Neste Oil lifts renewables outlook, shares surge
HELSINKI (Reuters) - Shares in Finnish refiner Neste Oil (NES1V.HE) soared on Tuesday after the company upgraded its full-year profit guidance, citing better-than-expected demand for its renewable fuels, especially in North America.
Neste Oil, which makes renewable diesel from palm oil and animal fats, has bolstered its biofuels business as a way of differentiating itself from bigger competitors. In the past few years it has built three renewable fuels plants in Porvoo, Finland, Rotterdam and Singapore.
Neste Oil said it expected its renewable fuels business' 2013 comparable operating profit top 200 million euros ($265 million), up from its previous guidance of above 120 million euros.
Analysts saw the upgrade just over a month after the previous forecast as "dramatic" and said there was pressure for investors to lift their outlook on the company for 2014 as well.
"Now we are at the (profit) level that the company was talking about when they were making these investments," Pareto Securities analyst Teemu Vainio said.
Shares in Neste Oil rose 15.6 percent to 17.67 euros, its highest level since July 2008.
Neste's renewable fuels business turned profitable in the first quarter of this year for the first time since its launch in 2008.
It made a comparable operating profit of 59 million euros in the first half of this year.
The business has benefited from cheap raw materials and good demand in Europe and North America.
Handelsbanken analyst Karri Rinta said the biofuels business would likely remain more volatile than traditional oil refining and added it was difficult for analysts to forecast.
Neste Oil will hold a capital markets day in London on Wednesday and analysts said they expected the company to explain the biofuels environment in more detail.
Neste Oil also upgraded its full-year guidance for the group, forecasting comparable operating profit of more than 530 million euros. It had previously said the profit would beat the 355 million euros it reported in 2012.
(Reporting by Terhi Kinnunen; editing by Jason Neely)
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