Company makes third cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel costs

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By Elviira Luoma and Essi Lehto

HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel business for the 3rd time this year due to falling costs and also decreased its expected sales volumes, sending the company's share cost down 10%.

Neste said a drop in the rate of routine diesel had actually affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained high.

A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has produced a of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent market.

Neste in a statement slashed the anticipated average similar sales margin of its renewables system to in between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well below the $600-$800 seen in February.

The business now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually predicted since the start of the year, it included.

A part of the volume cut originated from the production of sustainable aviation fuel, of which it is now expected to sell in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste said.

"Renewable items' sales rates have actually been adversely affected by a substantial decline in (the) diesel cost during the 3rd quarter," Neste stated in a declaration.

"At the very same time, waste and residue feedstock rates have not reduced and eco-friendly product market rate premiums have remained weak," the company included.

Industry executives and analysts have actually said rapidly broadening Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have announced they are stopping briefly growth plans in Europe.

While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel cost was to be expected, Inderes analyst Petri Gostowski stated.

Neste's share rate had reversed some losses by 1037 GMT however remained down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki