April 26, 2018 / 10:01 AM / 6 months ago

Biofuel firm Neste beats market expectations, shares jump

HELSINKI, April 26 (Reuters) - Finnish oil refiner and biofuel producer Neste posted its highest ever quarterly result on Thursday, helped by a U.S. tax break and profitable biofuel production.

Shares in the company jumped more than 12 percent after the first-quarter report showed core operating profit almost doubled from a year ago to 401 million euros ($488 million), surpassing analysts’ average forecast of 370 million euros.

“Renewable Products was able to exceed the previous year’s performance as a result of successful sales allocation and feedstock optimization,” CEO Matti Lievonen said in the report.

He forecast that the unit’s so-called additional margin would remain at a strong level through 2018.

“They have really succeeded in optimizing raw materials and production ... Full-year estimates will be lifted,” said Petri Gostowski, analyst at research firm Inderes, with a “sell” rating on the stock.

Neste has stepped up usage of low-quality feedstock in its biofuels: waste and residue inputs, such as animal fats, made up 81 percent of raw materials in the quarter.

The renewable product unit made up most of the profit, 296 million euros, including 140 million euros booked retrospectively from 2017 thanks to a U.S. tax break, the “Blender’s Tax Credit”.

Neste has biofuels plants in Singapore and Rotterdam with a total production capacity of 2.6 million tonnes, and it is looking into extending the capacity in Singapore.

Neste - 49.8 percent owned by the state of Finland - also has two conventional refineries in Finland.

Shares in the company have risen more than 60 percent in one year. ($1 = 0.8212 euros) (Reporting by Jussi Rosendahl; editing by David Evans)

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