on the regulatory front, both in North America, Europe, and Asia for the different products. I think just the fact that the list is quite long and much longer than we had earlier, you know, sends a message that, you know, things are happening here again. What's particularly interesting on the right-hand side is how much activity we see across all of Asia. Yes, there are small numbers, there are small mandates, 1%, 2%. In some countries, they're more on soft for international flights, not for domestic flights. But still, you know, Singapore has taken the lead with Japan, and now other countries are following. In Europe, of course, for us, the big thing is the implementation of the Renewable Energy Directive 3, and specifically what that does to Germany. Since we last have spoken, or since we last spoke, the process has continued in Germany. Now they are in parliamentary review in the Bundestag, and we hope in the coming months then to get a final resolution. But so far so good. Direction of travel is positive, and as we estimate, by the end of the decade, The volume of renewable diesel should go from 5 million to over 10 million plus tons in Europe. And, of course, for us at Neste, where we can produce both SOF and RD in our refinery, so this is really good news. And then in Europe, of course, the mandates will rise in 2030. We are going to continue discussion with the European Union to make sure that that really than materializes. So overall, very good. And in the U.S., we're waiting for more news on the RBO, Renewable Volume Obligation decision, which was part of the big, beautiful bill. And also there, we should hopefully get some more news towards the end of the first quarter. Focus areas for this year, I already talked about these a little bit, but if I just sort of summarize still, what's on my and my team's agenda, so I'll really continue with the performance improvement program. There's a lot of activity. I've been positively surprised, you know, how much Team Neste actually is able to do on this front. Maximization of our asset utilization. Here I would say that we still have work to do. need to put more efforts into predictive maintenance, make sure that we really prepare for our turnarounds really well, we get maintenance done on time and on budget. And this year in particular, we have the big TA Coming in portable in the fourth quarter or towards the fourth quarter, it's a very big undertaking, but we're monitoring that carefully so far. What I've seen, I feel good about the preparatory work. We also do external benchmarking to see how well we're getting ready, so that benchmarking data also indicates that the team has done good work and we will be prepared then for the turnaround. And then Rotterdam already we discussed. It is moving according to plan at the moment. Market opportunities overall. Our world in renewables can be a bit volatile from time to time. As said already, a lot of positive things happening now on the regulatory front. Let's see how those get implemented. But still, the tailwind is clearly more positive. The big unknown for us is Chinese SAF volumes, how much will come into Europe. We know there's volume coming. I need to wait and see for the customs data to get a better view on that. We continue the work on SAF anti-dumping duties to make sure we have a level playing field on SAF. And then on uncertainties, maybe I want to highlight the feedstock prices. Of course, in our business, feedstocks account for a very large share of of the variable costs, so depending on how they progress for animal fats and Yuko and then for these Annex 9 feedstocks will be critical to then determining the final margin of our products. So, because we have, we can hedge these costs to some degree, but not fully. And then I think on geopolitics and trade, otherwise I don't see anything particularly new happening on that front that would impact Neste at the moment. So that pretty much is that story. Then in terms of dividends, our board recommends to the annual Gerholtz meeting that the dividends would be kept at the same level as last year. So that is 20 Euro cents overall. And then finally the outlook for this fiscal year. So renewable product sales volumes in 2026 are expected to be approximately at the same level as in 2025. Oil product sales volumes in 2026 are expected to be lower than 2025 due to the planned maintenance turnaround at the Porvo refinery. So those are our key messages at this stage, and I think we will hand it over to the operator, right, and take your questions. So thank you very much.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Alejandro vigil from Santander. Please go ahead.

Hello. Thank you for taking my questions. The first one is about the outlook for 26. Of course, you are talking about these guidance of volumes flat year on year, and I'm wondering something is going on in terms of utilization rates, or why you see this flattest performance? That's the first question. And the second is regarding profitability. We have seen in the last couple of quarters a VTA in the renewal products division of about 250, 270 million euros per quarter. This is a good indication of the current status of the market in terms of margins for Neste in this division. Thank you.

