Slides
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2 Today’s presentation can be found on Neste’s website: Investors
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The following 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 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 following forward-looking statements, possibly to a material degree. All forward-looking statements made in this presentation are based on information presently available to management and Neste Corporation assumes no obligation to update any forward-looking statements. Nothing in this presentation constitutes investment advice and this presentation 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. Disclaimer 4
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Strengthening Neste for long-term value creation Capital Markets Update 13 February 2025 Heikki Malinen CEO Anssi Tammilehto Interim CFO
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Key decisions in first 100 days • Launched full potential analysis • New leadership appointments • Electrolyzer investment stopped First 100 days and future direction 6 CEO agenda • Shifting focus to customer- orientation, operational efficiency, safety and reliability • Immediate actions to improve performance and build resilience • Ensuring value creation from renewable fuels to enable growth
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Current performance unsatisfactory 7 1.0 2020 0.5 2021 -0.4 2022 0.8 2023 -0.3 2024 1.9 1.9 3.5 3.5 1.3 • Renewable margins affected by overcapacity and lack of voluntary demand in 2024 • Normalization of Oil Products' market environment • Lower planned availability: Maintenance shutdowns in Singapore and Rotterdam, major turnaround in Porvoo • Higher unplanned outages: Martinez ramp-up continuing until end of 2024, Equipment failure at Singapore RD line in Q4 2024, Fire at Rotterdam refinery in Q4 2024 • Front-loaded fixed costs to build optionality with broad platforms Cash flow before financing activities Neste financials (B€) Comparable EBITDA: RP OP M&S RP = Renewable Products, OP = Oil Products, M&S = Marketing & Services
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We have been investing heavily and our costs have grown, focus and reset are needed 8 0.0 0.5 1.0 1.5 Fixed costs (B€) 2021 2022 2023 2024 RP OP M&S Other +56% 0.0 0.5 1.0 1.5 2.0 CAPEX and M&A (B€) 2021 2022 2023 2024 RP OP M&S Other Capacity expansions in Singapore and Rotterdam, Martinez acquisition Fixed costs have been grown based on a different market view and desire to create broad optionality RP = Renewable Products, OP = Oil Products, M&S = Marketing & Services
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Neste's priorities to improve competitiveness and strengthen market position 9 Improve refinery performance through safety, reliability and project execution Extract full commercial potential from the existing core and Rotterdam expansion Focus on selected priorities and reset cost structure Prepare next steps of growth with targeted development initiatives Maintain strong balance sheet Ambition Growth in renewable fuels: • Market leadership • Cost competitiveness • Technology advantage 2025-26 2027-28
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Performance improvement program 2025-2026 10 Objective Improve performance through cost discipline and refocusing on core Program priority areas Ambition +350M€ run rate EBITDA improvement by end of 2026 Maintain investment grade credit rating Commercial acceleration and supply chain optimization Refinery performance and safety External cost reduction Planned operating model simplification
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Four key areas to improve performance 11 External cost reduction ● Reduce spend through efficient tendering, strict procurement policies, and process optimization ● Improve capabilities, tools and operating model to drive step-change in procurement Planned operating model simplification ● New organization structure to strengthen focus on cost and operational performance ● Target structural savings through ~600 FTE reduction Commercial acceleration and supply chain optimization ● Accelerate commercial efforts to sell volume from new capacity ● Streamline go-to-market approach ● Right-size terminal and logistics network Refinery performance and safety ● Improve reliability ● Increase margin through production valorisation and yield optimization ● Reduce OPEX through utilities and maintenance optimization
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Business focus and capital discipline: Strengthening competitive advantage in renewable fuels 12 Our investment and business development portfolio has been fragmented across multiple priorities Focus on value creation in renewable fuels: • Rotterdam expansion • Strengthening competitive advantage by developing our current raw material base, novel vegetable oils sourcing and lignocellulosic raw materials research Planned streamlining: • Development of algae and P2X • Renewable and circular polymers and chemicals Porvoo transformation • Focus on energy efficiency and renewable hydrogen • Other components of the plan are considered to be delayed
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Rotterdam expansion with revised schedule and budget under tight monitoring 13 Rotterdam complex at the center of European SAF and RD market Long-term market potential continues to support the business case Delay driven by challenging contractor market in Europe and underlying project complexity Proven technology based on Singapore second line New project governance model setup to ensure efficient completion 2027 2.5B€ 2026 1.9B€ Commercial operations schedule Investment budget
