Stock Exchange Release
Neste Oil Corporation
4 February 2010 at 9.00 a.m. (EET)
- Full-year comparable operating profit of EUR 116 million (2008: 602 million)
- The year ended with a Q4 comparable operating profit of EUR -29 million,
including a negative impact of EUR 30 million from non-recurring items
2009 in brief:
* A new operational model was introduced, aimed to improve implementation of
our strategic projects and to make the most of our best practises and
expertise
* Comparable operating profit was EUR 116 million (2008: 602 million)
* IFRS operating profit was EUR 335 million (2008: 186 million)
* Investments totaled EUR 863 million (2008: 508 million), of which EUR 625
million was allocated to Renewable Fuels
* Sales volumes decreased by approx. 400,000 tons year-on-year, as a result of
contango storage
* Contango storage had a negative impact on net cash from operations, which
came in at EUR 177 million (2008: 512 million)
* Interest-bearing net debt increased to EUR 1,918 million (2008: 1,004
million)
* The Group's safety performance improved compared to 2008
* The Board of Directors will propose a dividend of EUR 0.25 per share (2008:
0.80)
Fourth quarter in brief:
* Comparable operating profit of EUR -29 million (Q4/2008: 103 million),
including the following non-recurring negative items:
- EUR 10 million environmental provision (non-cash) booked against Nynas
AB's result in Others
- EUR 9 million one-off costs resulting from personnel reductions announced
in October
- EUR 3 million additional depreciation charge (non-cash) at Renewable Fuels
- EUR 4 million additional depreciation charge (non-cash) booked at Oil
Products related to the Porvoo refinery's major turnaround in 2005
- EUR 4 million IFRS pension cost adjustment (non-cash), booked in Others
* IFRS operating profit of EUR 9 million (Q4/2008: -352 million)
* Total refining margin of USD 5.85/bbl (Q4/2008: 15.05)
* Significant contango storage was built up in anticipation for the
maintenance turnaround at the Porvoo refinery
* Contango storage depressed cash flow from operations by approximately EUR
250 million, leading to a net cash from operations figure of EUR -225
million (Q4/08: 486 million)
President & CEO Matti Lievonen:
The refining industry had a very difficult year in 2009, which was reflected
clearly in our result. A virtually unprecedented drop in oil demand, coupled
with increased new refining capacity, led to lower refining margins compared to
recent years. During these challenging times, I would like to thank our
personnel for their hard work and what we achieved during the year. We were able
to bring our fixed costs down by 10% and started many improvement projects that
will benefit us in the future.
2010 appears likely to be another challenging year due to the slow pace of
economic recovery. We will put a lot of focus on implementing our strategy and
will be aiming for a smooth ramp-up of the new renewable diesel plant in
Singapore during the second half. In addition, we will concentrate on ensuring a
problem-free maintenance turnaround at the Porvoo refinery during the second
quarter.
NESTE OIL FINANCIAL STATEMENTS, 1 JANUARY - 31 DECEMBER 2009
10-12/2009 and 10-12/2008 unaudited, full year 2009 and 2008 audited
Figures in parentheses refer to the corresponding period for 2008, unless
otherwise stated.
KEY FIGURES
EUR million (unless otherwise noted)
10-12/09 10-12/08 7-9/09 2009 2008
----------------------------------------------------------------------------
Revenue 2,491 2,805 2,500 9,636 15,043
Operating profit before depreciation 74 -297 171 569 409
Depreciation, amortization,
and impairments 65 55 58 234 223
Operating profit 9 -352 113 335 186
Comparable operating profit * -29 103 42 116 602
Profit before income tax 4 -382 102 296 129
Earnings per share, EUR -0.01 -1.14 0.29 0.86 0.38
Investments 263 185 216 863 508
Net cash from operating activities -225 486 162 177 512
31 Dec 31 Dec
2009 2008
-------------------------------------------------------------------------
Total equity 2,222 2,179
Interest-bearing net debt 1,918 1,004
Capital employed 4,257 3,237
Return on capital employed pre-tax (ROCE), % 9.0 6.1
Return on average capital employed after tax (ROACE)**, % 2.5 13.1
Return on equity (ROE), % 10.2 4.4
Equity per share, EUR 8.64 8.48
Cash flow per share, EUR 0.69 2.00
Equity-to-assets ratio, % 39.1 46.3
Leverage (Net debt to capital), % 46.3 31.5
Gearing, % 86.3 46.1
* Comparable operating profit is calculated by excluding inventory gains/losses,
capital gains/losses, and unrealized changes in the fair value of oil and
freight derivative contracts from the reported operating profit. Inventory
gains/losses include changes in the fair value of all trading inventories.
** Rolling 12 months
The Group's full-year results for 2009
Sales at the Neste Oil Group totaled EUR 9,636 million, compared to EUR 15,043
million in 2008. The decline primarily resulted from lower petroleum product
prices.
The Group's comparable operating profit was EUR 116 million, compared to EUR
602 million in 2008. The most important negative contributor was the
significantly weaker market environment experienced in all segments,
particularly Oil Products. This was only partly offset by an 10% reduction in
fixed costs, which totaled EUR 604 million (679 million).
Oil Products' full-year comparable operating profit was EUR 105 million (602
million), Renewable Fuels' EUR -30 million (2 million), Oil Retail's EUR 50
million (22 million), and Others' -7 million (-29 million).
Profits from associated companies and joint ventures totaled EUR 20 million (13
million).
Operating profit under IFRS was EUR 335 million (186 million). The increase
originated from inventory gains that totaled EUR 261 million and compares to an
inventory loss of EUR 453 million in 2008.
The full-year profit before taxes was EUR 296 million (129 million) and the
effective tax rate was 23.8% (21.8%). Profit for 2009 was EUR 225 million (101
million) and earnings per share were EUR 0.86 (0.38)
Given the capital-intensive nature of its business, Neste Oil uses return on
average capital employed after tax (ROACE) as its primary financial target.
ROACE calculation is based on comparable results. At the end of December, the
rolling twelve-month ROACE was 2.5% (2008 financial year: 13.1%).
The Group's fourth-quarter results in 2009
Neste Oil's fourth-quarter sales totaled EUR 2,491 million (2,805 million),
reflecting lower sales volumes.
The Group's comparable operating profit was EUR -29 million in the fourth
quarter, compared to EUR 103 million a year earlier. The weak result was mainly
a consequence of a 61% drop in the total refining margin year-on-year and a
weaker freight market compared to 2008. Oil Retail's profitability improved
compared to the last quarter of 2008, which included significant inventory
losses. A reduction in fixed costs of 10% compared to the fourth quarter of
2008 made a positive contribution.
Oil Products' comparable operating profit was EUR -11 million (154 million) in
the fourth quarter, Renewable Fuels' EUR -10 million (-10 million), Oil Retail's
EUR 5 million (-5 million), and Others' EUR -11 million (-38 million).
Profits from associated companies and joint ventures totaled EUR -1 million (-26
million), and were depressed by a EUR 10 million provision at Nynas AB. Nynas
booked major inventory losses in the fourth quarter of 2008.
The Group's fourth-quarter 2009 IFRS operating profit was EUR 9 million (-352
million), as inventory profit totaled EUR 58 million, compared to an inventory
loss of EUR 467 million in 2008.
Pre-tax profit was EUR 4 million (-382 million). Profit for the period was EUR
1 million (-289 million) and earnings per share EUR -0.01 (-1.14).
10-12/09 10-12/08 7-9/09 2009 2008
--------------------------------------------------------------------------------
COMPARABLE OPERATING PROFIT -29 103 42 116 602
- inventory gains/losses 58 -467 62 261 -453
- changes in the fair value of open oil
derivatives -20 10 8 -43 24
- capital gains/losses 0 2 1 1 13
OPERATING PROFIT 9 -352 113 335 186
Cash flow, investments, and financing
Neste Oil Group's net cash from operating activities between January and
December totaled EUR 177 million (512 million). The difference compared to 2008
resulted from an increase in working capital, largely due to the contango
storage of petroleum products. Approximately EUR 250 million was tied up in
contango storage at the end of the year.
