Neste Corporation, Stock Exchange Release / Inside information, 13 February 2025 at 8.55 am (EET)

As a result of the company's significantly changed market environment and weakened financial performance as well as a comprehensive full potential analysis started in October 2024, Neste has decided to start a performance improvement program. The goal is to secure our strong market position and cost competitiveness in renewable fuels and to enhance Neste's financial performance. The program targets a total of EUR 350 million EBITDA run rate improvement by the end of 2026, of which EUR 250 million from operational costs.

The Rotterdam growth investment project continues, but schedule and costs have been re-evaluated. Due to the challenging contractor market, the scheduled start of commercial operations has been delayed from 2026 to 2027. Furthermore, the estimation for investment cost has been increased from EUR 1.9 billion to EUR 2.5 billion. Several actions have been taken to ensure that the project proceeds on the updated schedule and budget.

Renewed focus and strict capital discipline

In 2025-2026, Neste plans to refocus from growth and development to efficiency and profitability, including capital discipline. The company's performance improvement program focuses on commercial acceleration and supply chain optimization, improved refinery performance and safety, external cost reduction, and operating model simplification.

Neste continues to strengthen its competitive advantage by developing its current raw material base, novel vegetable oils sourcing and lignocellulosic raw materials research. 

The company plans to scale down investments in the development of algae and Power-to-X. In Renewable Products, Neste is planning to streamline its renewable and circular polymers and chemicals activities, focusing on renewable fuels. The company also considers simplifying its commercial models and streamlining its sales channels for renewables to accelerate sales growth. The focus of the Porvoo refinery transformation is planned to be on energy efficiency and renewable hydrogen while other components of the plan are considered to be delayed. 

Neste maintains strict capital discipline throughout the company and in the coming few years, our capital expenditure beyond the Rotterdam investment is expected to be on an annual level of approximately EUR 0.5 billion with focus on safety and reliability investments.

Change negotiations to be started

To improve profitability and cost-competitiveness, Neste plans to further simplify its operating model and increase internal efficiency. As a result, the company starts change negotiations that cover globally Oil Products and Renewable Products business areas and all functions, targeting total annual cost savings of approximately EUR 65 million. The planned organizational changes are expected to lead to a permanent reduction of approximately 600 positions, of which approximately 450 in Finland.

"Our current financial performance is weak and not sustainable. Therefore, we must take urgent action to reset various parts of our company. Adjustments to our cost structure and development portfolio are necessary to meet the current and foreseeable market realities. Before preparing any plans and launching the performance improvement program, we have conducted a systematic and comprehensive analysis of the markets and our own operations. While understandably hard for Neste people, the planned efficiency measures are necessary to ensure Neste's long-term competitiveness and success. We will do our best to support our employees in this situation. Going forward, we plan to focus on our core operations and remain fully committed to serving our customers and maintaining our position as a global market leader in renewable diesel and sustainable aviation fuel," says Neste's President and CEO Heikki Malinen.

Financial targets, dividend for the year 2024 and capital allocation

Neste continues to seek growth in renewable fuels targeting market leadership, cost competitiveness and technology advantage. During the coming few years, the company will extract full commercial potential from its existing operations and the Rotterdam expansion as well as improve refinery performance through better safety, reliability and project execution. In 2025-2026, the company will focus on defined priorities and reset its cost structure, while in 2027-2028 it will prepare next steps of growth, focusing on selected development initiatives. Maintaining a strong balance sheet will be crucial in both of these phases.

In line with changes in the company's operating environment and financial performance, Neste updates its financial targets for 2025-2026. Firstly, we are targeting EUR 350 million EBITDA run rate improvement by the end of 2026 from our performance improvement program, of which EUR 250 million from operational costs. Secondly, we are committed to maintaining our investment grade credit rating and our leverage below 40%.

The company targets a total capital expenditure of maximum EUR 2.4 billion in 2025-2026. In light of the current financial position of the company, the Board has decided to cancel the dividend policy announced on 19 June 2023, and proposes a dividend payout of 0.20 euros per share for the year 2024 to the Annual General Meeting. Going forward, the company seeks to maximize operating cash flow in order to strengthen the balance sheet with the potential to review the dividend in the future.

Neste Corporation

Hanna Maula
Senior Vice President, Communications, Sustainability and Public Affairs