So if I take the outlook and if you talk about the profitability, so, well, I would say that at the moment with respect to our refineries, so we are running fairly close to the capacity we have at the moment that we can get out. We're constantly optimizing and trying to squeeze out more, but in our situation, Any de-bottlenecking that we can do to get more out will have to happen during the turnarounds. And the next opportunity for de-bottlenecking will be end of this year, early 2027, when we have the next turnarounds in Rotterdam and Singapore. So you cannot do de-bottlenecking until you have done a certain amount of engineering and you've ordered different types of equipment and pipes, etc., So there's always delays to how quickly you can do the turnarounds and de-bottlenecking. So that will be a story more towards the end of this year, early next year. And then Rotterdam, of course, will then be the big volume increase, and that will come in 2027. So that is the situation, and as I said, we are trying to squeeze out safely and reliably as much as possible, but we have to overcome those de-bottlenecking challenges first.

And Alejandro, on your profitability development question there, so obviously sales market prices are important. We've had tailwind that we see continuing. At the same time, if you look at feedstock prices, 25 versus 24, they were higher. So we need to continue to work really on finding the right feedstock and really utilizing the whole global market. network that we have to maximize the margins. But importantly, then, obviously, is the performance improvement program. A lot of the actions are RP focused, and we, as mentioned, we have more in the pipeline just from a sort of timing perspective, but still working on new actions. So we're certainly very focused on improving the profitability at RP. I think this is not a level where we're yet satisfied in any way.

Thank you.

The next question comes from Paul Redman from BNP Paribas. Please go ahead.

Hi, guys, and thank you very much for your time. Yeah, two, please. The first one is just back to sales volumes. Could you just be clear, you used to provide a breakout of weeks by refinery of how much Turnaround activity will go on in the year. Could you just go through each refinery, just highlighting how many weeks turnaround you're expecting in 2026, or as you just mentioned, Rotterdam and Singapore possibly in 2027? And then secondly, I have a question about it's a bit longer term. So when we look beyond 2026, you previously guided to a material reduction in capex post-2026 as a Rotterdam facility comes online. If margins continue to be strong, the balance sheet will de-gear. How do you think about financial priorities post-2026?

Okay, so I will start and let Eva continue. So in terms of this fiscal year, so we have these catalyst changes pretty much every year. I cannot really give you an exact week number here yet for the turnaround in Rotterdam or in Singapore because they will also include the bottlenecking work. So it isn't just the pure capitalist change, but there will be others. But the Rotterdam... TA will be at the end of sometime in the fourth quarter, and then Singapore will start line two. Now, that's the first TA on line two in Singapore. That will be starting probably, I think it was this time, you know, mid-December-ish, somewhere there, and it will flow then into the first quarter. But the exact date still will depend a bit also on the holiday season in Singapore with Chinese New Year, et cetera. So, But anyway, roughly there, so Singapore more into the 27-ish, and that will also include then the bottlenecking work which has to be done. Now then to your question about beyond 26 and CAPEX and how we're thinking about that, so maybe Eva.

Yeah, financial priorities post-26, Paul, I think it was. So no news here really. Deleveraging is the one word I would say that obviously – Whilst we now had good cash flow and we've clearly turned a corner in leverage, the amount of gross debt remains high and this year being still a sort of capex intensive year is not going to sort of fundamentally change that. So then as we go into 27, 28, that's really sort of the main focus. And of course, in order then to build ourselves a stronger balance sheet and that we have more optionality, a few years after that.

The next question comes from Henry Patrick from UBS. Please go ahead.

Thank you for the presentation. I have two questions, please. The first one is on the volumes for this year. mentioned that you're running very close to capacity at the moment, but your utilization rate last year was 70%. to run much closer to full capacity. Are you saying that we should assume that the full utilization would be close to this soft level because of the frequency of the catalyst changes, or is there some upside to that utilization rate over the next couple of years? And then secondly, on the sales structure for 2026, can you give us an update on the term contracts for this year? Where did you end up in terms of the spin between term sales versus spot? Any comments you can make on all these term premium looks in 2026 versus 2025? Thank you.

Yes, thank you. Thank you very much for those questions. Yes, the utilization level, I would like to see that also higher. But that will require some more work in the refineries. There's also a bit on how much do we swing between RD and SAF. So last year we made over 870,000 tons of SAF. So how much we're swinging back and forth between that also impacts utilization. It isn't just a although we're happy about the flexibility you know getting putting the soft lines on you know also you know impacts a bit the utilization so so the more we can run with one grade uh rd in particular you know that helps that so but but we are going to try to to to improve that further and then do some more d bottlenecking then in terms of the term contracts i said in the last call i said that we would take our time and not rush well in the end then we We did ultimately then go and term about 60%, roughly, about the same level as the year before. So about that. Anything you want to add, Eva?

