Neste Oil's Interim Report for January-June 2009
(Thomson Reuters ONE) - - Comparable operating profit in Q2 was EUR 47 million (Q2/2008: 181million)Second quarter in brief:- Diesel margins remained weak during the entire quarter- Neste Oil's total refining margin was USD 7.87 /bbl(4-6/08: 12.38- Comparable operating profit came in at EUR 47 million(4-6/08: 181 million)- IFRS operating profit was EUR 118 million (4-6/08: 290million)- Cash flow from operations totaled EUR 223 million (4-6/08:314 million)- Investments totaled EUR 210 million, of which 149 millionwas allocated to Renewable Fuels- The second NExBTL renewable diesel production plant wascommissioned at the Porvoo refineryPresident & CEO Matti Lievonen:"Refining margins continue to be weak, dampened by depressed demand,and no rapid recovery seems to be in sight. Despite these difficultcircumstances and the two-month maintenance shutdown at ProductionLine 4 at the Porvoo refinery, we were able to stay in the black.However, a quarterly profit of 47 million euros is not satisfactoryand the current market conditions mean that we must further improveour cost and operational efficiency. This is something that we willcontinue to concentrate on during the second half of the year. Wehave already seen an improvement in our working capital management,and this has had a positive impact on our operating cash flow.""We remain committed to proceeding with our strategic projects andI'm pleased to say that the start-up of our second NExBTL renewablediesel plant has been very smooth and the plant has reached itsnameplate capacity. Our partners published some very promisingresults during the second quarter from long-term field tests of usingNExBTL renewable diesel commercially. These field tests prove thatNExBTL's quality is second to none when it comes to performance andemissions."Further information:Matti Lievonen, President & CEO, tel. +358 10 458 11Ilkka Salonen, CFO, tel. +358 10 458 4490News conference and conference callA press conference in Finnish on the second quarter results will beheld today, 30 July 2009, at 11:30 am EET at the company'sheadquarters, Keilaranta 21, Espoo. www.nesteoil.com will featureEnglish versions of the presentation materials. A conference call inEnglish for investors and analysts will be held today, 30 July 2009,at 3:00 pm Finland / 1:00 pm London / 8:00 am New York. The call-innumbers are as follows: Europe: +44 (0)20 3023 4426, US: +1 866 9665335. A webcast of the call can be found at company's website. Usethe password: Neste Oil. An instant replay of the call will beavailable for one week at +44 (0)20 8196 1998 for Europe and +1 866583 1035 for the US, using access code 725434.NESTE OIL FINANCIAL STATEMENTS, 1 JANUARY - 30 JUNE 20091-6/2009 and 1-6/2008 unaudited, full year 2008 auditedFigures in parentheses refer to the second quarter of 2008, unlessotherwise stated.KEY FIGURESEUR million (unless otherwise noted) 4-6/09 4-6/08 1-3/09 1-6/09 1-6/08 2008Revenue 2,592 4,420 2,053 4,645 7,717 15,043Operating profit before 174 343 150 324 606 409depreciationDepreciation, amortization,and impairments 56 53 55 111 112 223Operating profit 118 290 95 213 494 186Comparable operating profit 47 181 56 103 300 602*Profit before income tax 109 284 81 190 475 129Earnings per share, EUR 0.35 0.83 0.24 0.58 1.38 0.38Investments 210 110 174 384 192 508Net cash from operating 223 314 17 240 201 512activities 30 June 30 June 31 Dec 2009 2008 2008Total equity 2,144 2,509 2,179Interest-bearing net debt 1,409 1,017 1,004Capital employed 3,660 3,600 3,237Return on capital employed pre-tax (ROCE), % 12.5 29.2 6.1Return on average capital employed after tax 8.8 12.7 13.1(ROACE)**, %Return on equity (ROE), % 13.9 28.8 4.4Equity per share, EUR 8.34 9.78 8.48Cash flow per share, EUR 0.94 0.79 2.00Equity-to-assets ratio, % 41.3 43.5 46.3Leverage ratio, % 39.7 28.8 31.5Gearing, % 65.7 40.5 46.1* Comparable operating profit is calculated by excluding inventorygains/losses, capital gains/losses, and unrealized changes in thefair value of oil and freight derivative contracts from the reportedoperating profit. As from 1 April 2009, the calculation of comparableoperating profit has been amended by including the change in fairvalue of all trading inventories to inventory gains/losses. Thisamendment has no effect on previously reported figures.** Rolling 12 monthsThe Group's second-quarter financial resultsRevenue at the Neste Oil Group totaled EUR 2,592 million in thesecond quarter of 2009. The substantial reduction from EUR 4,420million in the same quarter of 2008 resulted from lower petroleumproduct prices.The Group's comparable operating profit was EUR 47 million (181million) in the second quarter. The significant drop compared to thesame quarter in 2008 was largely due to a lower total refiningmargin, which was negatively affected by an approximately 75%reduction in the diesel margin year-on-year and a narrow differentialbetween Urals and Brent crude. This was only partially compensatedfor by a stronger gasoline margin. The Group's hedged EUR/USDexchange rate was 1.43 in the second quarter.Oil Products' second-quarter comparable operating profit was EUR 37million (162 million), Renewable Fuels' EUR -7 million (13 million),Oil Retail's EUR 14 million (11 million), and Others' EUR -1 million(-4 million). Others includes profits from associated companies andjoint ventures (mainly Nynas AB), which totaled EUR 9 million (10million).Operating profit under IFRS was EUR 118 million (290 million) in thesecond