Good day and thank you for standing by. Welcome to the Q1 2022 Neste Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Juha-Pekka Kekäläinen, Head of Investor Relations. Please go ahead.
Thank you, and good afternoon, ladies and gentlemen. Welcome to this conference call to discuss Neste's first quarter 2022 results published this morning. I'm Juha-Pekka Kekäläinen, Head of Neste IR, and here with me on the call are President and CEO Peter Vanacker, CFO Jyrki Mäki-Kala, and his successor Martti Ala-Härkönen, effective May first, Matti Lehmus, who will start as the new President and CEO on May first as well, today Matti in his current role as the Head of Renewables Platform, and also the Business Unit Heads Markku Korvenranta of Oil Products and Panu Kopra of Marketing & Services. We will be referring to the presentation that can be found on our website. Please pay attention to the disclaimer since we will be making forward-looking statements in this call.
With these remarks, I would like to hand over to our President and CEO, Peter Vanacker, to start with the presentation. Peter, please go ahead.
Thank you very much, JP, and a very good afternoon also on my behalf. It's great to have you all participating in the call, which will be my final as the President and CEO of Neste. We at Neste are appalled and concerned about the war in Ukraine, and we strongly condemn the invasion by Russia. We have now mostly replaced Russian crude oil with other crudes, and the remaining supply contracts for Russian crude oil will end in July 2022. We have not bought Russian crude oil on the spot market since the start of the war, nor are we making any new supply agreements for Russian crude or fossil feedstocks. Our employees have done an excellent job in replacing Russian crude oil with other grades in a safe way.
In addition to the great human suffering, the war has caused significant market disruptions which are ongoing or possibly still ahead of us. Despite this turmoil, Neste's financial performance was strong in the first quarter. Our company continues to be in great shape, and we are proceeding with high speed, executing our strategy to be a global leader in renewable and circular solutions. This is also impressively demonstrated in how we started the year 2022. If I can now move to Page 4 of the presentation. We had a strong financial performance in the first quarter. Our comparable EBITDA was EUR 578 million, and that is almost 35% higher than in the corresponding period last year. All of our businesses improved their comparable EBITDA compared to the first quarter of 2021.
Our Renewable Products had an excellent performance in the first quarter, which was one of its best quarters ever. Our comparable sales margin averaged a record high $806 per ton. This outstanding achievement was supported by our strong sales performance, by successful margin hedging, and the flexibility provided by our global optimization model. This was an excellent result in a very expensive feedstock market environment. Our sales volumes were 747,000 tons, and that is slightly higher than last year. During the first quarter, our renewables production facilities reached a new quarterly record of 858,000 tons. Oil Products was able to clearly exceed the previous year's results, and that is mainly driven by the improved refining market.
Due to the changes in our crude oil supply and prevailing market volatility, we have discontinued splitting our total refining margin into reference margin and additional margin. The total refining margin was supported by exceptionally high product cracks, but on the other hand, burdened by high utility costs driven by very expensive natural gas and electricity. Operationally, the quarter was quite smooth. On the sales side, we limited product exports and then built inventories to mitigate possible risks related to the war in Ukraine. Our Marketing & Services segments performed very well in the first quarter. We were able to increase our sales volumes, and unit margins were supported by significant inventory gains driven by the surge in oil prices.
Our strategy execution is successfully on track with the announced production joint venture with Marathon Petroleum in the United States as a prime example, and I will come back to that later in the presentation. Our financial position remains solid. Since the beginning of the year, we have adjusted our ROACE calculation formula, and we excluded assets under construction from the average capital employed. This is seen to better reflect the underlying profitability of the company while we are implementing significant growth in growth investments. With this adjusted formula, we reached an after-tax ROACE of 19.1% on a rolling 12-month basis. At the end of March, our leverage ratio was 12%. This solid financial position enables the implementation of our growth strategy going forward. With these remarks, I'll hand over to Jyrki to discuss the financials in more detail. Please, Jyrki.
Thank you, Peter. Really, if you look at the quarter one, it was really conducted during very special circumstances since late February. The world truly changed, and the Neste organization really managed the quarter in a very prudent manner. Let's look more closely on the quarter one financials. We delivered record high quarterly revenues. In fact, it was the highest ever in a quarter, up another 10% versus quarter one 2021. Of course, reasons behind being the fossil oil-related price increases across all the segments, Oil Products, also Renewable Products, and Marketing & Services. Like you see from the table, we are now focusing on comparable EBITDA, so we do not present any more the comparable operating profit as it used to be the key KPI.
We basically posted the same comparable EBITDA as quarter four 2021, EUR 578 million, and some 30% higher than quarter one 2021. We had a very strong Renewable Products, solid Oil Products, and strong Marketing & Services, and all again in a difficult market circumstances since late February. Like Peter already mentioned, Renewable Products they had exceptionally high sales margin with solid 750 kiloton volumes. What we witness is that the average sales price went up close to 25% compared to quarter four 2021. Oil Products total refining margin really was as quarter four 2021 with high utilization rate. As mentioned already earlier, the usage of the Russian crude oil dropped to a level of 45%.
