Neste to refocus from sustainable polymers/chemicals to fuels

As a result of Helsinki-based firm Neste’s weakened financial performance, the materials firm says it has decided to start a performance improvement program. In line with this, it says it plans to focus on its core fuels business and put renewable and circular polymers and chemicals activities aside for the next two years, to turn around its financial performance.

The proposed organisational changes are expected to result in the loss of around 600 jobs, including approximately 450 in Finland, targeting total annual cost savings of approximately EUR65 million.

Being the world’s leading producer of sustainable aviation fuel (SAF) and renewable diesel and a forerunner in developing renewable and circular feedstock solutions for polymers and chemicals, the company aims to help its customers to reduce their greenhouse gas emissions by at least 20 million tonnes/year by 2030.

However, it adds that it will push back the scheduled start of commercial operations in its renewable refinery in Rotterdam, Netherlands, since the total investment costs for the site had risen from EUR1.9 billion to EUR2.5 billion.

Falling prices of renewable fuel, hit by weak demand and a supply glut, have caused the Finnish group to cut its guidance on the renewable sales margin in 2024.

The company’s ambition is to make its Porvoo oil refinery in Finland the most sustainable refinery in Europe. Neste is committed to reaching carbon-neutral production by 2035, and will reduce the carbon emission intensity of sold products by 50% by 2040.

Neste adds it continues to strengthen its competitive advantage by developing its current raw material base, novel vegetable oils sourcing and lignocellulosic raw materials research.

But the company plans to scale down investments in the development of algae and Power-to-X. In Renewable Products, Neste is planning to streamline its renewable and circular polymers and chemicals activities, focusing on renewable fuels. The company also considers simplifying its commercial models and streamlining its sales channels for renewables to accelerate sales growth. The focus of the Porvoo refinery transformation is planned to be on energy efficiency and renewable hydrogen while other components of the plan are considered to be delayed.

“Our current financial performance is weak and not sustainable. Therefore, we must take urgent action to reset various parts of our company. Adjustments to our cost structure and development portfolio are necessary to meet the current and foreseeable market realities,” says Neste’s President/CEO Heikki Malinen.

Neste continues to seek growth in renewable fuels targeting market leadership, cost competitiveness and technology advantage. During the coming few years, the company will extract full commercial potential from its existing operations and the Rotterdam expansion as well as improve refinery performance through better safety, reliability and project execution. In 2025-2026, the company will focus on defined priorities and reset its cost structure, while in 2027-2028 it will prepare next steps of growth, focusing on selected development initiatives. Maintaining a strong balance sheet will be crucial in both of these phases.

In line with changes in the company’s operating environment and financial performance, Neste updates its financial targets for 2025-2026. Firstly, it is targeting EUR350 million EBITDA run rate improvement by the end of 2026 from its performance improvement program, of which EUR250 million will be from operational costs.

The company targets a total capital expenditure of maximum EUR2.4 billion in 2025-2026 and expects its sales volume for the renewable business in 2025 to be higher than in 2024.

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