quarter, as inventory gains were just half those booked in2008.The second-quarter profit before taxes was EUR 109 million (284million), net profit for the period was EUR 89 million (213 million),and earnings per share were EUR 0.35 (0.83).The Group's January-June financial resultsRevenue at the Group during the first six months amounted to EUR4,645, compared to EUR 7,717 during the same period in 2008. Thedecrease resulted from lower oil product prices.Neste Oil's comparable operating profit in January-June was EUR 103million (1-6/08: 300 million). This reduction resulted primarily froma weaker total refining margin. The company's hedged EUR/USD exchangerate was 1.44 in January-June.Oil Products' six-month comparable operating profit was EUR 101million (1-6/08: 275 million), Renewable Fuels' EUR -14 million(1-6/08: 15 million), Oil Retail's EUR 26 million (1-6/08: 20million), and Others' EUR -12 million (1-6/08: -12 million). Othersincludes profits from associated companies and joint ventures (mainlyNynas AB), which totaled EUR 2 million (1-6/08: 11 million).Given the capital-intensive nature of its business, Neste Oil usesreturn on average capital employed after tax (ROACE) as its primaryfinancial target, based on comparable results. At the end of June,the rolling twelve-month ROACE was 8.8% (30 June 2008: 12.7%). 4-6/09 4-6/08 1-3/09 1-6/09 1-6/08 2008COMPARABLE OPERATING PROFIT 47 181 56 103 300 602- inventory gains/losses 65 119 76 141 194 -453- changes in the fair value 6 -10 -37 -31 -8 24of open oil derivatives- capital gains/losses 0 0 0 0 8 13OPERATING PROFIT 118 290 95 213 494 186Capital expenditure and financingInvestments totaled EUR 384 million during the first six months(1-6/08: 192 million). Oil Products' capital spending was EUR 94million (1-6/08: 72 million), Renewable Fuels' EUR 273 million(1-6/08: 77 million), and Oil Retail's EUR 10 million (23 million).Depreciation was EUR 111 million (112 million).The Group's interest-bearing net debt was EUR 1,409 million at theend of June (31 Dec 2008: EUR 1,004 million). Net financial expensesbetween January and June were EUR 23 million (19 million). The Groupwill capitalize interest expenses related to major investmentprojects during 2009. The average interest rate of borrowings at theend of June was 2.3%, and the average maturity 3.4 years.Net cash from operating activities between January and June was EUR240 million (1-6/08: 201 million). This increase in cash flow waslargely the result of more effective working capital management.Around EUR 85 million was tied up in contango storages of petroleumproducts at the end of June. The equity-to-assets ratio was 41.3% atthe end of June (31 Dec 2008: 46.3%), the leverage ratio 39.7% (31Dec 2008: 31.5%), and the gearing ratio 65.7% (31 Dec 2008: 46.1%).Cash and cash equivalents and committed, unutilized credit facilitiesamounted to EUR 1,357 million at the end of June (31 Dec 2008: 1,536million). Short-term financing needs will continue to be met byrevolving credit and overdraft facilities. There are no financialcovenants in existing loan agreements.In accordance with its hedging policy, Neste Oil has hedged themajority of its net foreign currency exposure for the next 12 months,mainly using forward contracts and currency options. The mostimportant hedged currency is the US dollar.Market overviewCrude oil prices strengthened during the second quarter, followingthe rise of equity and commodity prices and the weakening of the USdollar. Brent Dated reached USD 70/bbl in mid-June after OPEC decidedto keep its production quotas unchanged and crude oil inventoriesstarted to draw down. Price differentials between heavier and lightergrades were narrow throughout the quarter.Refining margins were weak, leading to low refinery runs because ofmaintenance activity and economic run cuts.Gasoline margins continued to improve as demand increased seasonallyand production cuts reduced supply. In late June, margins fell againdue to increasing production and a buildup of inventories.Margins for middle distillates suffered from reduced demand caused bythe global economic recession and sank to their lowest level in fiveyears. Despite lower refinery runs, inventories continued to build.In June, margins gradually recovered.Fuel oil margins were relatively strong, supported by demand in Asiaand cuts in refinery runs. In addition, due to reduced crude oil use,some fuel oil was used in crackers to produce light products.On the Finnish retail market, demand for gasoline fell byapproximately 4% and diesel by close to 10% during the second quartercompared to the same quarter in 2008. The drop in diesel demand fromtrucking companies has been even greater. Demand has also fallen inthe Baltic countries, in line with the decline of their GDP.Biofuel prices remained lower and the price difference betweenbiofeedstocks were narrower year-on-year. The price premium ofhigher-quality renewable fuels remains healthy.Oil freight rates collapsed in both the crude and product marketcompared to the second quarter of 2008.Key drivers 4-6/09 4-6/08 1-3/09 1-6/09 1-6/08 2008 July09IEA Brent crackingmargin, USD/bbl 1.23 5.87 2.34 1.92 4.57 4.90 0.14Neste Oil totalrefining margin,USD/bbl 7.87 12.38 9.44 8.65 12.14 13.39 n.a.Urals-Brent pricedifferential,USD/bbl -0.94 -4.44 -1.17 -1.05 -3.68 -2.95 -0.43NWE Gasolinemargin*, USD/bbl 12.84 6.36 6.39 9.62 6.08 5.34 10.7NWE Diesel margin*,USD/bbl 9.98 39.15 15.38 12.68 32.24 31.23 8.7NWE Heavy fuel oilmargin*, USD/bbl -8.61 -37.22 -8.77 -8.69 -28.75 -25.16 -5.6Brent dated crudeoil, USD/bbl 58.79 121.38 44.40 51.60 109.14 96.98 64.06USD/EUR exchangerate 1.36 1.56 1.30 1.33 1.53 1.47 1.41Crude freights,Aframax WS points 74 228 83 78 187 179 73*Product margins Platt's fob RotterdamProduction and salesNeste Oil refined a total of 3.5 million tons (3.6 million) of crudeoil and feedstocks in the second quarter, of which 2.9 million tons(2.9 million) at Porvoo and 0.6 million tons (0.7 million) atNaantali.The proportion of Russian Export Blend in Neste Oil's total refineryinput was 57% (54%) in the second quarter.Diesel fuel accounted for a lower-than-normal proportion of NesteOil's sales due to a shutdown at Production Line 4 at the Porvoorefinery and gasoline sales from contango storage.At the end of June, Neste Oil's contango storage consisted of 170,000tons, or approximately 1.3 million barrels, and mainly consisted ofmiddle distillates. Sales from contango storage were quite large inthe second quarter, as storage volumes stood at 550,000 tons at theend of March.Neste Oil's sales from in-house production, by product category(1,000 t) 4-6/09 % 4-6/08 % 1-3/09 % 1-6/09 % 1-6/08 % 2008 %Motorgasolines 1,294 35 1,322 35 940 27 2,234 31 2,116 30 4,056 28Gasolinecomponents 92 3 75 2 64 2 157 2 153 2 253 2Dieselfuel 1,181 32 1,226 32 1,306 38 2,487 35 2,609 37 5,583 38Jet fuel 137 4 169 4 148 4 286 4 306 4 658 5Base oils 73 2 75 2 57 2 130 2 152 2 278 2Heatingoil 131 4 134 4 223 6 354 5 314 4 763 5Heavy fueloil 346 9 309 8 354 10 700 10 516 7 981 7LPG 83 2 87 2 59 2 142 2 185 3 340 2NExBTLrenewablediesel 43 1 35 1 31 1 74 1 53 1 94 1Otherproducts 286 8 358 9 246 7 532 8 662 9 1,565 11TOTAL 3,666 100 3,790 100 3,430 100 7,096 100 7,066 100 14,571 100Neste Oil's sales from in-house production, by market area (1,000 t) 4-6/09 % 4-6/08 % 1-3/09 % 1-6/09 % 1-6/08 % 2008 %Finland 1,854 51 1,805 48 1,860 54 3,714 52 3,573 51 7,537 52OtherNordiccountries 512 14 500 13 537 16 1,048 15 926 13 2,056 14OtherEurope 610 16 748 20 558 16 1,168 16 1,496 21 3,028 20USA &Canada 627 17 729 19 472 14 1,099 16 995 14 1,857 13Othercountries 63 2 6 0 3 0 66 1 76 1 94 1TOTAL 3,666 100 3,790 100 3,430 100 7,096 100 7,066 100 14,571 100SEGMENT REVIEWSAs of 1 April 2009, Neste Oil's businesses have been grouped intofour reporting segments: Oil Products, Renewable Fuels, Oil Retail,and Others. Quarterly figures for 2008 based on these segments werepublished on 23 April 2009.Oil ProductsKey figures 4-6/09 4-6/08 1-3/09 1-6/09 1-6/08 2008Revenue, MEUR 2,091 3,798 1,582 3,673 6,513 12,641Comparable operating 37 162 64 101 275 602profit, MEUROperating profit, MEUR 105 272 106 211 469 183Total refining margin, 7.87 12.38 9.44 8.65 12.14 13.39USD/bblOil Products' second-quarter comparable operating profit was EUR 37million (162 million). This decrease was mainly due to a lower totalrefining margin of USD 7.87/bbl, which compares to USD 12.38/bbl inthe same quarter last year. The total refining margin was depressedby significantly weaker middle distillate margins and a very narrowprice differential between Urals and Brent crude.Contango sales of both crude and products had a positive impact onthe total refining margin and made a major positive contribution toOil Products' comparable operating profit.The result of the base oils business was roughly flat year-on-yearbut margins were softer compared to the first quarter. Gasolinecomponents showed a slightly lower profit than last year.The oil tanker chartering business suffered from record-low freightrates during the second quarter.Oil Products' 12-month comparable return on net assets was 15.4%(17.9%).Renewable Fuels 4-6/09 4-6/08 1-3/09 1-6/09 1-6/08 2008Revenue, MEUR 38 46 24 62 69 116Comparable operating profit, -7 13 -7 -14 15 2MEUROperating profit, MEUR -3 12 -10 -13 13 2Renewable Fuels' second-quarter comparable operating profit was EUR-7 million (13 million). Although sales volumes developed positively,lower sales price and the termination of a fixed-priced feedstockcontract earlier this year put pressure on renewable diesel margins.The price premium of NExBTL renewable diesel over conventionalbiodiesel remained healthy. While the first NExBTL plant at Porvooposted a profit, the segment's costs continued to increase as aresult of the expansion of the business and R&D.Renewable Fuels' 12-month comparable return on net assets was -7.0%(7.9%).Oil RetailKey figures 4-6/09 4-6/08 1-3/09 1-6/09 1-6/08 2008Revenue, MEUR 727 1,078 691 1,418 2,026 4,073Comparable operating profit, 14 11 12 26 20 22MEUROperating profit, MEUR 13 11 12 25 22 25Total sales volume*, 1,000m3 964 1,051 1,021 1,985 2,107 4,353- gasoline station sales,1,000 m3 370 380 329 699 714 1,479- diesel station sales,1,000 m3 326 352 320 646 693 1,406- heating oil, 1,000 m3 145 161 214 359 359 759- heavy fuel oil, 1,000 m3 61 77 89 150 174 356*includes both station and terminal salesOil Retail's comparable operating profit increased to EUR 14 million(11 million) in the second quarter, supported by somewhat bettermargins on the Finnish market than in 2008 and reduction of fixedcosts in the Finnish organization. Russian operations generated aslightly lower level of profit compared to the same quarter in 2008,while performance in the Baltic Rim was flat.Sales volumes were lower on the Finnish market than during the secondquarter of 2008, with the exception of diesel sold to privatemotorists. The largest reduction has been seen in trucking, whichreflects domestic industrial production. Lubricant sales have alsobeen