Neste to Take 25% Sales Hit From Sweden's Biofuel Pull-Back — OPIS

Neste's renewable diesel sales will be 25% lower than previously forecast over the next three years due to the Swedish government's biofuel mandate amendment, RBC Capital Markets analysts warned Tuesday.

Last week, in a move to contain inflation, the Swedish government agreed to ease its diesel and petrol emissions reduction mandate for the 2024-2026 period. The mandate, achieved by blending biofuels, will be slashed from 40%-60% to just 6%.

RBC said in a research note that Sweden is a major market for Neste as it accounted for 58% of the group's renewable diesel sales point in Europe by the end of 2022. Even assuming that Neste is able to mitigate 25% of the losses via commercial flexibility, RBC analysts have slashed sales and profit estimates for the company.

The investment bank now believes Neste will achieve cumulative renewable diesel sales of 12.1 million metric tons across 2024-2026, down 25% from its previous estimate of 16.1 million mt.

"While strong execution combined with favorable macro tailwinds have contributed to very strong margins over the past quarters, we remain cautious due to continued competition and policy risk," RBC said.

Neste will celebrate its capital markets day in London on June 20. RBC expects that growing policy risk will be a major area of focus.

Neste claims to be the world's largest producer of renewable diesel and sustainable aviation fuel. Shares in the Finnish company are down 14% over the past month.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Jaime Llinares Taboada, jllinares@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com

(END) Dow Jones Newswires

May 23, 2023 09:35 ET (13:35 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.