Neste Oil's Financial Statements for 2013 Neste Oil

Neste Oil Corporation Stock Exchange Release 4 February 2014 at 9:00 a.m. (EET) Neste Oil's Financial Statements for 2013 Strong full-year result, with a 70% increase in comparable operating profit 2013 in brief: * Comparable operating profit totaled EUR 604 million (2012: EUR 355 million) * Total refining margin was USD 9.60/bbl (2012: USD 10.17/bbl) * Net cash from operations totaled EUR 839 million (2012: EUR 468 million) * Return on average capital employed (ROACE) was 11.8% (2012: 5.0%) * Leverage ratio was 30.0% as of the end of December (31.12.2012: 43.2%) * Comparable earnings per share was EUR 1.92 (2012: EUR 0.70) * The Board of Directors will propose a dividend of EUR 0.65 per share (2012: 0.38), totaling EUR 167 million (2012: EUR 97 million). Fourth quarter in brief: * Comparable operating profit totaled EUR 164 million (Q4/2012: EUR 77 million) * Total refining margin was USD 9.53/bbl (Q4/2012: USD 10.99/bbl) * Net cash from operations was EUR 629 million (Q4/2012: EUR 327 million). President & CEO Matti Lievonen: "Neste Oil had a very good year in 2013. We achieved a comparable operating profit of EUR 604 million and we also further reduced our leverage through strong cash flow generation. This was the first full year of operations at Renewable Fuels with all plants running at full capacity. The business succeeded in increasing its sales and customer base, particularly in the US, and opened up a new market in Australia. Margins were very strong, both in Europe and North America, during the summer, but declined towards the end of the year. The use of waste- and residue-based feedstock was successfully expanded to 52% of total renewable inputs. Renewable Fuels recorded a full-year comparable operating profit of EUR 273 million compared to a loss of EUR 56 million in 2012. After a strong start to the year, Oil Products' reference refining margin began to decline and was lower on average during the year as a whole than in 2012, as European demand for petroleum products proved soft and additional refining capacity was brought on-line in the Middle East and Asia. Productivity at the Porvoo and Naantali refineries was good, which contributed to an increase in our additional margin. Oil Products recorded a comparable operating profit of EUR 280 million compared to EUR 396 million in 2012. Oil Retail performed very well due to stronger margins in all markets, especially Finland and Northwest Russia. The segment generated a record full- year comparable operating profit of EUR 76 million in 2013, a clear improvement on the EUR 58 million booked in 2012. Supply and demand balances for oil in Europe, together with uncertainties related to political decision-making on biofuel mandates and incentives, particularly in the US, have been reflected in the oil and renewable fuel markets. These factors are anticipated to impact our earnings during 2014 as well. Neste Oil has a strong balance sheet and has been able to generate improving returns on average capital employed. We are confident that a good result will be reached also in 2014, and we expect the Group's full-year comparable operating profit to be at the level of EUR 500 million." The Group's fourth-quarter 2013 results Neste Oil's revenue of EUR 4,604 million in the fourth quarter was virtually unchanged from that during the last quarter of 2012 (EUR 4,597 million). The Group's comparable operating profit came in at EUR 164 million. Comparable operating profit for the corresponding period in 2012 was EUR 77 million. Oil Products' result was negatively impacted by reference refining margins, which were lower than in the last quarter of 2012. Renewable Fuels improved significantly and Oil Retail's performance was also clearly better than that during the corresponding period in 2012. Oil Retail's result was positively impacted by higher margins in all markets, particularly Finland. The Others segment posted a loss, but the figure was an improvement on the fourth quarter of 2012, when various one-time items were also booked. Oil Products' fourth-quarter comparable operating profit was EUR 72 million (116 million), Renewable Fuels' EUR 94 million (-2 million), and Oil Retail's EUR 14 million (5 million). The comparable operating profit of the Others segment totaled EUR -14 million (-42 million); associated companies and joint ventures accounted for EUR -11 million (-8 million) of this figure, which mainly reflects continued unsatisfactory performance at Nynas. Nynas' result includes a EUR 6 million provision for restructuring and asset write-offs at the Dundee refinery. The Group's IFRS operating profit was EUR 185 million (52 million), which was impacted by inventory gains totaling EUR 16 million (losses of 48 million) and changes in the fair value of open oil derivatives totaling EUR 4 million (23 million). Pre-tax profit was EUR 167 million (35 million), profit for the period EUR 193 million (17 million), and earnings per share EUR 0.75 (0.06). The Group's full-year results for 2013 Neste Oil's revenue in 2013 totaled EUR 17,462 million (17,853 million). This decline mainly resulted from lower trading activity and the sale of the retail business in Poland. The Group's comparable operating profit for the year was EUR 604 million, an increase of 70% on the EUR 355 million reported in 2012. The Renewable Fuels segment recorded a significant improvement in comparable operating profit year-on-year, and Oil Retail's result was also clearly higher than in 2012. Oil Products' full-year comparable operating profit was lower than in 2012, mainly due to lower refining margins. The Others segment improved compared to 2012, but remained negative. The Group's fixed costs came in at EUR 691 million (664 million), an increase that was mainly caused by higher staff and maintenance costs. Oil Products' full-year comparable operating profit was EUR 280 million (396 million), Renewable Fuels' EUR 273 million (-56 million), and Oil Retail's EUR 76 million (58 million). The comparable operating profit of the Others segment totaled EUR -27 million (-43 million), of which Nynas accounted for EUR -13 million (-6 million). The Group's full-year IFRS operating profit was EUR 632 million (324 million), which was impacted by inventory losses totaling EUR 19 million (61 million) and net capital gains totaling EUR 43 million (45 million). Pre-tax profit was EUR 561 million (233 million), and profit for the period EUR 524 million (159 million). Comparable earnings per share were EUR 1.92 (0.70), and earnings per share EUR 2.04 (0.61). The Group's effective tax rate was low 6.6% (31.9%) mainly due to the write-down of deferred tax liabilities resulting from the Finnish corporate tax rate change, and the tax-exempt items, such as the sale proceeds of the retail network in Poland. Return on average capital employed after tax (ROACE) and leverage ratio are Neste Oil's financial targets. The company's long-term ROACE target is 15% and ROACE figures are based on comparable results. As of the end of 2013, the rolling twelve-month ROACE was 11.8% (2012 financial year: 5.0%). The leverage ratio target is 25-50%, and leverage was 30.0% (43.2%) at the end of 2013. Outlook Developments in the global economy have been reflected in the oil, renewable fuel, and renewable feedstock markets, and the volatility is expected to continue. Global oil demand is generally forecasted to pick up more than 1 million barrels per day in 2014, but, as in 2013, this growth is more than compensated by new refining capacity additions in Asia and Middle East. This development is expected to lead to continued high product imports to Europe, putting pressure on average utilization rates of simple refineries in particular. Complex refiners such as Neste Oil are expected to remain the most competitive. Diesel is projected to be the strongest part of the barrel, and gasoline margins are expected to improve seasonally during the spring and summer. While demand for premium-quality base oils is continuing to grow, base oil margins are likely to remain under pressure due to overcapacity. Vegetable oil price differentials are expected to vary, depending on crop outlooks, weather phenomena, and variations in demand for different feedstocks, but no fundamental changes in the drivers influencing feedstock price differentials are expected. Price differentials between vegetable oils are likely to widen from the current narrow levels during the year 2014 in both Europe and North America. Uncertainties regarding political decision-making in the US are likely to be reflected in the renewable fuel markets. Examples of pending decisions include the volume targets for biomass-based diesel and renewal of the Blender's Tax Credit, which both impact the US market. Production line 4 at the Porvoo refinery is scheduled to be shut down for decoking maintenance for approximately five weeks during the first quarter. The Singapore NExBTL refinery is scheduled to be taken down for maintenance either during the fourth quarter of 2014 or the first quarter of 2015. The Group's investments are expected to total approx. EUR 300-350 million in 2014. Neste Oil expects the Group's full-year comparable operating profit to be at the level of EUR 500 million in 2014. This is based on the assumption that Neste Oil's reference refining margin averages USD 4.5/bbl during the year. The reintroduction of a US Blender's Tax Credit for biofuels would impact the result positively. Weakening of the euro against the US dollar would also have a positive impact on the result. Dividend distribution proposal Neste Oil's dividend policy is to distribute at least one third of its comparable net profit in the form of a dividend. The parent company's distributable equity as of 31 December 2013 amounted to EUR 1,242 million, and there have been no material changes in the company's financial position since the end of the financial year. The Board of Directors will propose to the Annual General Meeting that Neste Oil Corporation pays a cash dividend of EUR 0.65 per share (0.38) for 2013, totaling EUR 167 million (97 million) based on the number of registered shares. The proposed dividend represents a yield of 4.5% (at year-end 2013 share price of EUR 14.37) and 34% of the comparable net profit in 2013. Further information: Matti Lievonen, President & CEO, tel. +358 10 458 11 Jyrki Mäki-Kala, CFO, tel. +358 10 458 4098 Investor Relations, tel. +358 10 458 5292 News conference and conference call A press conference in Finnish on 2013 results will be held today, 4 February 2014, at 11:30 a.m. EET at the company's headquarters at Keilaranta 21, Espoo. 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 2014 at 3 p.m. Finland / 1 p.m. London / 8 a.m. New York. The call-in numbers are as follows: Finland: +358 (0)9 2310 1621, Europe: +44 (0)20 3427 1919, US: +1 646 254 3388, using access code 2191993. The conference call can be followed at the company's web site. An instant replay of the call will be available until 11 February 2014 at +358 (0)9 2310 1650 for Finland at +44 (0)20 3427 0598 for Europe and +1 347 366 9565 for the US, using access code 2191993#. Neste Oil in brief Neste Oil Corporation is a refining and marketing company concentrating on low- emission, high-quality traffic fuels. The company produces a comprehensive range of major petroleum products and is the world's leading supplier of renewable diesel. Neste Oil had net sales of EUR 17.5 billion in 2013 and employs around 5,000 people, and is listed on NASDAQ OMX Helsinki. Neste Oil is included in the Dow Jones Sustainability World Index and the Ethibel Pioneer Investment Register, and has featured in The Global 100 list of the world's most sustainable corporations for many years. Forest Footprint Disclosure (FFD) has ranked Neste Oil as one of the best performers in the oil & gas sector. Further information: www.nesteoil.com [HUG#1758951]