Investments totaled EUR 863 million in 2009 compared to EUR 508 million in
2008. Oil Products' capital spending was EUR 198 million (165 million),
Renewable Fuels' EUR 625 million (249 million), Oil Retail's EUR 29 million (63
million), and Others' EUR 11 million (31 million).
The Group's interest-bearing net debt was EUR 1,918 million at the end of the
year (1,004 million). Net financial expenses between January and December were
EUR 39 million (57 million). The average interest rate of borrowings at the end
of 2009 was 2.2%, and the average maturity 3.8 years.
The year-end equity-to-assets ratio was 39.1% (46.3%), the leverage ratio 46.3%
(31.5%), and the gearing ratio 86.3% (46.1%).
The Group's liquidity remained healthy. Cash and cash equivalents and committed,
unutilized credit facilities amounted to EUR 1,407 million at the end of
December (1,536 million). In September, Neste Oil issued a EUR 300 million
seven-year domestic bond with an annual coupon of 6.00%, and raised a bilateral
bank loan of EUR 200 million in December. There are no financial covenants in
existing loan agreements.
In accordance with its hedging policy, Neste Oil has hedged the majority of its
net foreign currency exposure for the next 12 months, mainly using forward
contracts and currency options. The most important hedged currency is the US
dollar.
Main events during the reporting period
On 5 February 2009, Neste Oil announced that its operations would be reorganized
around three business areas, Oil Products, Renewable Fuels, and Oil Retail, and
seven common functions as of 1 April 2009. The new Neste Executive Board (NEB)
was appointed.
On 28 April, Neste Oil announced that it would postpone its plans to investment
in an isomerization unit at the Porvoo refinery. The decision resulted from the
weaker demand for petroleum products, and enabled resources to be concentrated
on the company's strategic growth projects. The cost of the isomerization unit
was estimated to be approximately EUR 80 million. The engineering work for the
unit is largely complete, and the intention is to move ahead with construction
when the market situation improves.
On 11 June, Neste Oil and Stora Enso inaugurated their demonstration plant for
biomass to liquids (BtL) production utilizing forestry residues in Varkaus,
Finland. A 50/50 joint venture, NSE Biofuels Oy, has been established to develop
technology for commercial-scale biocrude and later to produce this product as a
feedstock for renewable diesel.
On 29 July, Neste Oil announced that it has successfully started up its second
NExBTL renewable diesel plant at the Porvoo refinery, bringing the company's
total nameplate capacity of renewable diesel to 340,000 t/a.
On 5 August, Neste Oil announced its intention to save over EUR 60 million in
annual fixed costs and to secure around EUR 30 million of this through
personnel-related measures. Statutory employer-employee negotiations and a
consultation process were started in Finland and it was anticipated that 450
people would be affected.
On 6 August, a fire broke out on the main diesel production line at the Porvoo
refinery. Fortunately, no injuries were caused to personnel and no danger to
anyone outside the immediate area. The line was back in normal operation in late
September.
On 7 September, Neste Oil issued a EUR 300 million seven-year domestic bond with
an annual coupon of 6.00%. The proceeds of the offering were used for general
corporate and refinancing purposes.
On 29 September, Neste Oil hosted a Capital Markets Day in Porvoo and Helsinki.
The event covered topical issues, such as the profitability of the company's key
growth business, renewable fuels, and the company's cost structure and capital
investments. The main message of the event was that Neste Oil remains fully
committed to its clean traffic fuel strategy. It was announced that the
company's financial targets remain unchanged.
On 1 October, the Finnish Court of Arbitration issued an arbitration award on
the contract dispute between Neste Oil and YIT Industrial and Network Services
relating to disagreements linked to the final financial settlement of mechanical
installation work on diesel production line 4 at Neste Oil's Porvoo refinery,
which was completed and came on stream in summer 2007. The dispute was put
before the Court of Arbitration in April 2008. The final decision had no
material impact on Neste Oil's result.
On 13 October, Neste Oil completed the statutory employer-employee negotiations
covering Finnish-based personnel employed by the company and its subsidiaries,
which began on 5 August 2009. As a result of the negotiations, Neste Oil's
personnel in Finland will be reduced by a total of 351. Of these, around 240
people will leave the company through voluntary retirement. The last job losses
related to these reductions will take place during 2010.
On 7 December, Neste Oil announced that it will transfer the management of its
statutory occupational pensions and the associated pension portfolio to the
Ilmarinen Mutual Pension Insurance Company as of 1 April 2010. The statutory
pension liabilities that are currently the responsibility of the Neste Oil
Pension Fund and that will be transferred to Ilmarinen totaled approximately EUR
310 million as of the end of 2009. As a result of the transfer, a non-recurring
charge is expected to be booked against Neste Oil's consolidated IFRS financial
statements in the second quarter of 2010. The transfer is expected to have a
positive cash flow impact.
Strategy implementation
Neste Oil continued to implement its clean fuel strategy in 2009. The company's
current capital projects consist of new plants designed to increase production
of renewable diesel and high-quality base oil.
Strategic projects
Construction of two world-scale, 800,000 t/a, renewable diesel plants continued
in Singapore and Rotterdam. The plants are expected to be mechanically complete
in summer 2010 and spring 2011 respectively. Both projects proceeded on-schedule
and on-budget.
Two smaller renewable diesel plants are operational at the Porvoo refinery. The
second of these achieved mechanical completion in summer 2009 and started up
very successfully in a couple of weeks. The nameplate capacity of both Porvoo
plants has been increased to 190,000 t/a each from the original 170,000 t/a.
Construction of a 400,000 t/a base oil plant in Bahrain, jointly owned by Neste
Oil (45%) and local partners, has proceeded according to plan. The plant is
expected to be mechanically complete in the second half of 2011.
Market overview
After collapsing in the second half of 2008, crude oil prices increased steadily
in the first half of 2009 and continued to rise towards the end of the year,
despite some short-lived downturns. Brent Dated doubled from around USD 40/bbl
to nearly USD 80/bbl towards the end of the year. Prices were mainly driven by
news of a recovery in the global economy, strengthening stock and commodity
markets, and a weaker US dollar - although oil market fundamentals remained
weak. Price differentials between heavier and lighter crudes were very narrow,
reflecting the reduced supply of heavier grades following OPEC production cuts.
Refining margins weakened significantly compared to 2008 on the back of poor
product demand, especially for middle distillates. As a consequence, refinery
runs declined to record low levels, especially in OECD countries. Gasoline
margins recovered from the low level seen in 2008 but fell again in the latter
half of 2009. Demand for gasoline was quite stable, but production was limited
due to low refinery runs. The margins for middle distillates continued to
decline and sank to their lowest level in five years during the summer. Demand
for middle distillates was hit by the economic recession, and stocks built up to
record-high levels despite low refinery runs. The European market nevertheless
attracted large import volumes from the US and Asia.
Fuel oil margins were stronger than in 2008, supported by demand in Asia and the
US and cuts in refinery output. In addition, due to reduced crude oil usage,
some refineries refined light products from fuel oil.
In the biofuel market, feedstock prices increased through the end of 2009, after
the low levels seen in spring. This led to lower margins for biofuel producers.
The price premium between high-quality renewable diesel and conventional
biodiesel remained stable.
In the oil retail market, demand dropped year-on-year in all market areas, and
this was most evident in trucking and other business-related traffic. Oil demand
decreased in Finland by around 7% in 2009, whereas Baltic Rim markets showed
declines of over 10% and even close to 20% in the case of gasoline in the last
quarter.
Freight rates for crude tankers in North Sea were only half of those seen in
2008, impacted by the increased number of vessels available.