Well, maybe just to mention, Henri, on the premium, so significantly higher than a year back. Obviously, the market situation was healthy, and thanks to that, that actually was behind our decision to term that much. I mean, originally, I think we discussed also with you that we'd aim a bit higher, but when the market was as good as it was, we felt it was the best decision for shareholder value.

Thank you. Thank you.

The next question comes from Adnan Dhanani from RBC. Please go ahead.

Hi. Thanks for taking my questions, too, for me, please. So first one on your CapEx, you were able to lower your guidance a couple times last year and still ended up spending less than the final guidance at the end of the year. Can we get some color on the moving parts there? Is that just a phasing thing? And if so, could that mean that this year's spend could be towards the higher end of the range you provided? And then secondly, on your performance improvement program, obviously very solid results so far. You've noted that the work continues in 2026. Are you able to provide any color on how much further upside it could be beyond the 376 million that's already been achieved? Thank you.

Yeah, thank you. Maybe I'll take the second one first, and then Eva can take a crack on the first one. On the performance improvement program, we had the four modules, which were there's the efficient organization, which has been done. There were items on procurements or sourcing. A lot of work has happened. Some of it will flow also into this year. There's a commercial piece. We've optimized our logistics and terminal networks. We've closed some terminals recently. which had very low utilization so that much of that work has been done on the refinery side we do see a lot of further opportunity that module has been slower to progress because the changes we need to make to these lines some of them may need some money or they just need some design work and it just takes more time to do these adjustments um let's say safely, plus it's just simply more complex work. So we will continue focusing especially on the refinery side in 26. We are not going to give you any guidance or estimate on the upside. As I said, I only can state that I'm really pleased with what we've accomplished this year. We're going to continue focusing particularly on the upside on refineries, and we will then report on a quarterly basis and try to provide you as much color as we can. That is the current way we're going to move forward. And then in terms of the CAPEX, so anything you would like to say regarding that?

Yeah, certainly, I think it's not a sort of untypical phenomenon that you have a bit of slipping. I wouldn't say that it was more than a few tens of millions, so indeed we were expecting that slip. Now, the estimate is based on what we kind of have currently, and yeah, then obviously we've given a range just because there are some uncertainties, and I'm comfortable with the range, but indeed, I think it's a Typical phenomena is sometimes really difficult to estimate exactly right then on how the sort of payments then go out. But not a big thing for last year.

Thank you.

The next question comes from Artem Beletsky from SEB. Please go ahead.

Yes, good afternoon, and thank you for taking my question. So I have two to be asked. So the first one is relating to renewables volume outlook for this year and basically split between RD and SAF. Is it fair to assume that there will be growth in RD and maybe SAF volumes coming down just looking at market fundamentals? and the SAF market being pressured by import volumes coming from China. And then the second question is relating to Q4 fixed costs, what comes to renewables. So there has been quite significant increase sequentially, I think more than 30 million euros. How big portion of it was related to this maintenance activity happening in the quarter, and maybe you can provide some guidelines for this year as well. Thank you.

Thank you, Artem. So I'll take a crack at the first one and then Eva can talk about the fixed cost. So, yeah, last year we sold, it was a three and a half, hold on, 800, 870 on the SAF, if I remember correctly. And then the rest was RD. I think I said on the call last time. that if the soft market doesn't develop well, then we have always the option to sell RD, and that is what we will do. So we are constantly optimizing, and depending on what really makes sense financially for our shareholders, we will run the refineries according to that. So it is possible that this year we'll have a bit less stuff. But let's see, it's early, we're just in January. And let's see how the markets, what happens with the imports. We really don't know yet very well. We don't have any data yet really for 26. And then based on that, we'll have to make choice. But we will go with what really maximizes value for the company.

And then on the fixed cost Artem, so indeed the growth in fixed cost was really all around maintenance. And looking into 26, so we'll have a similar phenomenon that obviously we have some of the performance improvement savings. coming through in the fixed cost, and that's supportive. But then at the same time, we will be increasing somewhat the money spent on maintenance for the obvious reason that we do want to want to sort of max out on the utilization and reach a better utilization, as Heikki already mentioned. So that will probably mean that in a way net-net there's not much improvement in fixed cost per se to be expected, but of course we're we're very focused on all elements and on the margin then to sort of improve profitability nevertheless. Fixed cost relatively speaking is not the main item.

