Neste Capital Markets Day 2019: Sustainable high-margin growth and cash generation
Neste Corporation Press Release 27 February at 7 am. (EET)
Neste is holding a Capital Markets Day 2019 in London today, 27 February, featuring presentations by President and CEO Peter Vanacker and CFO Jyrki Mäki-Kala on the company strategy, market outlook and the next steps for creating sustainable high-margin growth and cash generation.
Renewed long-term strategy
Neste targets to become a global leader in renewable and circular solutions. The renewed long-term strategy is designed to move Neste faster and bolder to realize its sustainability aspirations while growing profitably.
Neste aims to:
- Reduce its customers’ greenhouse gas emissions every year by at least 20 million tons CO2 equivalent by 2030
- Lower its carbon footprint in production ahead of EU’s climate and energy targets
- Broaden the company’s end markets to aviation and polymers
- Become a solution provider for chemical recycling
- Expand the company’s unique global waste and residue feedstock platform
- Continue leadership in renewable products production capacity with at least 40% market share
- Outperform peers in value creation
The growth in renewable products will proceed in three waves:
In its first wave, Neste has established a global leadership position in Renewable Road Transportation that will continue to deliver high-margin growth. The renewable diesel demand for road use is expected to quadruple to approx. 20 million tons by 2030. After a successful debottlenecking of the current refineries to a renewable diesel production capacity of 2.9 million tons, Neste is well positioned to meet the current global growing demand, and will continue to work on further debottlenecking options. The announced capacity expansion in Singapore will further increase the company’s total production capacity close to 4.5 million tons in 2022. Neste will continue to support the growing demand from its customers for renewable products by further expanding its capacity and feedstock platform beyond the Singapore investment.
The second wave is Renewable Aviation Solutions where Neste targets to further develop the Green Hub concept and take the leading position in renewable jet fuel globally. Renewable jet fuel is expected to play a significant role in decarbonizing aviation. Neste is currently negotiating with several potential aviation customers and aims at delivering the first commercial volumes of renewable jet fuel made from waste and residues in 2019.
The third wave, Renewable Polymers & Chemicals, will allow Neste to realize the full potential of the renewables platform. More than 50% of the largest consumer goods companies have announced aspirations to switch from fossil-based to renewable and recycled plastics in their products by 2030. Neste has a proven technology to produce renewable drop-in solutions for the value chain in the polymers industry. We are further focusing our technology development to provide solutions for chemical recycling of waste plastics. Neste is working closely together with consumer brands such as IKEA and other partners in the value chain. The company is targeting the first commercial deliveries during 2019.
In Oil Products business, Neste continues to drive operational excellence and strong cash generation. With the recent investments at the Porvoo and Naantali refineries we are ready to capture value from the changing IMO marine fuel sulphur regulation. Neste increases its target for the additional margin for Oil Products by 10% based on the updated reference margin calculation formula.
Neste has established an operational excellence program ensuring competitiveness across both renewable and oil businesses. Six breakthrough programs including digitalization and production process optimization have been created with a target to deliver EUR 100 million EBIT improvement by the end of 2022.
Currently more than 25% of Neste’s workforce is working in Innovation and Technology. Neste will continue to increase its focus on innovation to generate breakthroughs for long-term growth. This will be done together with collaboration partners. The main focus of the increased innovation program will be on the development of scalable and sustainable feedstocks and required technologies to support Neste’s vision of being a global leader in renewable and circular solutions.
Neste’s new organizational structure announced on 19 February has been developed to support the execution of the renewed strategy and will go live on 1 May, 2019.
Financial targets and dividend policy remain unchanged
Neste's long-term financial targets are leverage ratio and ROACE after tax, and they remain unchanged. The leverage target is below 40% and the ROACE target is 15%. Neste's dividend policy also remains unchanged. The company will distribute at least 50% of the company's comparable net profit for the year in the form of dividends.
Presentation materials and webcast
Capital Market Day presentation material in English will be available at www.neste.com/investors from around 2.30 p.m. (EET) onwards.
The event can also be followed online at www.neste.com/investors from 2.30 pm. (EET) onwards.
A replay will be available after the event at www.neste.com/investors.
Neste Corporation
Kaisa Lipponen
Director, Corporate Communications and Brand Marketing
Further information:
Jyrki Mäki-Kala, CFO, tel. +358 10 458 4098
Neste in brief
Neste (NESTE, Nasdaq Helsinki) creates sustainable solutions for transport, business, and consumer needs. Our wide range of renewable products enable our customers to reduce climate emissions. We are the world's largest producer of renewable diesel refined from waste and residues, introducing renewable solutions also to the aviation and plastics industries. We are also a technologically advanced refiner of high-quality oil products. We want to be a reliable partner with widely valued expertise, research, and sustainable operations. In 2018, Neste's revenue stood at EUR 14.9 billion. In 2019, Neste placed 3rd on the Global 100 list of the most sustainable companies in the world. Read more: neste.com
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