Key drivers
10-12/09 10-12/08 7-9/09 2009 2008 Jan 10 Jan 09
Reference refining margin,
USD/bbl 1.73 8.66 2.20 3.14 9.93 2.81 6.62
Neste Oil total refining
margin, USD/bbl 5.85 15.05 5.97 7.35 13.39 n.a. n.a.
Urals-Brent price
differential, USD/bbl -0.68 -1.82 -0.46 -0.81 -2.95 -0.46 -1.11
NWE Gasoline margin*,
USD/bbl 7.73 2.69 10.09 9.26 5.34 10.0 3.95
NWE Diesel margin*,
USD/bbl 10.14 28.04 9.24 11.18 31.23 10.4 20.51
NWE Heavy fuel oil
margin*, USD/bbl -6.41 -16.16 -5.95 -7.44 -25.16 -5.6 -9.27
Brent Dated crude oil,
USD/bbl 74.56 54.87 68.27 61.51 96.98 76.19 43.59
USD/EUR, market rate 1.48 1.32 1.43 1.39 1.47 1.43 1.32
USD/EUR, hedged 1.33 1.45 1.40 1.41 1.42 n.a. n.a.
Crude freights, WS points
(TD7) 97 144 70 81 179 132 144
--------------------------------------------------------------------------------
Production and sales
Neste Oil's total production in 2009 was 15.5 million tons (15.5 million), of
which 0.2 million tons (0.1 million) took the form of NExBTL renewable diesel. A
total of 15.1 million tons (15.2 million) of crude oil and other
hydrocarbon-based feedstocks were refined, 12.5 million tons (12.4 million) at
Porvoo and 2.6 million tons (2.8 million) at Naantali.
During the fourth quarter, the corresponding figure for total production was
4.1 million tons (4.0 million), with a NExBTL renewable diesel accounting for
0.1 million tons (0.0). Neste Oil refined 3.3 million tons (3.3 million) at
Porvoo and 0.7 million tons (0.7 million) at Naantali, totaling 4.0 million tons
(4.0 million).
The Porvoo refinery operated at an average capacity utilization rate of 87%
(82%) in 2009, while Naantali reached 87% (92%). Utilization at the Porvoo
refinery was negatively affected in August and September by a fire on Line 4.
Excluding the latter incident, the line's performance improved compared to
2008, which was the main reason behind Porvoo's higher utilization rate. At
Naantali, capacity utilization was negatively affected by unplanned maintenance
shutdowns during the first half of the year. During the fourth quarter, both
refineries operated well, with capacity utilization at Porvoo running at 92%
(89%) and at Naantali at 89% (91%).
The proportion of Russian Export Blend (REB) in Neste Oil's total refinery input
rose to 63% (57%) for the year as a whole and 67% during the fourth quarter
(57%).
Refinery production costs decreased to USD 4.4/bbl (5.9) for the year as a
whole. In the fourth quarter, the figure was USD 4.3/bbl (6.3).
The proportion of diesel fuel in Neste Oil's sales remained close to 40% in
2009, while the proportion of gasoline and heavy fuel oil increased. Less
favorable arbitrage economics resulted to a shift of gasoline exports from the
US to other markets.
During the fourth quarter, a total of 400,000 tons of gasoline and middle
distillates were stored in preparation for the Porvoo refinery's scheduled
maintenance shutdown during the second quarter of 2010. As of the end of 2009,
Neste Oil's contango storage stood at around 570,000 tons, which is scheduled to
be sold during the second quarter of 2010.
Neste Oil's sales from in-house production, by product category (1,000 t)
10-12/09 % 10-12/08 % 7-9/09 % 2009 % 2008 %
Motor gasoline 837 24 1,052 28 1,146 33 4,218 30 4,056 28
Gasoline components 51 1 33 1 62 2 270 2 253 2
Diesel fuel 1,449 41 1,585 42 1,292 37 5,228 37 5,583 38
Jet fuel 191 5 154 4 136 4 613 4 658 5
Base oils 62 2 58 2 66 2 257 2 278 2
Heating oil 178 5 245 7 99 3 631 4 763 5
Heavy fuel oil 291 8 220 6 308 9 1,300 9 981 7
LPG 51 1 70 2 27 1 220 2 340 2
NExBTL renewable
diesel 66 2 19 1 68 2 209 1 94 1
Other products 382 11 318 8 318 9 1,233 9 1,565 11
--------------------------------------------------------------------------------
TOTAL 3,559 100 3,755 100 3,522 100 14,178 100 14,571 100
Neste Oil's sales from in-house production, by market area (1,000 t)
10-12/09 % 10-12/08 % 7-9/09 % 2009 % 2008 %
Finland 2,034 57 1,942 52 1,831 52 7,580 53 7,537 52
Other Nordic
countries 581 16 607 16 580 16 2,210 16 2,056 14
Other Europe 629 18 734 19 692 20 2,488 18 3,028 20
USA & Canada 229 6 467 12 357 10 1,686 12 1,857 13
Other countries 86 2 3 0 62 2 214 2 94 1
--------------------------------------------------------------------------------
TOTAL 3,559 100 3,754 100 3,522 100 14,178 100 14,571 100
SEGMENT REVIEWS
As of April 2009, Neste Oil's businesses were grouped into four reporting
segments: Oil Products, Renewable Fuels, Oil Retail, and Others.
Oil Products
10-12/09 10-12/08 7-9/09 2009 2008
Revenue, MEUR 1,987 2,221 1,971 7,631 12,641
Comparable operating profit, MEUR -11 154 15 105 602
Operating profit, MEUR 27 -301 80 318 183
Total refining margin, USD/bbl 5.85 15.05 5.97 7.35 13.39
Oil Products posted a significantly lower comparable operating profit of EUR
105 million in 2009 compared to EUR 602 million in 2008. This decrease is mainly
attributable to a major drop in total refining margin, which averaged USD
7.35/bbl (13.39) during the year. The negative impact of market conditions and
lower sales volumes was only partly offset by better productivity, contango and
trading benefits, and cost reductions. The base oil business suffered from
significantly lower demand, and the oil tanker chartering business from very low
freight rates. Gasoline components performed better year-on-year, thanks to a
better overall gasoline market.
In the fourth quarter, Oil Products' comparable operating profit sank to EUR -11
million compared to EUR 154 million in the same quarter of 2008. Refining
operations continued to be profitable despite the considerably weaker market
environment, which was reflected in a drop in total refining margin to EUR
5.85/bbl from USD 15.05/bbl in 2008. The profitability of the other businesses
in Oil Products' portfolio declined compared to Q4/2008, due to low freight
rates in oil tanker chartering, high feedstock price in gasoline components, and
lower demand year-on-year in base oils. Oil Products booked additional
depreciation of EUR 4 million related to the Porvoo refinery's major turnaround
in 2005.
Oil Products' comparable return on net assets was 4.0% (21.2%) in 2009.
Renewable Fuels
10-12/09 10-12/08 7-9/09 2009 2008
Revenue, MEUR 61 20 59 182 116
Comparable operating profit, MEUR -10 -10 -6 -30 2
Operating profit, MEUR -11 -9 -1 -25 2
----------------------------------------------------------------------
Renewable Fuels' comparable operating profit was EUR -30 million in 2009,
compared to EUR 2 million in 2008. This was the result of lower margins, partly
because of a favorable fixed feedstock price in 2008, and costs related to the
expansion of business and Research & Technology.
In the fourth quarter, Renewable Fuels posted a comparable operating profit of
EUR -10 million (-10 million). This includes a EUR 3 million additional
depreciation. Renewable diesel margins were lower in 2009, due to higher
feedstock prices, although this was offset by higher sales volumes after the
second plant at Porvoo came online during the second half.
Renewable Fuels' comparable return on net assets was -4.8% in 2009 (0.9%).
