ENERGY SECTOR: Neste Oyj Q4 Results

NESVFH A3

Negative results with competition and overcapacity feeding trough to EBITDA and leverage. Dividend policy abandoned. Chair of the Audit Committee Eeva Sipilä has announced her resignation from the Board.

• Q4 revs: EUR 5.6bn -12% YoY (+9.3% vs. cons). FY: EUR 20.6bn (-10% YoY).
• Q4 EBITDA: EUR 168mn -79% YoY (-45% vs. cons). FY: EUR 1.3bn (-64% YoY).
• Q4 CFO: EUR 911mn +32% YoY. FY: EUR 1.2bn (-48% YoY).
• Q4 FCF: EUR 504mn +6% YoY. FY: EUR -0.3bn (vs. EUR 0.7bn YoY).
• NIBD EUR 4.2bn from EUR 2.5bn at FY23.
• Reported comp EBITDA leverage of 3.3x from 0.7x at FY23 with a lev ratio of 36% from 35% at Q3 and 23% at FY23.
• We calc gross/net leverage as 1.3x/1.1x higher QoQ and 3x/2.7x higher YoY.
• FY25: Renewable and oil products volumes to be higher than 2024. Cash CapEx of EUR 1.1-1.3bn (FY24: EUR 1.6bn) with lower total fixed costs.
  
   
• “Firstly, we are targeting EUR 350mn EBITDA run rate improvement by the end of 2026 …of which EUR 250 million from operational costs. Secondly, we are committed to maintaining our IG credit rating and leverage below 40%.”.
• “I am confident that …we will reverse the current trend in our financial performance while maintaining our investment grade credit rating”.
• “In light of the current financial position…the Board has decided to cancel the dividend policy… and proposes a dividend payout of EUR 0.20 per share based on the approved balance sheet for 2024” [former policy was 50% of comp net profit; dividends paid of EUR 154mn (from EUR 922mn) will exceed net profit].
• “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.”