hit significantly.Neste Oil's volumes were roughly flat outside Finland, while demandwas down significantly. This was supported by the new stations openedaround the Baltic Rim in 2008 and the efficiency of the unmannedstation network.Oil Retail's 12-month comparable return on net assets was 8.2%(14.1%).Shares, share trading, and ownershipA total of 73,768,025 Neste Oil shares were traded in the secondquarter, totaling EUR 0.8 billion. The share price reached EUR 11.53at its highest and EUR 9.46 at its lowest, and closed the quarter atEUR 9.90, giving the company a market capitalization of EUR 2.5billion as of 30 June 2009. An average of 1.2 million shares wastraded daily, equivalent to 0.5% of shares outstanding.Neste Oil's share capital registered with the Company Register as of30 June 2009 totaled EUR 40 million, and the total number of sharesoutstanding is 256,403,686. The company does not hold any of its ownshares, and the Board of Directors has no authorization to buy backcompany shares or to issue convertible bonds, share options, or newshares.At the end of June, the Finnish state owned 50.1% of outstandingshares, foreign institutions 15.0%, Finnish institutions 20.6%, andFinnish households 14.3%.PersonnelNeste Oil employed an average of 5,328 (5,099) employees during thefirst half of the year. At the end of June, the company had 5,547employees (30 June 2008: 5,477).Health, safety, and the environmentThe company's safety performance has developed positively. Theindicator for safety performance used by Neste Oil - total recordableinjury frequency (TRIF, number of cases per million hours worked) forall work done for the company, combining the company's own personneland contractors - stood at 2.8 (5.2) at the end of June 2009. Thetarget for 2009 is below 4.Lost workday injury frequency (LWIF) stood at 2.0. LWIF for 2008 was3.2. The target for 2009 is below 2.Strategy implementationNeste Oil's current capital projects consist of new plants designedto increase production of renewable diesel and high-quality base oil.Strategic projectsConstruction of renewable diesel plants in Singapore and Rotterdamhas proceeded according to plan. Mechanical completion of theSingapore plant is expected to be achieved in summer 2010. Theproject is proceeding in line with its original budget of EUR 550million. The Rotterdam plant is scheduled for completion in the firsthalf of 2011. The project is proceeding according to schedule and itsoriginal budget of EUR 670 million.In June, Neste Oil - together with Daimler AG, Deutsche Post DHL, theenergy group OMV, and the Stuttgarter Straÿenbahnen AG publictransportation company - published the initial results of a jointpilot test project focusing on the use of NExBTL renewable diesel incommercial transportation. The test shows significant emissionreductions and a positive CO2 balance when the fuel and its feedstockare produced sustainably. It was also shown that NExBTL performs verywell and is tolerated very well by diesel engines currently in use.Also in June, Neste Oil and Stora Enso took an important step inefforts to convert forest residues into transportation fuels with theinauguration of a demonstration plant at Varkaus, Finland for biomassto liquids (BtL) production. The companies' 50/50 joint venture willdevelop and test the necessary technology and plans to producebiocrude for renewable diesel subsequently.A joint venture between Neste Oil and the Bahrain Petroleum Company(Bapco) is continuing construction of a high-quality lubricant baseoil plant in Bahrain. The plant will have an annual capacity of400,000 tons of VHVI (Very High Viscosity Index) base oil for use inblending top-tier lubricants. Completion is scheduled for the end of2011. Neste Oil's share of the JV is 45% and its estimated share ofthe investment cost is EUR 115-135 million.Construction of an isomerization unit at Porvoo was postponed inApril.Potential short-term and long-term risksThe oil market has been very volatile. Oil refiners are exposed to avariety of political and economic trends and events, as well asnatural phenomena that affect the short- and long-term supply of anddemand for the products that they produce and sell.The largest uncertainty continues to be the slowdown of the worldeconomy, which is reducing the demand for petroleum products. Thishas already materialized during the last couple of quarters and hassignificantly decreased the demand for diesel, which is Neste Oil'smost important product. The problems on the international financialmarket have also increased the level of uncertainty. As aconsequence, managing customer receivables risks has become even moreimportant. Sudden and unplanned outages at Neste Oil's productionunits or facilities continue to represent a short-term risk.Rapid and large changes in feedstock and product prices may lead tosignificant inventory gains or losses, or changes in working capitalthat may have a material impact on the company's IFRS operatingprofit and net cash from operations.Over the longer term, access to funding and rising capital costs, aswell as challenges in procuring and developing new competitive andreasonably priced raw materials, may impact the company's growthplans.The implementation of biofuel legislation in the EU and other keymarket areas may influence the speed at which the demand for thesefuels develops.The key market drivers for Neste Oil's financial performance continueto be international refining margins, the price differential betweenRussian Export Blend (REB) and Brent