Oil Retail
Key figures
10-12/09 10-12/08 7-9/09 2009 2008
Revenue, MEUR 791 915 789 2,998 4,073
Comparable operating profit, MEUR 5 -5 19 50 22
Operating profit, MEUR 6 -6 19 50 25
Total sales volume*, 1,000 m3 1,030 1,142 986 4,002 4,353
- gasoline station sales, 1,000 m3 333 376 374 1,405 1,479
- diesel station sales, 1,000 m3 345 355 340 1,331 1,406
- heating oil, 1,000 m3 200 219 156 714 759
- heavy fuel oil, 1,000 m3 78 105 57 287 356
* includes both station and terminal sales
Oil Retail's comparable operating profit totaled EUR 50 million in 2009,
compared to EUR 22 million in 2008. The Comparable operating profit for 2008
included a EUR 15 million write-down on bad debts and EUR 10 million in
inventory losses. Volumes were lower in 2009 and there was substantial pressure
on margins. A reduction in fixed costs year-on-year provided a positive
contribution.
In the fourth quarter of 2009, volumes and margins were weak in the Baltic
countries and North-West Russia, and Oil Retail's comparable operating profit
came in at EUR 5 million (-5 million). The last quarter of 2008 was depressed by
significant inventory losses.
Oil Retail's comparable return on net assets was 15.8% (6.0%) in 2009.
Shares, share trading, and ownership
Neste Oil's shares are traded on the NASDAQ OMX Helsinki Ltd. The share price
closed 2009 at EUR 12.42, which is 17% higher compared to the end of 2008. At
its highest during 2009, the share price reached EUR 13.44, while at its lowest
the price stood at EUR 8.80, with the weighted average for the year coming in at
EUR 10.85. Market capitalization was EUR 3.2 billion as of 31 December 2009.
An average total of 1.1 million shares were traded daily. This represents 0.4%
of the Company's shares. An average of 22.4 million shares was traded monthly.
During the year as a whole, 269 million shares, or 105% of the total number of
shares, were traded.
Neste Oil's share capital registered with the Company Register as of 31 December
2009 totaled EUR 40 million, and the total number of shares outstanding is
256,403,686. The company does not hold any of its own shares, and the Board of
Directors has no authorization to buy back company shares or to issue
convertible bonds, share options, or new shares.
As of the end of 2009, the Finnish State owned 50.1% (50.1%) of outstanding
shares, foreign institutions 17.1% (20.6%), Finnish institutions 18.9% (19.5%),
and Finnish households 14.0% (9.8%).
Annual General Meeting
Neste Oil's Annual General Meeting 2009 was held on 3 April at the Helsinki Fair
Centre. The AGM adopted the company's financial statements and consolidated
financial statements for 2008 and discharged the Supervisory Board, Board of
Directors, and management from liability for 2008. The AGM also approved the
Board of Directors' proposal regarding the distribution of the company's profit
for 2008, sanctioning payment of a dividend of EUR 0.80 per share. Payment was
made on Friday, 17 April 2009.
In accordance with a proposal made by the AGM Nomination Committee, the AGM
confirmed the membership of the Board of Directors at eight members, and the
following were re-elected to serve until the end of the next AGM: Mr. Timo
Peltola, Mr. Mikael von Frenckell, Mr. Michiel Boersma, Ms. Ainomaija Haarla,
Ms. Nina Linander, Mr. Markku Tapio and Ms. Maarit Toivanen-Koivisto. Mr. Hannu
Ryöppönen was elected as a new member. Mr. Timo Peltola continued as Chairman
and Mr. Mikael von Frenckell as Vice Chairman. The AGM decided to pay the
following remuneration to the Board: Chairman EUR 66,000 a year, Vice
Chairman EUR 49,200 a year, and members EUR 35,400 a year. In addition, those
participating at Board meetings and meetings convened by the Board's committees
will receive a payment of EUR 600 per meeting, together with their traveling
costs, in accordance with the company's travel policy. A payment of double this,
EUR 1,200 per meeting, will be made to Board members living outside Finland.
Convening after the Annual General Meeting, Neste Oil's Board of Directors
elected the members of its two Committees. Timo Peltola was elected Chairman and
Michiel Boersma, Mikael von Frenckell, and Ainomaija Haarla as members of the
Personnel and Remuneration Committee. Nina Linander was elected Chairman and
Hannu Ryöppönen, Markku Tapio, and Maarit Toivanen-Koivisto as members of the
Audit Committee.
The AGM confirmed that the Supervisory Board shall comprise eight members and
the following members were elected: Ms. Heidi Hautala (Chairman), Mr. Kimmo
Tiilikainen (Vice Chairman), Mr. Esko Ahonen, Mr. Mikael Forss, Mr. Timo
Heinonen, Mr. Markus Mustajärvi, Ms. Jutta Urpilainen, and Ms. Anne-Mari
Virolainen. Mr. Kimmo Tiilikainen was elected for the first time. Members are
all Finnish Members of Parliament, with the exception of Mr. Mikael Forss, who
is a Director at the Social Insurance Institution of Finland. No changes were
made to the remuneration paid to the Supervisory Board, which remains as
follows: Chairman EUR 1,000 a month, Vice Chairman EUR 600 a month, and
members EUR 500 a month. In addition, those participating at Supervisory Board
meetings receive a payment of EUR 200 per meeting.
In accordance with a proposal by the Board of Directors, Ernst & Young Oy,
Authorized Public Accountants, were appointed as the company's Auditor, with
Authorized Public Accountant Anna-Maija Simola as Responsible Auditor, until the
end of the next AGM. Payment for their services shall be made in accordance with
their invoice that is accepted by the company.
Following a proposal by the Prime Minister's Office, representing the Finnish
State, the AGM decided to establish a Nominations Committee to prepare proposals
covering the members of the Board of Directors and their remuneration for
consideration by the next AGM. The Nomination Committee comprises
representatives of the Company's three largest shareholders and shall also
include, as expert members, the Chairman of the Board, together with one member
elected by the Board from among its members unaffiliated with any of the
Company's major shareholders. In 2009, the Nomination Committee comprised
Director General Pekka Timonen from the Ownership Steering Department at the
Prime Minister's Office; Timo Ritakallio, Deputy CEO, Ilmarinen Mutual Pension
Insurance Company; and Risto Murto, Chief Investment Officer, Varma Mutual
Pension Insurance Company. The Chairman of Neste Oil's Board of Directors Timo
Peltola and Vice Chairman Mikael von Frenckell served as the Committee's expert
members.
Organizational restructuring
Neste Oil's operations were reorganized around three business areas and seven
common functions as of 1 April 2009. The new structure is designed to give the
company a more cost-efficient and customer-driven operating model, and one that
will be better capable of implementing corporate strategy. The new matrix
organization will ensure that the best practices and know-how of business areas
and functions will benefit the entire company, and that new international units,
such as the renewable diesel plants currently being built, can be integrated
into the Group's operations more effectively and that reporting will be more
efficient.
The business areas are as follows: Oil Products, Renewable Fuels, and Oil
Retail. Activities outside these business areas are grouped under Others. The
common functions are: Production & Logistics, Finance, Human Resources,
Sustainability & HSSE, Communications, Marketing and Public Affairs, Technology
& Strategy, and Legal Affairs.
As of 1 April, the Neste Executive Board (NEB) comprises the following members:
Matti Lievonen, President & CEO; Matti Lehmus, Executive Vice President, Oil
Products; Jarmo Honkamaa, Executive Vice President, Renewable Fuels, Deputy CEO;
Sakari Toivola, Executive Vice President, Oil Retail; Ilkka Poranen, Senior Vice
President, Production & Logistics; Ilkka Salonen, CFO; Hannele Jakosuo-Jansson,
Senior Vice President, Human Resources, Simo Honkanen, Senior Vice President,
Sustainability and HSSE; Osmo Kammonen, Senior Vice President, Communications,
Marketing and Public Affairs; and Lars Peter Lindfors, Senior Vice President,
Technology and Strategy. Matti Hautakangas, General Counsel, acts as secretary
to the NEB.