Okay, this is very clear, thank you.

The next question comes from Henry Ta from Burenberg. Please go ahead.

Hi, and thanks for taking my questions. The first one is just on premiums and margins. So I think you talked about, you know, higher premiums into the term contracts. Obviously, there are lots of push and pull factors, et cetera, driving margins in the renewables business. But as we stand here today, then, looking into 2026, Does it make sense as a starting point to think about the sort of second half levels from last year being a good base as we think about modeling renewable products? I think that's my first question. Thank you.

Well, I think that if you use the second half as a reference, it wasn't that. That may be impressive in the beginning, so I would say that we are aiming upwards on that. But like you rightly say, so obviously the premium we fixed is dependent also how what happens on the feedstock side and how we're able to optimize. But I think it's fair to say that our ambition is higher and hence the higher term rate.

I think the feedstock pricing is, of course, really critical here for the final margins.

Yes, and that's probably my second question then, which is what are the key drivers and risks that you see for this year on feedstock?

We try to buy from all jurisdictions globally. We're continuing to expand our reach, both for animal fat, for Yuko. And what's been really interesting, of course, now with the new Red 3 requirements is these Annex 9 feedstocks. I think we're well positioned, actually pretty well positioned on these Annex 9 feedstocks, which I think could become an asset here as we go forward, but let's see. And then in terms of Yuko, what I think is playing here a lot into the equation is, you know, how much will Chinese demand be hard to predict, and then also what happens with these RIN, the RIN 50 in North America. So I think those are the two maybe triggers which could then impact both Yuko and animal fat prices. And then, of course, how much supply of animal fat is available, particularly out of Australia. I think those are the sort of dimensions or things which are moving the market. But as I said, I think overall, we're probably the largest buyer of these feedstocks globally, and we have a good sourcing organization. I think we're very well on the pulse of the market, and we have multiple sources to market. to buy from if one area looks more expensive, we then always have the opportunity to look for other sources. I think that is an advantage. Stocks are really critical in this industry.

Okay. Thank you.

The next question comes from Nash Kui from Barclays. Please go ahead.

Hey, good afternoon, everyone. Two questions, please. The first one is a follow-up on term sales. I just want to clarify on the ability to lock the margin. From your previous answers, am I right to understand that you can lock the sales price but not the fixed price so we can still see a bit of volatility on the margin? Then my second question is, One of your peers comments, your other European energy peer CEO mentioned some bearish comment on South Monday. I wonder what's your view on that? Thank you.

But you want to comment on the hedging?

Yeah, sure. So indeed, I think, Nash, the challenge on the feedstock side is that not all of those products can really be hedged. They are not open, transparent markets. So more on where you can hedge is then on the sort of soy palm side, and that means that there's – certain limitations when we sort of term a sale. But of course, we sort of, they do over time usually sort of have a correlation and then we sort of try to optimize based on the sort of experience we built on how to do so. But indeed, there is a certain open position and hence our Hence our cautiousness on the commenting on the final sales margin.

Regarding your question about the soft mandates, so I said before that at least based on the conversations I've had and we've had with the European Union, they are pretty committed to implementing the soft mandates for 2030. I mean, between now and 2030, nothing specifically will happen. There will be a review. probably somewhere between now and 2030 about these mandates. I know the airlines are, of course, pushing back and trying to move the 6% into the longer-term future. But as I said, our indication is that the mandates are going to grow. And six is the number which has been decided. I'm very pleased with what we're seeing in Asia. gradually starting to see mandates coming there as well. I think that's a very positive sign. If Asia now starts to move forward, you know, why would Europe then suddenly, you know, move backward, especially when Europe has been the one really, you know, pushing for us off, you know, to start off with. So, you know, if we hear something different, you know, we will report to you, but I'm not aware of anything that would derail the 2030 program, at least not at the moment.

That's very helpful. Thank you so much.

The next question comes from Alice Winograd from Morgan Stanley. Please go ahead.

Hi. Just one for me, please. So you said about 60% of sales were returned. Can you give maybe a breakdown between Europe and the U.S. within the term sales? Because the EU margins have been extremely high for the better part of the second half, I think upwards of $900 per ton. So if there's any indication that, you know, a lot of these term sales are in Europe as opposed to the U.S., this has some read across the margins, right? So I appreciate any call you can give. Thank you.