crude, and the USD/EUR exchangerate.For more detailed information on Neste Oil's risks and riskmanagement, please refer to the company's Annual Report and FinancialStatements for 2008.OutlookThe overall picture for oil refiners has not changed since theprevious outlook published in April. The global economy has notimproved over the last few months. The International Energy Agency'sglobal oil demand forecast for 2009 remains at -2.9%, with thesteepest reduction predicted for OECD countries.Low demand and new refining capacity coming onstream in 2009 arelikely to keep refining margins below those seen in recent years,unless serious disruptions occur on the supply side. Diesel marginsare expected to stay under pressure until economical activity picksup. High inventory levels will continue to put pressure on dieselmargins. On the other hand, the indications are that diesel marginscould improve a little towards the end of the year. Seasonal supportfor the gasoline market is anticipated to diminish during the secondhalf.Demand for base oils has shown a slight recovery, but margins haveweakened. Neste Oil has again shut down its PAO plant in Beringen,Belgium for four weeks in July-August and made temporary lay-offs.Freight rates for oil tankers are set to stay low throughout 2009.Production volumes at Renewable Fuels will increase during the secondhalf, thanks to the start-up of the second NExBTL plant. This will beoffset, however, by increasing costs linked to the expansion of thebusiness.Low demand will continue to be the key feature of the Oil Retailbusiness.Performance at Neste Oil's refineries should be better in the secondhalf of 2009. Production Line 4 at Porvoo, which was shut down formaintenance during the second quarter, is expected to operatenormally.Neste Oil does not expect to book major contango profits during thethird quarter. As a result, if refining margins stay at the levelseen in July, the Group's third-quarter comparable operating profitwill be significantly lower than in the second quarter.The Group is currently working on an additional cost-savings andefficiency program to reduce its fixed costs.The Group's investments are estimated to be around EUR 890 million in2009. Maintenance investments will account for around EUR 160million, productivity investments around EUR 40 million, andstrategic investments around EUR 690 million.Capital Markets Day 2009Neste Oil will hold a Capital Markets Day for investors and analystson 29 September 2009 in Finland. Details will be published on thecompany's website soon.Reporting date for the third-quarter 2009 resultsNeste Oil will publish its third-quarter results for 2009 on 29October 2009 at approximately 9:00 a.m. EET.Espoo, 29 July 2009Neste Oil CorporationBoard of DirectorsThe preceding information contains, or may be deemed to contain,"forward-looking statements". These statements relate to futureevents or our future financial performance, including, but notlimited to, strategic plans, potential growth, planned operationalchanges, expected capital expenditures, future cash sources andrequirements, liquidity and cost savings that involve known andunknown risks, uncertainties, and other factors that may cause NesteOil Corporation's or its businesses' actual results, levels ofactivity, performance or achievements to be materially different fromthose expressed or implied by any forward-looking statements. Insome cases, such forward-looking statements can be identified byterminology such as "may," "will," "could," "would," "should,""expect," "plan," "anticipate," "intend," "believe," "estimate,""predict," "potential," or "continue," or the negative of those termsor other comparable terminology. By their nature, forward-lookingstatements involve risks and uncertainties because they relate toevents and depend on circumstances that may or may not occur in thefuture. Future results may vary from the results expressed in, orimplied by, the forward-looking statements, possibly to a materialdegree. All forward-looking statements made in this report are basedon information presently available to management and Neste OilCorporation assumes no obligation to update any forward-lookingstatements. Nothing in this report constitutes investment advice andthis report shall not constitute an offer to sell or the solicitationof an offer to buy any securities or otherwise to engage in anyinvestment activity.NESTE OILGROUPJANUARY- JUNE2009UnauditedCONSOLIDATEDINCOMESTATEMENTMEUR Last Note 12 4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008 monthsRevenue 3 2592 4420 4645 7717 15043 11971Other income 7 9 14 25 44 33Share ofprofit (loss)of associatesand jointventures 3 9 10 2 11 13 4Materials andservices -2195 -3824 -3823 -6640 -13657 -10840Employeebenefit costs -83 -79 -162 -154 -315 -323Depreciation,amortizationandimpairments 3 -56 -53 -111 -112 -223 -222Other expenses -156 -193 -352 -353 -719 -718Operatingprofit 118 290 213 494 186 -95Financialincome andexpensesFinancialincome 3 2 4 4 8 8Financialexpenses -8 -11 -25 -24 -70 -71Exchange rateand fair valuegains andlosses -4 3 -2 1 5 2Totalfinancialincome andexpenses -9 -6 -23 -19 -57 -61Profit beforeincome taxes 109 284 190 475 129 -156Income taxexpense -20 -71 -40 -119 -28 51Profit for theperiod 89 213 150 356 101 -105Profitattributableto:Owners of theparent 88 212 148 354 97 -109Minorityinterest 1 1 2 2 4 4 89 213 150 356 101 -105Earnings pershare fromprofitattributableto the ownersof the parentbasic anddiluted (ineuro pershare) 0,35 0,83 0,58 1,38 0,38 -0,42STATEMENT OFCOMPREHENSIVEINCOME Last 4-6 4-6 1-6 1-6 1-12 12MEUR 2009 2008 2009 2008 2008 monthsProfit for theperiod 89 213 150 356 101 -105Othercomprehensiveincome for theperiod,net of taxTranslationdifferences 2 1 -3 -15 -44 -32Cash flowhedgesrecorded inequity 21 0 -4 37 -23 -64transferred toincomestatement 10 -20 30 -39 -25 44Net investmenthedges 0 0 0 0 0 0Hedging reserves inassociates andjoint ventures -2 -1 -2 -1 -1 -2Othercomprehensiveincome for theperiod,net of tax 31 -20 21 -18 -93 -54Totalcomprehensiveincome for theperiod 120 193 171 338 8 -159Totalcomprehensiveincomeattributableto:Owners of theparent 119 192 169 336 4 -163Minorityinterest 1 1 2 2 4 4 120 193 171 338 8 -159CONSOLIDATEDBALANCE SHEET 30 30 June June 31 DecMEUR Note 2009 2008 2008ASSETSNon-current assetsIntangible assets 4 51 53 51Property, plantand equipment 4 2937 2500 2675Investments inassociates andjointventures 153 190 152Non-currentreceivables 12 8 13Pension assets 108 84 105Deferred taxassets 14 7 16Derivativefinancialinstruments 5 16 64 16Available-for-salefinancial assets 1 2 1Total non-currentassets 3292 2908 3029Current assetsInventories 752 1422 637Trade and otherreceivables 916 1164 786Derivativefinancialinstruments 5 134 218 213Cash and cashequivalents 107 74 55Total currentassets 1909 2878 1691Total assets 5201 5786 4720EQUITYCapital andreservesattributable tothe ownersof the parentShare capital 40 40 40Other equity 2 2094 2463 2131Total 2134 2503 2171Minority interest 10 6 8Total equity 2144 2509 2179LIABILITIESNon-currentliabilitiesInterest-bearingliabilities 1158 880 926Deferred taxliabilities 308 292 297Provisions 26 14 24Pensionliabilities 10 11 12Derivativefinancialinstruments 5 31 67 32Other non-currentliabilities 2 3 3Total non-currentliabilities 1535 1267 1294CurrentliabilitiesInterest-bearingliabilities 358 211 133Current taxliabilities 9 60 1Derivativefinancialinstruments 5 135 191 197Trade and otherpayables 1020 1548 916Total currentliabilities 1522 2010 1247Total liabilities 3057 3277 2541Total equity andliabilities 5201 5786 4720CONSOLIDATED STATEMENT OFCHANGES 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 restMEUR reservesTotal equity at 1January 2008 40 10 42 -11 2342 4 2427Dividend paid -256 -256Share-basedcompensation 0 0Transfer fromretained earnings 1 -1 0Change in minority 0 0Totalcomprehensiveincome for theperiod -3 -15 354 2 338Total equity at 30June2008 40 11 39 -26 2439 6 2509 Share Reserve Fair Translation Re- Mi- Total ca- fund value diffe- tained nority equity pital and rences ear- inte- other nings restMEUR reservesTotal equity at 1January 2009 40 10 -7 -54 2182 8 2179Dividend paid -205 -205Share-basedcompensation -1 -1Transfer fromretained earnings 1 -1 0Change in minority 0 0Totalcomprehensiveincome for theperiod 24 -3 148 2 171Total equity at 30June2009 40 11 16 -57 2124 10 2144CONDENSEDCONSOLIDATED CASHFLOW STATEMENT 4-6 4-6 1-6 1-6 1-12MEUR 2009 2008 2009 2008 2008Cash flow fromoperatingactivitiesProfit beforetaxes 109 284 190 475 129Adjustments, total 53 57 161 135 249Change in workingcapital 92 17 -132 -320 248Cash generatedfrom operations 254 358 219 290 626Finance cost, net -23 -9 -9 -32 -29Income taxes paid -8 -35 30 -57 -85Net cash generatedfrom operatingactivities 223 314 240 201 512Capitalexpenditure -210 -107 -384 -182 -497Acquisition ofsubsidiary - -3 - -10 -10Acquisition ofassociates andjoint ventures - - - - -1Proceeds fromsales of fixedassets 2 1 5 3 9Proceeds fromsales of shares 0 0 0 7 12Change in otherinvestments -5 -2 -61 -26 -8Cash flow beforefinancingactivities 10 203 -200 -7 17Net change inloans and otherfinancingactivities 256 -182 457 286 244Dividends paid tothe owners ofthe parent -205 -11 -205 -256 -256Net increase(+)/decrease (-)in cashand cashequivalents 61 10 52 23 5KEY FINANCIALINDICATORS 30 June 30 June 31 Dec Last 12 2009 2008 2008 monthsCapital employed,MEUR 3660 3600 3237 3660Interest-bearingnet debt, MEUR 1409 1017 1004 -Capital expenditureand acquisition ofsubsidiary, MEUR 384 192 508 700Return on averagecapital employed,after tax, ROACE % - - 13,1 8,8Return on capitalemployed, pre-tax,ROCE % 12,5 29,2 6,1 -2,3Return on equity,% 13,9 28,8 4,4 -4,5Equity per share,EUR 8,34 9,78 8,48 -Cash flow pershare, EUR 0,94 0,79 2,00 2,15Equity-to-assetsratio, % 41,3 43,5 46,3 -Gearing, % 65,7 40,5 46,1 -Leverage ratio, % 39,7 28,8 31,5 -Average number ofshares 255903686 255903686 255903686 255903686Number of sharesat the end ofthe period 255903686 255903686 255903686 255903686Average number ofpersonnel 5328 5099 5174 -NOTES TO THE CONDENSEDCONSOLIDATED INTERIMFINANCIAL STATEMENTS1. BASIS OF PREPARATIONAND ACCOUNTING POLICIESThe interim financial statements has been prepared in accordancewith IAS 34, Interim Financial Reporting, as adopted by EU. Theinterim report should be read in conjunction with the annualfinancial statements for the period ended 31 December 2008.The accounting policies adopted are consistent with those of theGroup's annual financial statements for the year ended 31 December2008.The Group applies revised standard IAS 1 Presentation of FinancialStatements as of 1 January 2009. This revised standard separateschanges in equity of an entity arising from transactions with ownersfrom other changes in equity.The following interpretations are mandatory for the financial yearending 31 December 2009, but not relevant for the Group:- IFRIC 12 ServiceConcessionArrangements- IFRIC 13Customer LoyaltyPrograms- IFRIC 16 Hedges of aNet Investment in aForeign Operation- Amendment to IFRS 