Personnel
Neste Oil employed an average of 5,286 (5,174) employees in 2009, of which
1,333 are based outside Finland. As of the end of December, the company had
5,092 employees (5,262), of which 1,424 are located outside Finland. Wages and
salaries paid by the company totaled EUR 233 million in 2009 (251 million).
Health, safety, and the environment
The main indicator for safety performance used by Neste Oil - total recordable
injury frequency (TRIF, number of cases per million hours worked) for all work
done for the company, combining the company's own personnel and contractors -
stood at 3.1 (5.2) at the end of 2009. The target for 2009 was below 4. Lost
workday injury frequency (LWIF) stood at 2.2. The target for 2009 was below 2.
LWIF in 2008 was 3.2. Safety performance during 2009 was the best in the
company's history.
No serious environmental accidents resulting in liability occurred at Neste
Oil's refineries or other production facilities in 2009. The environmental
emissions of Neste Oil's operations remained low throughout the year, with the
exception of short-term sulfur dioxide emissions in July, resulting from flaring
due to technical and operational problems. Permitted emission limit values were
not exceeded. The wastewater treatment plants at the refineries operated very
well. The oil content of waterborne emissions was 0.07 g/ton of crude oil
processed. This is less than 2.2% of the 3 g/ton maximum emission recommendation
by the Baltic Marine Environment Protection Commission.
Neste Oil has successfully fulfilled all the requirements related to carbon
dioxide emissions in 2009. The verification of emissions for 2009 is scheduled,
and the company is able to report and surrender allowances equal to its total
emissions in 2009. The company has received emission rights for 3.6 million tons
of CO2 emissions a year between 2008 and 2012, and will need to acquire rights
from the market to cover expected future emissions.
The REACH (Registration, Evaluation and Authorization of Chemicals) regulation
came into force in the EU on 1 June 2007. Neste Oil has contributed to joint
work carried out under the framework of the European oil companies'
organization, Concawe, and the company's project for meeting REACH requirements
has progressed according to plan.
Neste Oil retained its position in or was selected for inclusion in a number of
sustainability indexes during 2009. It was included in the Dow Jones
Sustainability World Index for the third year in a row. Neste Oil has been
awarded 'Best in Class' recognition for its social accountability by the
Norwegian banking group, Storebrand, and has been included in Innovest's Global
100 list of the world's most sustainable companies three times, and featured in
the Ethibel Pioneer Investment Register.
Research and development
Research and development focusing on both crude oil-based and renewable traffic
fuels is crucial in implementing Neste Oil's strategy. Neste Oil's R&D
expenditure totaled EUR 37 million in 2009 (37 million). The company's main R&D
projects were related to extending the raw material and technological base for
renewable fuels.
Events after the reporting period
On 12 January 2010, Neste Oil decided to transfer the management of its
supplementary pension benefits and the associated pension portfolio of its
Finnish companies to OP Life Assurance Company Ltd. The move is expected to take
place on 1 April 2010. A non-recurring charge is expected to be booked against
Neste Oil's consolidated IFRS financial statements in the second quarter of
2010. The transfer is expected to have a positive cash flow impact.
On 1 February 2010, Neste Oil announced that it is to receive a total of EUR
47.5 million in compensation for damage and lost production volumes following a
fire on Line 4 at the Porvoo refinery on 4 April 2008. The compensation will be
booked against the company's first-quarter 2010 result.
Potential short-term and long-term risks
The oil market has been and is expected to continue to be very volatile. Oil
refiners are exposed to a variety of political and economic trends and events,
as well as natural phenomena that affect the short- and long-term supply of and
demand for the products that they produce and sell.
The largest uncertainty over the short term continues to be the pace of the
anticipated recovery of the world economy, which is likely to have a material
impact on the demand for petroleum products generally and diesel fuel in
particular.
Sudden and unplanned outages at Neste Oil's production units or facilities
continue to represent a short-term operational risk.
Rapid and large changes in feedstock and product prices may lead to significant
inventory gains or losses, or change in working capital. These may have a
material impact on the company's IFRS operating profit and net cash from
operations.
Over the longer term, access to funding and rising capital costs, as well as
challenges in procuring and developing new competitive and reasonably priced raw
materials, may impact the company's growth plans.
The implementation of biofuel legislation in the EU and other key market areas
may influence the speed at which the demand for these fuels develops. Risks
include also any problems or delays in completing the NExBTL renewable diesel
investments or failure to capture the anticipated benefits from these
investments. In the longer term, failure to protect its proprietary technology
or introduction and implementation of competing renewable fuel technologies or
hybrid and electric engines may have a negative impact on the company's results.
The key market drivers for Neste Oil's financial performance are international
refining margins, the price differential between Russian Export Blend (REB) and
Brent crude, and the USD/EUR exchange rate.
For more detailed information on Neste Oil's risks and risk management, please
refer to the company's Annual Report and Financial Statements for 2009.
Outlook
The market environment is likely to remain challenging in 2010. It is still too
early to say whether the global economy has returned to sustainable growth even
if there are some positive signs. Oil demand forecasts for 2010 indicate growth,
primarily in non-OECD countries, after the historical collapse seen in 2009, but
demand will be largely dictated by general economic developments.
Refining margins are expected to increase only gradually, due to the slow
recovery of demand and the new capacity set to come on stream in 2010, as well
as high petroleum product inventories. It is likely that refinery utilization
rates will be limited globally and that more capacity will be closed either
temporarily or for good.
Diesel and middle distillate margins have strengthened somewhat during January
2010, resulting from the cold weather and normal seasonal demand. Margins are
not expected to increase significantly before inventories, both onshore and
floating, which are running at high levels, have been drawn down. This is
expected to take at least six months, depending on how demand develops. Gasoline
inventories are close to normal levels, and there is a possibility of positive
seasonal impact to gasoline margins ahead of the driving season.
A major planned six-week turnaround will be carried out at Neste Oil's Porvoo
refinery starting at the beginning of April. During this, Neste Oil will sell
stored products, which totaled appr. 600,000 tons (over 4 million barrels) at
the end of 2009. This will have a positive impact on the operational cash flow
in the second quarter.
The Renewable Fuels business is anticipated to report negative results until
sales volumes increase significantly, which is expected during the last months
of 2010 when the new plant in Singapore is scheduled to come on stream.
No significant recovery of demand is expected on oil retail markets, either in
Finland or elsewhere. Increased economic activity would have a positive impact
on diesel demand in trucking and other transport use. Neste Oil will continue to
offset the impact of a weak market by increasing its internal efficiency.
A non-recurring insurance compensation of EUR 47.5 million will be booked in the
first quarter operating profit.
A non-recurring charge is expected to be booked in the second quarter 2010
operating profit relating to transfer of the Neste Oil Pension Fund outside the
company. The cash flow impact of these transfers in the second quarter will be
positive.
The Group's fixed costs are estimated to be on a similar level to those in 2009.
The Group's cash investments are expected to be around EUR 920 million (870
million), of which strategic investments will account for 580 million (670
million), maintenance investments 310 million (160 million), and productivity
investments 30 million (40 million).
Dividend distribution proposal and the AGM
The Board of Directors' dividend proposal to the Annual General Meeting is EUR
0.25 per share for 2009, totaling EUR 64 million.
The Annual General Meeting will be held on 15 April 2009 at 11:00 a.m. EET at
the Helsinki Fair Centre.
Reporting date for the first-quarter 2010 results
Neste Oil will publish its first-quarter results for 2010 on 29 April 2010 at
approximately 9:00 a.m. EET.