Thank you for your question. Unfortunately, we only provide information on the aggregated number of terms across the region, so we do not break that out by markets in more specific detail. So sorry about that, but thanks for your question.

The next question comes from Iris Tiemann from DNB Carnegie. Please go ahead.

Hi. Thanks for your presentation. I have two questions, please. So the first one is related to renewable diesel prices, which have come slightly down from Q4 over the past two to three weeks. So what has been driving prices lower and do you see any drivers that could affect prices for the remainder of Q1? Yes, so this is my first question. And the second question is related to your utilization rate in RP. So I think previously you highlighted the 80% utilization rate as a good proxy for this year in RP, while now it seems to be 75% or something like that. So is there anything that has changed since the Q3 presentation when you highlighted this 80% proxy? Did you, for example, have longer maintenance in Rotterdam or Singapore that basically has impacted your volumes this year?

Thank you. So thank you, Iris, for your questions on the RD prices on the last few weeks. I cannot report anything particular. I think partially it can be also a bit sentiment-driven, you know, how these mandates are coming into play. But I think overall, I cannot report anything specific about that. I think what is good is that the level is, of course, much higher for us compared to where we were last year. I think we've now gotten to a more, let's say, healthy level, and I think for Neste, that is what's really critical here. On the utilization level, as I said earlier, we feel that we have more work to do in terms of these refineries. At the moment we are running at a level which is fairly close to, well, let's say that is the performance of the day, if I would say so for us. Part of our PIP program, our performance improvement program, specifically focuses on getting more improvements out of the refineries. And therefore, we want to also get that number up. But that is the health of the refinery at the moment. Regarding the turnarounds that you referred to, Singapore, I think, is very close to starting, if not starting, and both turnarounds have been done. We don't comment specifically on the individual turnarounds per se, but both of them have now been completed.

Okay, thank you.

The next question comes from Christopher Coupland from Bofe. Please go ahead.

Good afternoon. I'm afraid I'm going to keep asking about turnarounds. I'm going to focus on Porvo and the oil product division. As far as I can recall, this used to be a four-year cadence for major turnarounds. I think the last one we had was in Q2 of 2024. And maybe it's my recollection that's off, but I thought it was next going to be in 2027, which was already, to me, earlier than the usual four-year cadence. And you're now, as far as I can tell, telling us that that 2027 may actually happen in 2026. So I wonder not whether you can give us the exact week when it's happening, but I wonder what your thinking is behind reducing the cadence and what can explain the more regular turnarounds and shutdowns. And lastly, again, this is not about a turnaround, but about Rotterdam and the ramp-up that we're looking forward to for 2027. Can you give us an insight into how fast you think that ramp-up can happen once you've gone through the latest rounds of de-bottlenecking by the end of this year and you then bring the new units online? Is this a three-month process, a 24-month process, 12 months? What's a reasonable expectation for the speed of that ramp-up, please? Thank you.

Thank you very much. I think the first question is easier for me to answer. It's a good question. The reason why we have gone to a more frequent process turnaround is very straightforward. Here in Finland, in the Nordic markets, what we have concluded is that the four-year cycle is just simply too big a turnaround to pull off safely and reliably. There are certain sort of limitations on how much workers and contractors we can actually physically get into this fairly small market. and therefore we've concluded that breaking it into smaller parts simply makes the turnaround more manageable. um this is purely driven by you know efficiency and and safety and productivity uh rather than anything particularly different so it will be a bit smaller scope but then more frequency so then yeah so the two and a half year cycle is is what what what is the the way that our engineers have concluded is the safest and most efficient way to do it Obviously, I cannot tell you the exact day when we're starting. We will report back to you on that later. But we are spending a lot of time really to do our utmost to get this turnaround to be good. The previous turnaround we had actually was quite successful. If we look at the performance at Porvo, I think part of the explanation why we've done so well in terms of utilization is that the previous turnaround was done really well. So taking learnings from the previous one into the 26th program hopefully will then yield good results. Regarding Rotterdam ramp up, unfortunately here I cannot give you any information yet. We're still in the midst of building the refinery, you know, we are one year late from the initial schedule that was published, I think in summer of 2022, if I remember. And so there's still a fair amount of work to do. I think probably, well, let's see when we are closer to startup and when we are in that phase, we will then start telling you more about the ramp up curve. But at the moment, unfortunately, I cannot I don't have any meaningful information to share with you. So sorry about that. Thank you. No problem. Thank you.

