April 24, 2020 / 7:20 AM / a month ago

UPDATE 2-Finland's Neste stalls 2nd dividend payment because of coronavirus

(adds analyst comment, share price, details)

By Anne Kauranen

HELSINKI, April 24 (Reuters) - Finnish biofuel producer and oil refiner Neste on Friday postponed a decision on the payment of a second dividend instalment until October because of the uncertainty caused by the coronavirus outbreak.

The company also said demand for its oil products business in the second quarter would be severely reduced, but said its renewables business had been resilient so far to the drop in demand consumption caused by restrictions on movement to contain the novel coronavirus.

Neste’s board proposed its first dividend instalment, 0.46 euros per share, to be paid on May 28 but a decision on the payment of a second tranche of 0.56 euros per share would be taken on October 22.

Neste, which is investing heavily in renewables, said its comparable earnings per share in the first quarter rose to 0.5 euros, beating an average forecast of 0.42 euros expected by analysts in a poll commissioned by the company.

“Neste had a solid start to the year considering the negative market impacts caused by the global coronavirus pandemic in the latter part of the first quarter,” Chief Executive Peter Vanacker said in a statement.

Shares in the company fell 3.5% by 0820 GMT, below the wider Helsinki market that fell nearly 2%.

“Despite strong 1Q20 and good guidance on 2Q20 volumes in renewables (i.e., stable), it tweaks its dividend proposal (not the amount),” Credit Suisse wrote in a note.

The company also reported an 8% rise in its first quarter earnings to 408 million euros ($439 million), mainly reflecting a weak comparison period in the first quarter of last year before it wrote off its loss-making Nynas venture with Venezuela.

Sales volumes of renewable diesel are expected to remain relatively stable in the second quarter, although the expected decline in overall fuel demand could have a negative impact on the sales and profitability of its renewable business, the company said.

Neste also said the waste and residue feedstock market would be tight because of limited availability of used cooking oil as restaurants have shut down during lockdowns across the globe.

$1 = 0.9294 euros Reporting by Anne Kauranen and Tarmo Virki, additional reporting by Milla Nissi in Gdansk; editing by Susan Fenton and Barbara Lewis

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