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Largest renewable fuels refinery in the world with 2.7 Mt capacity 14
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Solid foundation for long-term performance 15 Market leading position in renewable fuels 6.8Mt of renewable fuel refining capacity in Singapore, Rotterdam, Porvoo and Martinez in 2027 Widest feedstock pool with global access and ability to process broad range of materials Local market expertise combined with global scale Years of accumulated experience in mastering complex local market requirements and tracking biocriteria Platform to capture opportunities on global scale Porvoo and M&S cash generation Well-invested, complex, tier 1 Porvoo refinery Market-leading Marketing and Services business
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2 500 201 Significant opportunity for growth in renewable fuels market 16 • Renewable fuels still fraction of the market in 2035 • Renewable fuels needed to complement electric vehicles in decarbonizing road transportation • Renewable fuels most attractive way to decarbonize aviation Global road and aviation fuel demand (Mt/a) RD = Renewable diesel, SAF = Sustainable Aviation Fuel Note: Biofuels including biodiesel and ethanol in addition to renewable diesel Sources: Argus Biofuels Analytics (Biofuels, RD, SAF), IEA Stated Policies Scenario (Total consumption) 48 410 24 0.9 Road transportation fuels (diesel, gasoline) in 2035 RD '24 RD '35 Aviation fuel in 2035 SAF '24 SAF '35 Biofuels '35 15.6
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Biofuel regulatory framework in place, more concrete actions needed 17 Source: World Energy outlook 10/2024 (LHS); Argus Biofuels Analytics (middle); UN Comtrade Database (Product : 3826) (RHS) More actions – mandates and incentives – needed to meet pledges and targets Level playing field required in the EU to avoid subsidized imports More policies needed to meet pledges So far, only EU has firm mandates for SAF in 2025 Imports to EU are increasing 136 218 Stated biofuel policies Biofuels needed to reach pledges +60% EU US APAC 2.0% 0.0% 0.0% 2021 2022 2023 0.5 1.1 1.5 IEA 2030 world biofuel demand outlook (Mt oil equivalent) Value of EU biofuel imports from China (B$) Planned mandates in 2025 (%) Incentive- based, 0.6% consumption est. for '25 Singapore 1% SAF mandate from '26
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Solid growth trajectory continuing in renewable diesel 18 Global renewable diesel demand (Mt/a), external estimate 16 38 48 2024 2030 2035 11% CAGR LCFS = Low Carbon Fuel Standard Source: Argus Biofuels Analytics Majority of expected growth from mandates, incl.: • EU RED III: 29% renewable share or 14.5% emission reduction obligation in transport by 2030, with sub-quota for advanced biofuels • California LCFS: 30% reduction in the carbon intensity of transportation fuels by 2030 and 90% by 2045. Other US states are increasingly following California’s example • National road mandates: in e.g. UK, Canada, and Brazil
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Rapid increase in global SAF demand, especially from 2030 onwards 19 Source: SAF demand range based on externally available sources Global SAF demand (Mt/a), range of external estimates Majority of expected growth from mandates and incentives including: • EU: 2% in 2025, 6% by 2030 • UK: 2% in 2025, 10% by 2030 • US: Various incentive schemes • Singapore: 3% by 2030 • British Columbia (Canada): 3% by 2030 • Japan (proposed): 10% by 2030 • Australia (proposed): 3% by 2030 Estimate range driven by uncertainty of voluntary demand2024 2030 2035 <1 7-10 19-24 35% CAGR
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HEFA-SAF most cost-efficient way to decarbonize aviation 20 HEFA most commercially mature drop-in solution available for decarbonization in aviation eSAF high cost due to renewable hydrogen and biogenic CO2 inputs, requiring eSAF submandates to become commercially viable EU is the only region with explicit eSAF submandates 2030 onwards 2030 production cost HEFA - SAF eSAF Up to 3x HEFA = Hydroprocessed Esters and Fatty Acids, eSAF = Synthetic Aviation Fuel Source: IEA Global Hydrogen Review 2024
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Global demand and end of year capacity for RD, SAF and renewable polymers & plastics (Mt) Favorable long-term outlook, while overcapacity in 2025 21 Source: Consolidated from publicly available sources 16 19 Demand Capacity 16 19 -3 High certainty (Expected mandated demand / capacity now online or in construction) Low certainty (Voluntary demand / planned & assumed capacity) 18 24 Demand Capacity 18 24 -6 44 32 Demand Capacity 46 46 +14 2024 2025 2030
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Leadership Team to drive the change 22 COO Office MARKETING & SERVICES Heikki Malinen EVP , Jori Sahlsten President and CEO, Heikki Malinen People & Culture CFO Office RENEWABLE PRODUCTS OIL PRODUCTS COO, Markku Korvenranta EVP, Hannele Jakosuo-Jansson CFO, Eeva Sipilä (starts 1st of May 2025 at the latest). Anssi Tammilehto as an interim CFO until Eeva Sipilä starts. EVP , Panu Kopra**
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23 CFO value creation priorities Commitment to strong shareholder value creation in a growth market Focus in 2025-26 on profits and strong balance sheet Planned actions drive strong cash generation