2 Share based payments: Vesting Conditions andCalcellations- Annualimprovements 2008.2. TREASURY SHARESIn 2007 Neste Oil entered into an agreement with a third partyservice provider concerning the administration of the newshare-based management share performance arrangement for keymanagement personnel. As part of the agreement, the service providerpurchased a total of 500,000 Neste Oil shares in February 2007 inorder to hedge part of Neste Oil's cash flow risk in relation to thefuture payment of the rewards, which will take place partly in NesteOil shares and partly in cash during 2010 and 2013. Despite thelegal form of the hedging arrangement, it has been accounted for asif the share purchases had been conducted directly by Neste Oil, asrequired by IFRS 2, Share based payments and SIC-12, Consolidation -Special purpose entities. The consolidated balance sheet and theconsolidated changes in total equity reflect the substance of thearrangement with a deduction amounting to EUR 12 million in equity.This amount represents the consideration paid for the shares by thethird party service provider.3. SEGMENTINFORMATIONNeste Oil's operations are grouped into four segments: Oil Products,Renewable Fuels, Oil Retail and Others. Group administration, sharedservice functions as well as Research and Technology, Neste Jacobsand Nynas AB are included in the Others segment. LastREVENUE 12MEUR 4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008 monthsOil Products 2091 3798 3673 6513 12641 9801RenewableFuels 38 46 62 69 116 109Oil Retail 727 1078 1418 2026 4073 3465Others 41 33 83 64 143 162Eliminations -305 -535 -591 -955 -1930 -1566Total 2592 4420 4645 7717 15043 11971OPERATING LastPROFIT 12MEUR 4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008 monthsOil Products 105 272 211 469 183 -75RenewableFuels -3 12 -13 13 2 -24Oil Retail 13 11 25 22 25 28Others -1 -4 -12 -12 -29 -29Eliminations 4 -1 2 2 5 5Total 118 290 213 494 186 -95COMPARABLEOPERATING LastPROFIT 12MEUR 4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008 monthsOil Products 37 162 101 275 602 428RenewableFuels -7 13 -14 15 2 -27Oil Retail 14 11 26 20 22 28Others -1 -4 -12 -12 -29 -29Eliminations 4 -1 2 2 5 5Total 47 181 103 300 602 405DEPRECIATION,AMORTIZATION LastAND IMPAIRMENTS 12MEUR 4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008 monthsOil Products 43 41 87 87 175 175RenewableFuels 2 1 4 3 7 8Oil Retail 8 8 15 16 31 30Others 3 3 5 6 10 9Total 56 53 111 112 223 222CAPITALEXPENDITURE ANDINVESTMENTS IN LastSHARES 12MEUR 4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008 monthsOil Products 51 39 94 72 165 187RenewableFuels 150 50 273 77 249 445Oil Retail 6 15 10 23 63 50Others 3 6 7 20 31 18Total 210 110 384 192 508 700TOTAL ASSETS 30 June 30 June 31 DecMEUR 2009 2008 2008Oil Products 3544 4527 3352RenewableFuels 713 273 450Oil Retail 527 685 568Others 286 299 265Eliminations -174 -210 -155Total 4896 5574 4480NET ASSETS 30 June 30 June 31 DecMEUR 2009 2008 2008Oil Products 2602 2918 2436RenewableFuels 601 217 381Oil Retail 296 385 351Others 223 241 201Eliminations 5 1 4Total 3727 3762 3373RETURN ONNET ASSETS,% 30 June 30 June 31 Dec Last 12 2009 2008 2008 monthsOil Products 16,4 33,1 6,4 -2,7RenewableFuels -5,4 14,8 0,9 -6,2Oil Retail 15,5 11,7 6,8 8,2COMPARABLERETURN ONNET ASSETS,% 30 June 30 June 31 Dec Last 12 2009 2008 2008 monthsOil Products 7,9 19,4 21,2 15,4RenewableFuels -5,8 17,1 0,9 -7,0Oil Retail 16,1 10,6 6,0 8,2QUARTERLYSEGMENTINFORMATIONQUARTERLYREVENUEMEUR 4-6/2009 1-3/2009 10-12/2008 7-9/2008 4-6/2008 1-3/2008Oil Products 2091 1582 2221 3907 3798 2715RenewableFuels 38 24 20 27 46 23Oil Retail 727 691 915 1132 1078 948Others 41 42 43 36 33 31Eliminations -305 -286 -394 -581 -535 -420Total 2592 2053 2805 4521 4420 3297QUARTERLYOPERATINGPROFITMEUR 4-6/2009 1-3/2009 10-12/2008 7-9/2008 4-6/2008 1-3/2008Oil Products 105 106 -301 15 272 197RenewableFuels -3 -10 -9 -2 12 1Oil Retail 13 12 -6 9 11 11Others -1 -11 -38 21 -4 -8Eliminations 4 -2 2 1 -1 3Total 118 95 -352 44 290 204QUARTERLYCOMPARABLEOPERATINGPROFITMEUR 4-6/2009 1-3/2009 10-12/2008 7-9/2008 4-6/2008 1-3/2008Oil Products 37 64 154 173 162 113RenewableFuels -7 -7 -10 -3 13 2Oil Retail 14 12 -5 7 11 9Others -1 -11 -38 21 -4 -8Eliminations 4 -2 2 1 -1 3Total 47 56 103 199 181 119QUARTERLY DEPRECIATION,AMORTIZATION ANDIMPAIRMENTSMEUR 4-6/2009 1-3/2009 10-12/2008 7-9/2008 4-6/2008 1-3/2008Oil Products 43 44 44 44 41 46RenewableFuels 2 2 2 2 1 2Oil Retail 8 7 6 9 8 8Others 3 2 3 1 3 3Total 56 55 55 56 53 59QUARTERLYCAPITALEXPENDITUREANDINVESTMENTSIN SHARESMEUR 4-6/2009 1-3/2009 10-12/2008 7-9/2008 4-6/2008 1-3/2008Oil Products 51 43 47 46 39 33RenewableFuels 150 123 108 64 50 27Oil Retail 6 4 22 18 15 8Others 3 4 8 3 6 14Total 210 174 185 131 110 824. CHANGES ININTANGIBLE ASSETS ANDPROPERTY, PLANT AND EQUIPMENTAND CAPITALCOMMITMENTSCHANGES IN INTANGIBLEASSETS AND PROPERTY,PLANT AND 30EQUIPMENT June 30 June 31 DecMEUR 2009 2008 2008Opening balance 2726 2477 2477Depreciation,amortization andimpairments -111 -112 -223Capitalexpenditure 384 182 497Disposals -5 -2 -8Translationdifferences -6 -3 -28Acquired groupcompanies 0 11 11Closing balance 2988 2553 2726CAPITAL 30COMMITMENTS June 30 June 31 DecMEUR 2009 2008 2008Commitments topurchase property,plant and equipment 539 213 540Commitments topurchaseintangible assets 0 0 0Total 539 213 5405. DERIVATIVEFINANCIALINSTRUMENTS 30 June 2009 30 June 2008 31 Dec 2008Interest rate andcurrency derivativecontracts andshare forwardcontracts Nominal Net Nominal Net