Espoo, 3 February 2010
Neste Oil Corporation
Board of Directors
Further information:
Matti Lievonen, President & CEO, tel. +358 10 458 11
Ilkka Salonen, CFO, tel. +358 10 458 4490
Investor Relations, tel. +358 10 458 5132
News conference and conference call
A press conference in Finnish on the fourth quarter and full-year results will
be held today, 4 February 2010, at 11:30 am EET at the company's headquarters,
Keilaranta 21, Espoo. www.nesteoil.com <http://www.nesteoil.com/> will feature
English versions of the presentation materials. A conference call in English for
investors and analysts will be held on 4 February 2010 at 3:00 pm Finland /
1:00 pm London / 8:00 am New York. The call-in numbers are as follows: Europe:
+44 (0)20 3023 4426, US: +1 866 966 5335. The conference call can be followed at
http://www.thomson-webcast.net/uk/dispatching/?event_id=e52f403b5265cf27b5210a23
f0da8265&portal_id=87cf8ed9b77cfb128c775d5a0751c499. An instant replay of the
call will be available for one week at +44 (0)20 8196 1998 for Europe and +1
866 583 1035 for the US, using access code 725434#.
The preceding information contains, or may be deemed to contain,
"forward-looking statements". These statements relate to future events or our
future financial performance, including, but not limited to, strategic plans,
potential growth, planned operational changes, expected capital expenditures,
future cash sources and requirements, liquidity and cost savings that involve
known and unknown risks, uncertainties, and other factors that may cause Neste
Oil Corporation's or its businesses' actual results, levels of activity,
performance or achievements to be materially different from those expressed or
implied by any forward-looking statements. In some cases, such forward-looking
statements can be identified by terminology such as "may," "will," "could,"
"would," "should," "expect," "plan," "anticipate," "intend," "believe,"
"estimate," "predict," "potential," or "continue," or the negative of those
terms or other comparable terminology. By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future. Future results
may vary from the results expressed in, or implied by, the forward-looking
statements, possibly to a material degree. All forward-looking statements made
in this report are based on information presently available to management and
Neste Oil Corporation assumes no obligation to update any forward-looking
statements. Nothing in this report constitutes investment advice and this report
shall not constitute an offer to sell or the solicitation of an offer to buy any
securities or otherwise to engage in any investment activity.
NESTE OIL GROUP
JANUARY- DECEMBER
2009
10-12/2009 and 10-12/2008
unaudited, full year 2009 and
2008 audited
CONSOLIDATED INCOME STATEMENT
MEUR
Note
10-12/2009 10-12/2008 1-12/2009 1-12/2008
Revenue 3 2 491 2 805 9 636 15 043
Other income 6 7 29 44
Share of profit (loss)
of associates and joint
ventures 3 -1 -26 20 13
Materials and
services -2 180 -2 789 -8 167 -13 657
Employee benefit
costs -80 -84 -301 -315
Depreciation,
amortization and
impairments 3 -65 -55 -234 -223
Other expenses -162 -210 -648 -719
Operating profit 9 -352 335 186
Financial income and
expenses
Financial income 4 2 10 8
Financial
expenses -8 -28 -44 -70
Exchange rate and fair value
gains and
losses -1 -4 -5 5
Total financial income and
expenses -5 -30 -39 -57
Profit before income taxes 4 -382 296 129
Income tax
expense -3 93 -71 -28
Profit for the
period 1 -289 225 101
Profit
attributable to:
Owners of the parent -1 -290 221 97
Minority interest 2 1 4 4
1 -289 225 101
Earnings per share from
profit
attributable to the
owners
of the parent basic and
diluted (in euro per
share) -0,01 -1,14 0,86 0,38
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
MEUR
10-12/2009 10-12/2008 1-12/2009 1-12/2008
Profit for the
period 1 -289 225 101
Other
comprehensive
income for the
period,
net of tax:
Translation
differences and
other changes 3 -34 9 -44
Cash flow hedges
recorded in
equity -2 -22 3 -23
transferred to
income statement -11 21 15 -25
Net investment
hedges 0 0 0 0
Hedging reserves in
associates and joint
ventures 0 0 -2 -1
Other comprehensive
income for the period,
net of tax -10 -35 25 -93
Total
comprehensive
income for the
period -9 -324 250 8
Total
comprehensive
income
attributable to:
Owners of the
parent -11 -325 246 4
Minority interest 2 1 4 4
-9 -324 250 8
CONSOLIDATED
BALANCE SHEET
31 Dec 31 Dec
MEUR Note 2009 2008
ASSETS
Non-current assets
Intangible assets 4 48 51
Property, plant and
equipment 4 3 235 2 675
Investments in
associates and joint
ventures 216 152
Non-current receivables 3 13
Pension assets 111 105
Deferred tax assets 11 16
Derivative financial
instruments 5 3 16
Available-for-sale
financial assets 1 1
Total non-current
assets 3 628 3 029
Current assets
Inventories 1 148 637
Trade and other
receivables 757 786
Derivative financial
instruments 5 50 213
Cash and cash
equivalents 117 55
Total current
assets 2 072 1 691
Total assets 5 700 4 720
EQUITY
Capital and reserves
attributable to the owners
of the parent
Share capital 40 40
Other equity 2 2 170 2 131
Total 2 210 2 171
Minority interest 12 8
Total equity 2 222 2 179
LIABILITIES
Non-current
liabilities
Interest-bearing
liabilities 1 590 926
Deferred tax
liabilities 328 297
Provisions 22 24
Pension liabilities 10 12
Derivative financial
instruments 5 15 32
Other non-current
liabilities 0 3
Total non-current
liabilities 1 965 1 294
Current liabilities
Interest-bearing
liabilities 445 133
Current tax
liabilities 5 1
Derivative financial
instruments 5 83 197
Trade and other
payables 980 916
Total current
liabilities 1 513 1 247
Total liabilities 3 478 2 541
Total equity and
liabilities 5 700 4 720
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL
EQUITY
Attributable to equity holders of the
Company
Share Reserve Fair Translation Re- Mi- Total
ca- fund value diffe- tained nority equity
pital and rences ear- inte-
other nings rest
MEUR reserves
Total equity at 1
January 2008 40 10 42 -11 2342 4 2 427
Dividend paid -256 -256
Share-based
compensation 0 0
Transfer from
retained earnings 0
Total comprehensive
income
for the period -49 -43 96 4 8
Total equity at 31
December
2008 40 10 -7 -54 2182 8 2179
Share Reserve Fair Translation Re- Mi- Total
ca- fund value diffe- tained nority equity
pital and rences ear- inte-
other nings rest
MEUR reserves
Total equity at 1
January 2009 40 10 -7 -54 2182 8 2 179
Dividend paid -205 -205
Share-based
compensation -2 -2
Transfer from
retained earnings 1 -1 0
Total comprehensive
income
for the period 16 9 221 4 250
Total equity at 31
December
2009 40 11 9 -45 2 195 12 2 222
CONDENSED CONSOLIDATED CASH
FLOW STATEMENT
MEUR 10-12/2009 10-12/2008 1-12/2009 1-12/2008
Cash flow from operating
activities
Profit before taxes 4 -382 296 129
Adjustments, total 81 93 268 249
Change in working
capital -345 836 -450 248
Cash generated from
operations -260 547 114 626
Finance cost, net 29 6 20 -29
Income taxes paid 6 -67 43 -85
Net cash generated from
operating activities -225 486 177 512
Capital expenditures -248 -184 -816 -497
Acquisition of
subsidiary - - - -10
Acquisition of
associates and joint
ventures -15 -1 -47 -1
Proceeds from sales of
fixed assets 1 5 7 9
Proceeds from sales of
shares 0 2 0 12
Change in other
investments -16 -12 -29 -8
Cash flow before
financing activities -503 296 -708 17
Net change in loans and
other financing
activities 551 -346 975 244
Dividends paid to the
owners
of the parent 0 0 -205 -256
Net increase
(+)/decrease (-) in cash 48 -50 62 5
and cash equivalents
KEY FINANCIAL
INDICATORS
31 Dec 31 Dec
2009 2008
Capital employed, MEUR 4257 3237
Interest-bearing net
debt, MEUR 1918 1004
Capital expenditure and
investments in shares,
MEUR 863 508
Return on average capital
employed, after tax, ROACE
% 2,5 13,1
Return on capital
employed, pre-tax, ROCE
% 9,0 6,1
Return on equity, % 10,2 4,4
Equity per share, EUR 8,64 8,48
Cash flow per share, EUR 0,69 2,00
Price/earnings
ratio (P/E) 14,42 28,03
Equity-to-assets ratio,
% 39,1 46,3
Gearing, % 86,3 46,1
Leverage ratio, % 46,3 31,5
Dividend per
share 1) 0,25 0,80
Dividend payout
ratio, % 1) 29,0 211,9
Dividend yield, %
1) 2,0 7,6
Average number of shares 255903960 255903686
Number of shares at the
end of the period 255913686 255903686
Average number of
personnel 5286 5174
1) Board of Directors
proposal to the Annual
General Meeting
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND
ACCOUNTING POLICIES
The report on Annual Financial Statements has been prepared in accordance with
IAS 34, Interim Financial Reporting, as adopted by EU. The accounting policies
adopted are consistent with those of the Group's annual financial statements
for the year ended 31 December 2008 with the changes described below.
