Renewables loss and one-off costs hit Neste profits

HELSINKI Tue Feb 5, 2013 8:44am EST

HELSINKI (Reuters) - Unexpected losses at Neste Oil's (NES1V.HE) renewable fuels unit and one-off costs made a dent in the Finnish refiner's fourth quarter group profit, sending shares down 8 percent on Tuesday.

Neste said the unit, which makes biodiesel from sources such as palm oil and waste animal fat, lost 2 million euros ($2.71 million) at the comparable operating level, less than last year.

Group comparable operating profit - excluding inventory or capital gains fluctuations - rose to 82 million euros from 20 million in the same quarter last year, missing all forecasts in a Reuters poll showing an average estimate of 118 million.

One-off costs of 14 million euros related to its technology systems, as well as a loss at Nynas, its joint venture with Venezuela's Petroleos de Venezuela PDVSA.UL also hurt quarterly profits.

Neste shares fell 8.07 percent to 10.93 euros by 7.57 a.m. EST.

Some had expected cheaper palm oil to help the renewables unit make a profit for the first time since its launch in 2008. Neste said on Tuesday it was likely to be profitable this year.

Pareto analyst Teemu Vainio said he expected the unit to be in the black in the first quarter.

"It will be a catastrophe if there will not be a positive result in the first quarter," he said.

The company said group comparable operating profit would be higher in 2013 than the 352 million euros it reported for 2012.

Its outlook took into account plans for a three-week maintenance shutdown at a Singapore refinery, which it said would reduce renewable fuel sales volumes in the first quarter.

Its traditional oil refining earnings will be hurt in the second quarter by an up to eight-week maintenance shutdown at its Porvoo refinery's diesel production line 4, it said.

(Reporting by Terhi Kinnunen; Editing by Louise Ireland)

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