Nominal Net fair fair fairMEUR value value value value value valueInterest rateswaps 474 -16 372 2 475 -13Forward foreignexchangecontracts 1611 28 1265 21 1381 17Currency options Purchased 121 -1 499 15 336 -5 Written 88 2 325 3 256 -11Share forwardcontracts 9 -5 14 -3 14 -8Oil and freightderivativecontracts Volume Net Volume Net Volume Net million fair million fair million fair bbl value bbl value bbl value Meur Meur MeurSales contracts 35 -59 58 -104 28 166Purchasecontracts 29 34 70 89 32 -147Purchased options 2 -9 2 13 1 -12Written options 2 8 2 -12 1 12The fair values of derivative financial instruments subject topublic trading are based on market prices as of the balance sheetdate. The fair values of other derivative financial instruments arebased on the present value of cash flows resulting from thecontracts, and, in respect of options, on evaluation models. Theamounts also include unsettled closed positions. Derivativefinancial instruments are mainly used to manage the Group'scurrency, interest rate and price risk.6. RELATED PARTYTRANSACTIONSDetails of transactions between the Group and associates/jointventures are disclosed below. 1-6 1-6 1-12Transactions carried out withassociates and joint ventures 2009 2008 2008Sales of goods andservices 21 34 110Purchases of goods andservices 21 30 72Receivables 10 14 14Financial income andexpenses 0 0 0Liabilities 4 6 97. CONTINGENTLIABILITIES 30 June 30 June 31 DecMEUR 2009 2008 2008Contingent liabilitiesOn own behalf for debtPledged assets - 2 -Total - 2 -On own behalf forcommitmentsReal estate mortgages 26 26 26Pledged assets 2 4 3Other contingentliabilities 45 36 37Total 73 66 66On behalf of associatesand joint venturesGuarantees 6 13 5Other contingentliabilities 2 2 2Total 8 15 7On behalf of othersGuarantees 19 12 12Total 19 12 12Total 100 95 85 30 June 30 June 31 DecMEUR 2009 2008 2008Operating leaseliabilitiesDue within one year 98 105 106Due between one and fiveyears 243 197 262Due later than fiveyears 330 105 465Total 671 407 833The Group's operating lease liabilities primarily relate to hydrogensupply contracts, time charter vessels, land and office space.Other contingentliabilitiesNeste Oil Corporation has a collective contingent liability withFortum Heat and Gas Oy of the demerged Fortum Oil and Gas Oy'sliabilities based on the Finnish Companies Act's Chapter 17Paragraph 16.6.CALCULATION OF KEY FIGURESCALCULATION OF KEY FINANCIAL INDICATORSOperating profit = Operating profit includes the revenue from thesale of goods and services, other income such as gain from sale ofshares or non-financial assets, share of profits (loss) of associatesand joint ventures, less losses from sale of shares or non-financialassets, as well as expenses related to production, marketing andselling activities, administration, depreciation, amortization, andimpairment charges. Realized and unrealized gains or losses on oiland freight derivative contracts together with realized gains andlosses from foreign currency and oil derivative contracts hedgingcash flows of commercial sales and purchases that have been recycledin the income statement, are also included in operating profit.Comparable operating profit = Operating profit -/+ inventorygains/losses -/+ gains/losses from sale of shares and non-financialassets - unrealized change in fair value of oil and freightderivative contracts. Inventory gains/losses include the change infair value of all trading inventories.Return on equity, (ROE) % = 100 x (Profit before taxes - taxes) /Total equity averageReturn on capital employed, pre-tax (ROCE) % = 100 x (Profit beforetaxes + interest and other financial expenses) / Capital employedaverageReturn 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 andunrealized gains/losses on oil and freight derivative contracts, netof tax) + minority interest + interest expenses and other financialexpenses related to interest-bearing liabilities (net of tax)) /Capital employed averageCapital employed = Total assets - interest-free liabilities -deferred tax liabilities -provisionsInterest-bearing net debt = Interest- bearing liabilities - cash andcash equivalentsLeverage 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 / Averagesegment net assetsComparable return on net assets, % = 100 x Segment comparableoperating profit / Average segment net assetsSegment net assets = Property, plant and equipment, intangibleassets, investment in associates and joint ventures, pension assets,inventories and interest-free receivables and liabilities allocatedto the business segment, provisions and pension liabilitiesCALCULATION OF SHARE-RELATED INDICATORSEarnings per share (EPS) = Profit for the period attributable to theequity holders of the company / Adjusted average number of sharesduring the periodEquity per share = Shareholder's equity attributable to the equityholders of the company/ Adjusted average number of shares at the endof the periodCash flow per share = Net cash generated from operating activities /Adjusted average number of shares during the periodhttp://hugin.info/133386/R/1331644/315162.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 30.07.2009 - 08:02 Uhr
Sprache: Deutsch
News-ID 4130
Anzahl Zeichen: 0
contact information:
Town:
London
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 223 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Neste Oil's Interim Report for January-June 2009"
steht unter der journalistisch-redaktionellen Verantwortung von
Neste Oil Oyj (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