The Group applies the following
interpretations or amendments
as of 1 January 2009:
- IAS 1 Presentation of Financial Statements - Revised. This revised standard
separates changes in equity of an entity arising from transactions with owners
from other changes in equity
- Amendments to IFRS 7 Financial Instruments: Disclosures. This amendment
enhance disclosures about fair value measurement and liquidity risk.
- IAS 23 Borrowing Costs - Revised. The Group has revised the accounting
principle for capitalizing borrowing costs in accordance with the revised
standard. The revised accounting principle had no effect to the reported
figures.
The following interpretations are mandatory for the financial year
ending 31 December 2009, but not relevant for the Group:
- IFRIC 13
Customer Loyalty
Programmes
- Annual
improvements 2008
- Amendments to IFRS 2
Share-Based Payment: Vesting
Conditions and Cancellations
- Amendments to IAS 32 Financial instruments: Presentation and IAS 1
Presentation of Financial Statements - Financial Instruments Puttable at Fair
Value and Obligations Arising on Liquidation
- Amendments to IFRIC 9 Remeasurement of Embedded Derivatives and IAS 39
Financial Instruments: Recognition and Measurements - Embedded derivatives
2. TREASURY
SHARES
In 2007 Neste Oil entered into an agreement with a third party service
provider concerning the administration of the share-based management share
performance arrangement for key management personnel. As part of the
agreement, the service provider purchased a total of 500,000 Neste Oil shares
in February 2007 in order to hedge part of Neste Oil's cash flow risk in
relation to the possible future payment of the rewards, which will take place
partly in Neste Oil shares and partly in cash during 2013. Despite the legal
form of the hedging arrangement, it has been accounted for as if the share
purchases had been conducted directly by Neste Oil, as required by IFRS 2,
Share based payments and SIC-12, Consolidation - Special purpose entities.
The consolidated balance sheet and the consolidated changes in total equity
reflect the substance of the arrangement with a deduction amounting to EUR 12
million in equity. This amount represents the consideration paid for the
shares by the third party service provider. In December 2009 Neste Oil decided
to assign 10,000 shares held by the third party service provider. At the date
of the transfer, the value of the shares was 119 thousand euros. As at 31
December 2009 there were 490,000 shares accounted for as treasury shares.
3. SEGMENT
INFORMATION
Neste Oil's operations are grouped into four segments:
Oil Products, Renewable Fuels, Oil Retail and Others.
Group administration, shared service functions as well as Research and
Technology, Neste Jacobs and Nynas AB are included in the Others segment.
REVENUE
MEUR 10-12/2009 10-12/2008 1-12/2009 1-12/2008
Oil Products 1987 2221 7631 12641
Renewable Fuels 61 20 182 116
Oil Retail 791 915 2998 4073
Others 44 43 164 143
Eliminations -392 -394 -1339 -1930
Total 2491 2805 9636 15043
OPERATING PROFIT
MEUR 10-12/2009 10-12/2008 1-12/2009 1-12/2008
Oil Products 27 -301 318 183
Renewable Fuels -11 -9 -25 2
Oil Retail 6 -6 50 25
Others -11 -38 -6 -29
Eliminations -2 2 -2 5
Total 9 -352 335 186
COMPARABLE
OPERATING PROFIT
MEUR 10-12/2009 10-12/2008 1-12/2009 1-12/2008
Oil Products -11 154 105 602
Renewable Fuels -10 -10 -30 2
Oil Retail 5 -5 50 22
Others -11 -38 -7 -29
Eliminations -2 2 -2 5
Total -29 103 116 602
DEPRECIATION, AMORTIZATION
AND IMPAIRMENTS
MEUR 10-12/2009 10-12/2008 1-12/2009 1-12/2008
Oil Products 48 44 178 175
Renewable Fuels 6 2 14 7
Oil Retail 8 6 31 31
Others 3 3 11 10
Total 65 55 234 223
CAPITAL EXPENDITURE AND INVESTMENTS IN
SHARES
MEUR 10-12/2009 10-12/2008 1-12/2009 1-12/2008
Oil Products 59 47 198 165
Renewable Fuels 191 108 625 249
Oil Retail 10 22 29 63
Others 3 8 11 31
Total 263 185 863 508
TOTAL ASSETS 31 Dec 31 Dec
MEUR 2009 2008
Oil Products 3750 3352
Renewable Fuels 1080 450
Oil Retail 545 568
Others 281 265
Unallocated
assets 234 240
Eliminations -190 -155
Total 5700 4720
NET ASSETS 31 Dec 31 Dec
MEUR 2009 2008
Oil Products 2943 2436
Renewable Fuels 940 381
Oil Retail 305 351
Others 234 201
Eliminations 1 4
Total 4423 3373
RETURN ON NET ASSETS, % 31 Dec 31 Dec
2009 2008
Oil Products 12,0 6,4
Renewable Fuels -4,0 0,9
Oil Retail 15,8 6,8
COMPARABLE RETURN ON NET ASSETS, % 31 Dec 31 Dec
2009 2008
Oil Products 4,0 21,2
Renewable Fuels -4,8 0,9
Oil Retail 15,8 6,0
QUARTERLY SEGMENT INFORMATION
QUARTERLY REVENUE
MEUR
10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
/2009 /2009 /2009 /2009 /2008 /2008 /2008 /2008
Oil Products 1987 1971 2091 1582 2221 3907 3798 2715
Renewable Fuels 61 59 38 24 20 27 46 23
Oil Retail 791 789 727 691 915 1132 1078 948
Others 44 37 41 42 43 36 33 31
Eliminations -392 -356 -305 -286 -394 -581 -535 -420
Total 2491 2500 2592 2053 2805 4521 4420 3297
QUARTERLY OPERATING PROFIT
MEUR
10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
/2009 /2009 /2009 /2009 /2008 /2008 /2008 /2008
Oil Products 27 80 105 106 -301 15 272 197
Renewable Fuels -11 -1 -3 -10 -9 -2 12 1
Oil Retail 6 19 13 12 -6 9 11 11
Others -11 17 -1 -11 -38 21 -4 -8
Eliminations -2 -2 4 -2 2 1 -1 3
Total 9 113 118 95 -352 44 290 204
QUARTERLY COMPARABLE OPERATING PROFIT
MEUR
10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
/2009 /2009 /2009 /2009 /2008 /2008 /2008 /2008
Oil Products -11 15 37 64 154 173 162 113
Renewable Fuels -10 -6 -7 -7 -10 -3 13 2
Oil Retail 5 19 14 12 -5 7 11 9
Others -11 16 -1 -11 -38 21 -4 -8
Eliminations -2 -2 4 -2 2 1 -1 3
Total -29 42 47 56 103 199 181 119
QUARTERLY DEPRECIATION, AMORTIZATION AND IMPAIRMENTS
MEUR
10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
/2009 /2009 /2009 /2009 /2008 /2008 /2008 /2008
Oil Products 48 43 43 44 44 44 41 46
Renewable Fuels 6 4 2 2 2 2 1 2
Oil Retail 8 8 8 7 6 9 8 8
Others 3 3 3 2 3 1 3 3
Total 65 58 56 55 55 56 53 59
QUARTERLY CAPITAL EXPENDITURE
AND INVESTMENTS IN SHARES
MEUR
10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
/2009 /2009 /2009 /2009 /2008 /2008 /2008 /2008
Oil Products 59 45 51 43 47 46 39 33
Renewable Fuels 191 161 150 123 108 64 50 27
Oil Retail 10 9 6 4 22 18 15 8
Others 3 1 3 4 8 3 6 14
Total 263 216 210 174 185 131 110 82
4. CHANGES IN INTANGIBLE ASSETS AND PROPERTY,
PLANT AND EQUIPMENT AND CAPITAL COMMITMENTS
CHANGES IN INTANGIBLE ASSETS AND PROPERTY,
PLANT AND EQUIPMENT 31 Dec 31 Dec
MEUR 2009 2008
Opening balance 2726 2477
Depreciation, amortization and
impairments -234 -223
Capital
expenditure 820 497
Disposals -21 -8
Translation
differences -8 -28
Acquired group
companies 0 11
Closing balance 3283 2726
CAPITAL COMMITMENTS 31 Dec 31 Dec
MEUR 2009 2008
Commitments to purchase
property, plant and equipment 431 540
Total 431 540
Capital commitments include EUR 63 million future commitments related to
energy and utility supply agreements, which will be accounted for as finance
leases.
