July 26, 2024 [Reuters]- Finnish oil refiner and biofuel maker Neste narrowed down its annual renewables margin guidance on Thursday, its second cut to the target this year, after low biofuel prices hit its quarterly results.

Neste, which has invested heavily in biofuel production from waste and residue, said it expects the sales margin in its renewable products segment to be $480-$580 per ton this year, versus the $480-$650 per ton it forecast in May.

Renewable diesel and bioticket prices continued to fall during the quarter, and are expected to remain at a low level, the company said.

Its comparable earnings before interest, tax, depreciation and amortisation (EBITDA) slumped 69% to 240 million euros ($260 million) in the quarter. Analysts in a company-provided consensus had expected 314.5 million euros on average.

“Our result in the second quarter reflects the significantly weaker renewables market and the Porvoo refinery major turnaround,” Neste CEO Matti Lehmus said in a statement.

Lehmus, who is set to be replaced by former Outokumpu chief Heikki Malinen by Nov. 2, added that the renewable market environment remained “very challenging”.

Neste is building renewable fuel plants across the globe, including refineries in Rotterdam in the Netherlands, California and Singapore.

But lagging demand for renewable fuels and increasing supply have put pressure on prices and raised concerns over fuel storage.

Last year, Neste warned that renewable fuels could face an overcapacity as soon as 2025, and said it expected a more balanced supply-to-demand ratio only around 2030.

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