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We achieved strong margin premium in 2024 despite weak market 24 Neste 2024 RP comparable sales margin: 377 $/t 2024 drivers of premium Short and mid-term drivers of change • Anti-dumping and anti-subsidy schemes in the EU • CFPC eligibility for US imports • Voluntary SAF demand outlook • Increasingly liquid and volatile markets • Improved cost competitiveness and availability + Global presence + Upstream integration + Term deals + SAF sales + Hedging - Poor availability in Q4 Reference margin Neste premium CFPC = Clean Fuel Production Credit, i.e., 45Z 2024 North-West Europe 150-200 $/t
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Program launched to drive performance improvement 25 Note: EBITDA improvement vs. 2024 baseline, including capitalized lease costs 2025-26 Program objectives +350M€ EBITDA (of which 250M€ from operational costs) Maintain investment grade credit rating Commercial acceleration & supply chain optimization Refinery performance and safety External cost reduction Planned operating model simplification • Filling capacity • Streamlined go-to-market, reducing cost and NWC • Reliability improvement to increase availability • Production yields and OPEX optimization • Procurement program to drive down cost • Planned new operating model with strong accountability • Planned ~600 FTE reduction • Rotterdam expansion completion in adjusted time/budget • Focusing CAPEX and development budgets Business focus and capital discipline
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Strong focus on delivering results ● Strengthening P&L ownership and accountability for results in the organization ● Performance improvement program launched with 4 workstreams ● 150+ people currently mobilized to deliver across 20+ sub-workstreams ● Continuous progress tracking by NLT supported by Transformation Office ● External progress reporting quarterly starting Q1 / 25 NLT = Neste Leadership Team 26
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2022-24 capital allocation: Dividends and significant investments 27 Actual capital allocation 2022-24 Strong operating cash flow supported by favorable market environment There was room to increase debt Cash wash available for attractive dividends and investments for growth, competitiveness and M&A Operating cash flow 4.7B€ Increase in net debt 4.2B€ Investments and M&A 4.9B€ Dividends 2.7B€ Other Note: Other including e.g., repayments of lease liabilities and changes in long-term receivables and other financial assets
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Future capital allocation reflects new priorities 28 2025-26 2027-28 Note: 2024 Dividend is Board of Directors proposal to Annual General Meeting, Operating cash flow potential at 2024 prices and utilization and before NWC changes Operating cash flow: Performance improvement program launched to maximize cash flow CAPEX: ~1.2B€ p.a. committed for Rotterdam expansion, maintenance and other Dividend and balance sheet: 0.2€ dividend per share for 2024 and aim to maintain investment grade credit rating Operating cash flow (excl. change in NWC): 1.5-1.7B€ potential after program execution and Rotterdam expansion at 2024 prices CAPEX: Tight discipline with ~0.5B€ p.a. mainly for maintenance Dividend and balance sheet: Free cash flow used for stronger balance sheet enabling growth and dividends Strong cash flow potential even at current market prices Significant upside in a stronger market
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CAPEX expected to be ~0.5B€ p.a. after completion of Rotterdam expansion 29 0.0 0.5 1.0 1.5 2.0 CAPEX and M&A (B€) 2022 2023 2024 2025 2026 2027 2028 1.8 1.6 1.6 1.2 1.2 0.5 0.6 Maintenance and turnarounds Rotterdam expansion Other In 2025-26 investments to completion of Rotterdam expansion, turnarounds and routine maintenance in Rotterdam, Singapore, Porvoo After 2026 plan to maintain tight capital discipline and start to prepare next investments in growth and feedstock Note: Other including strategic and efficiency related investments
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Board of Directors dividend proposal for 2024 to Annual General Meeting 1.3B€ Rotterdam expansion, 0.9B€ TAs and maintenance, and 0.2B€ other Financial targets and capital allocation for 2025-26 30 Note: EBITDA improvement vs. 2024 baseline, including capitalized lease costs by the end of 2026, of which €250 million from operational costs Financial targets Capital allocation < 40% maintaining our investment grade credit rating €0.2 €350 million run rate improvement €2.4 billion EBITDA CAPEX 2 years Leverage Dividend per share
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Targeting solid long-term value creation 31 Shareholder return drivers Shareholder returns Valuation Margin improvement Sales growth Potential to review dividend once CAPEX normalizes Undisputed leader in a long-term growth market Maintain investment grade rating for growth and shareholder returns €350M EBITDA improvement from performance improvement program Further upside when RP demand / supply normalizes Targeting 10% RP volume CAGR 2024-29 with current investments Cash flow Strong operating and free cash flow potential in all market conditions Note: Volume growth potential with 6.8Mt post Rotterdam expansion nameplate capacity and assuming 90% availability, EBITDA improvement vs. 2024 baseline, including capitalized lease costs
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32 Q&A
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33 Closing remarks
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Strengthening Neste for long-term value creation Immediate focus on improving operational and financial performance Strongly positioned in a growing renewable fuels market Targeting solid long-term value creation 34
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