5. DERIVATIVE
FINANCIAL
INSTRUMENTS
31 Dec 2009 31 Dec 2008
Interest rate and
currency
derivative
contracts and
share forward
contracts Nominal Net Nominal Net
MEUR value fair value value fair value
Interest rate
swaps 723 -13 475 -13
Forward foreign
exchange
contracts 1759 -7 1381 17
Currency options
Purchased 115 -1 336 -5
Written 114 2 256 -11
Share forward
contracts 9 -4 14 -8
Oil and freight
derivative Net fair Net fair
contracts Volume value Volume value
million bbl Meur million bbl Meur
Sales contracts 18 -32 28 166
Purchase
contracts 7 10 32 -147
Purchased options 1 -8 1 -12
Written options 1 8 1 12
The fair values of derivative financial instruments subject to public trading
are based on market prices as of the balance sheet date. The fair values of
other derivative financial instruments are based on the present value of cash
flows resulting from the contracts, and, in respect of options, on evaluation
models. The amounts also include unsettled closed positions. Derivative
financial instruments are mainly used to manage the Group's currency, interest
rate and price risk.
6. RELATED PARTY
TRANSACTIONS
Details of transactions between the Group and
associates/joint ventures are disclosed below.
1-12 1-12
Transactions carried out with
associates and joint ventures /2009 /2008
Sales of goods and
services 70 110
Purchases of goods and
services 48 72
Receivables 23 14
Financial income and
expenses 0 0
Liabilities 2 9
7. CONTINGENT
LIABILITIES
31 Dec 31 Dec
MEUR 2009 2008
Contingent liabilities
On own behalf for
commitments
Real estate mortgages 26 26
Pledged assets 2 3
Other contingent
liabilities 48 37
Total 76 66
On behalf of associates
and joint ventures
Guarantees 4 5
Other contingent
liabilities 2 2
Total 6 7
On behalf of others
Guarantees 18 12
Total 18 12
Total 100 85
31 Dec 31 Dec
MEUR 2009 2008
Operating lease
liabilities
Due within one year 82 106
Due between one and five years 166 190
Due later than five
years 120 123
Total 368 419
The Group's operating lease commitments primarily relate to time charter
vessels, land and office space. In 2008 the lease commitments included
operating leases contained in hydrogen supply agreements. Based on updated
information the hydrogen supply agreements have been reassessed in 2009 and
will be accounted for as take-or-pay contracts. The previous years figures
concerning operating lease liabilities have been restated accordingly.
Other contingent
liabilities
Neste Oil Corporation has a collective contingent liability with Fortum Heat
and Gas Oy of the demerged Fortum Oil and Gas Oy's liabilities based on the
Finnish Companies Act's Chapter 17 Paragraph 16.6.
CALCULATION OF KEY FIGURES
CALCULATION OF KEY FINANCIAL INDICATORS
Operating profit = Operating profit includes the revenue from the sale of goods
and services, other income such as gain from sale of shares or non-financial
assets, share of profits (loss) of associates and joint ventures, less losses
from sale of shares or non-financial assets, as well as expenses related to
production, marketing and selling activities, administration, depreciation,
amortization, and impairment charges. Realized and unrealized gains or losses on
oil and freight derivative contracts together with realized gains and losses
from foreign currency and oil derivative contracts hedging cash flows of
commercial sales and purchases that have been recycled in the income statement,
are also included in operating profit.
Comparable operating profit = Operating profit -/+ inventory gains/losses -/+
gains/losses from sale of shares and non-financial assets - unrealized change in
fair value of oil and freight derivative contracts. Inventory gains/losses
include the change in fair value of all trading inventories.
Return on equity, (ROE) % = 100 x (Profit before taxes - taxes) / Total equity
average
Return on capital employed, pre-tax (ROCE) % = 100 x (Profit before taxes +
interest and other financial expenses) / Capital employed average
Return on average capital employed, after-tax (ROACE) % = 100 x (Profit for the
period (adjusted for inventory gains/losses, gains/losses from sale of shares
and non-financial assets and unrealized gains/losses on oil and freight
derivative contracts, net of tax) + minority interest + interest expenses and
other financial expenses related to interest-bearing liabilities (net of tax)) /
Capital employed average
Capital employed = Total assets - interest-free liabilities - deferred tax
liabilities -provisions
Interest-bearing net debt = Interest- bearing liabilities - cash and cash
equivalents
Leverage ratio, % = 100 x Interest- bearing net debt / (Interest- bearing net
debt + Total equity)
Gearing, % = 100 x (Interest bearing net debt / Total equity)
Equity-to assets ratio, % = 100 x Total equity / (Total assets - advances
received)
Return on net assets, % = 100 x Segment operating profit / Average segment net
assets
Comparable return on net assets, % = 100 x Segment comparable operating profit /
Average segment net assets
Segment net assets = Property, plant and equipment, intangible assets,
investment in associates and joint ventures including shareholder loans, pension
assets, inventories and interest-free receivables and liabilities allocated to
the business segment, provisions and pension liabilities
Research and development expenditure = Research and development expenditure
comprise of the expenses of the Research & Technology unit serving all business
areas of the Group, as well as research and technology expenses incurred in
business areas, which are included in the consolidated income statement.
Depreciation and amortization are included in the figure. The expenses are
presented as gross, before deducting grants received.
CALCULATION OF SHARE-RELATED INDICATORS
Earnings per share (EPS) = Profit for the period attributable to the equity
holders of the company / Adjusted average number of shares during the period
Equity per share = Shareholder's equity attributable to the equity holders of
the company/ Adjusted average number of shares at the end of the period
Cash flow per share = Net cash generated from operating activities / Adjusted
average number of shares during the period
Price / earnings ratio (P/E) = Share price at the end of the period / Earnings
per share
Dividend payout ratio, % = 100 x Dividend per share / Earnings per share
Dividend yield, % = 100 x Dividend per share / Share price at the end of the
period
Average share price = Amount traded in euros during the period / Number of
shares traded during the period
Market capitalization at the end of the period = Number of shares at the end of
the period x share price at the end of the period
Trading volume = Number of shares traded during the period, and number of shares
traded during the period in relation to the weighted average number of shares
during the period
[HUG#1380512]