The next question comes from Yulia Bochanikova from Goldman Sachs. Please go ahead.

Hi, thank you for taking my questions. I have two, please. First on SAF, so given we see currently SAF trading at discount to RD, is it correct to assume that 100% of SAF should be sold on term contracts? And if you could give any clarification if there is any premium of SAF to RD in terms of prices in term contracts? And the second one on hedging, so you mentioned there is still palm oil or soybean hedging. Is my understanding correct that if we further see lower diesel prices and higher palm oil prices, that would result in a positive hedging impact in Q126? Thank you.

Hey, Julia, how are you? So let me address the first one and then on hedging, Eva. So, indeed, you are right that the SOF is trading, unfortunately, at a discount to RD. I mean, SOF should be trading at a premium because it's obviously it's a more advanced product and and more higher value-added product, but that's how the market is today. I can't comment on the particular prices or how we do the terms. The only thing which I would say is what I said earlier is that when we look at the SAF business for us, we pretty much optimize it based on what creates more value for us. And depending on the commercial returns, we will then adjust our lines accordingly. That's really all I want to say about the soft commercial aspects. Hedging then, please.

Yeah, I would say, Julia, that higher diesel is better both in RP and OP, kind of irrespective of hedging. Now, obviously, that can sort of have some impact. But so I would, in that sense, your conclusion maybe is a bit sort of... to focus on the Palmo side. So the diesel component is important in both businesses. And of course, what we've seen so far in the quarter is a healthy level of diesel prices, even if we're not sort of where we were in that November spike.

Thank you.

The next question comes from Matty Carola from OP Corporate Bank. Please go ahead.

Hi, thank you for taking my question. Two questions. First we come to your production flexibility. So could you open up your kind of flexibility to produce more SAF in case the market is recovering? So how easy the switch is to? Are we speaking about like the S&OP horizon, like one quarter or something like that? And then the second one is regarding trade policy. So could you help me to understand why these ADDs for Chinese SAF is pending? Because it's kind of the case is pretty much the same thing with already assigned where we already have those ADDs in place.

Thank you, Matti. I'm sorry.

At least I had some difficulty in hearing the... Yeah, the first question for Matti was around how easy it is to switch between... Yeah, that's what I got. What about the... And the second was in trade policy, that's why... I believe, Matti, you asked that why are we yet to see any ADDs on SAF, that the case would be similar to RD and when we only have... Yeah, exactly.

It's happening in the same facilities and same companies.

Right. Okay, so very good. So on production flexibility, so it is the advantage of our production system is that we can fairly quickly move back and forth in the lines. it is something in our system i mean these lines do have that flexibility uh but of course we only do it if we think it is financially uh you know viable uh the switch is you know we're not talking a very long long lead times you know to go from one product to another so um i don't know if i have much else to say there anything you want to add on the flexibility no no and then on the trade on the trade policy yeah we are actually working with with the um European Union on this, but the European Union takes it, they have their own procedures, they have their own you know, methods and approaches on how they review these things. They have to do a lot of data collection and sometimes it just takes time to get the data for them to do the actual calculations on potential injury. So we don't have a deep insight into how the processes work inside the union, but we are hopeful that in 2026 we actually could see some progress. So we will report back to you the moment we know that the European Union is moving forward. I really hope they will make a decision this year. I really hope so.

Thank you so much.

The next question comes from Alistair Syme from Citi. Please go ahead. There are no more questions at this time, so I hand the conference back to the speakers.

Okay, well, thank you for your questions. Thanks for taking the time to discuss with us about 2025 and 2026 outlook. I want to really summarize our presentation with four main points. Looking at last year, I'm very happy with how we were able to deliver the financial turnaround compared to 2024. As you've heard, really phenomenally good success on the improvement program, really very happy with exceeding the targets. And I believe there's more to come, and we will report to you on a quarterly basis. Regulatory development looks to be favorable, and as referring to Matti's question about SAF anti-dumping duties, hopefully we can report something on that as well in 26. And really, I believe we have a good foundation. There is still opportunity to improve the company, and we are working towards getting full asset utilization in place in 2026, and then 27 Rotterdam 2 is coming. So with those messages, both from Eva, me, and Jukka, wish you all a very good day and look forward to seeing you then after Q1. Take care.