If we look at the Marketing & Services, basically performance, they had a very strong quarter, where, of course, the one-time inventory gains played a big role. The other segment, which is basically on a cost basis, they have a larger activities relating to our growth strategy like innovation and IT and some other development projects, so something we have planned for 2022. I think the biggest, let's say, the negative figure in this material is the free cash flow. It was negative by EUR 960 million, real reasons behind being the higher inventory volumes, both product and the feedstock. Of course, securing our feedstock for the coming quarters, but it's also preparing for the difficult market circumstances due to the war in Ukraine.
If thinking about the RP, they will have basically turnarounds in quarter three and quarter four, so we basically need the volumes to supply our customers with our products. We think about the net working capital overall because that was the biggest contributor for the negative cash flow. It was EUR 1.3 billion higher compared to the year-end 2021. Roughly EUR 600 million came out of the inventory volumes, reasons being what I just mentioned concerning turnarounds and preparation really of this crisis that may last longer than we thought. EUR 900 million came from prices, both prices in inventories, but also prices in receivables. This is basically where the big change came in the working capital. Of course, payables increased then some EUR 200 million in the background as well.
Our CapEx were relatively low in quarter one. It's roughly EUR 200 million, but we have this big project going on like in Singapore for the rest of the year. Thinking about the comparable earnings that is based on certainly in the future also with our dividend policy, it was basically 50% higher than quarter one 2021. Overall, strong quarter in a quarter where a lot of things happen in a geopolitical arena. If we look first this, basically simple bridge from 2021, basically a EUR 150 million improvement, there are basically two elements here. All the businesses, all the segment improve their performance very clearly. OP, for example, 160%, Marketing & Services 40%, and RP 20%.
You can truly say that it has had a very strong performance in the background. Okay. If we look a little bit close into basically little bit more elements, what is behind this EUR 150 million improvement, you see that the volumes margins basically improve by EUR 130 million across the businesses. FX changes are starting to be positive for us. It used to be like last year, pretty much on a negative side. Of course, we had the items relating to the fixed cost. It is like explained already earlier relating to renewable products. Preparing for the future, the fixed costs were higher by EUR 34 million, most of that in RP. Nothing special in that sense.
Very pleased with the results in the circumstances that we unfortunately witnessed during the later part of the quarter. With these words, it's then Renewable Products and Matti Lehmus, please.
Thank you, Jyrki. Good afternoon also on my behalf. I would start by saying that in a very volatile market environment impacted clearly by the war in Ukraine, we are able to continue a really strong business performance in renewables with an EBITDA level of EUR 419 million, which is more than 20% over last year's first quarter's level. Really the team did an excellent job, whether it's in sales, whether it's in supply, whether it's in production, to reach such result level. The main driver was the outstanding sales margin, which increased by $107 per ton versus last year, and also if I compare to the previous quarter versus $28 per ton.
Behind this, there is a very good sales performance, but it's also good to note that the waste and residue markets increased with a time lag in late Q1, which enabled this exceptional level. The sales volume remained high at 747 kilotons, almost identical to a year ago and slightly under the previous quarter. This reflects the continued healthy demand, but also a very good production performance with a record production of 858 kilotons. If you compare production and sales volume, we were able to build some inventories also in anticipation of the planned turnarounds in the second half of the year. Worth noting also that the North American sales share decreased slightly to a level of 32%, reflecting our geographic sales optimization. At the same time, you can see that our feedstock optimization continues.
Again, we were able to increase the share of the waste and residues to a level of very high 95%, which I'm very pleased with. Overall, very good quarter. Turning to the waterfall, let's have a look at the comparison to last year's Q1. As sales volume was almost stable, there are three items to highlight. The first one that is clearly visible is the sales margin improvement of more than $100 per ton, which had a EUR 61 million positive impact. Also worth noting, like Jyrki mentioned, that FX changes had a clearly positive impact of EUR 40 million as the euro dollar rate moved from 1.21 in Q1 last year to 1.12 this year, and all this before hedges.
Finally, our fixed costs increased by EUR 28 million year-over-year, reflecting again the fact that we have built up resources and capabilities in preparation for Singapore growth project start up and the expansion of our feedstock platform. Let me turn briefly to the feedstock markets. The Q1 feedstock markets were characterized by a significant increase of the average vegetable oil prices during the quarter. For example, palm oil during the quarter increased its quarterly average by 18%. Like for petroleum products, the price increase for palm oil increased and accelerated in the second half of the quarter following the start of the Ukraine war. Also, the waste and residue market strengthened, increasing on average around 10%.
It is good to note that this price increase was less steep than for vegetable oils, as most waste and residue markets followed the vegetable oil market price trend with a time lag. For example, for animal fats, the average quarterly price increase was around 7%. Let me then turn briefly to the product markets and especially the US, where I have two highlights I would like to make. First of all, the LCFS credit price decreased throughout the quarter, and it averaged $139 per ton, which is down roughly 10% from the previous quarter. This softening of the LCFS credit price was driven by supply demand, with supply growth outpacing the demand growth during the quarter.
At the same time, the RIN average values increased slightly to 1.52 cents a gallon, and the RIN values have also increased in recent weeks. Overall, the combination of higher feedstock cost and lower LCFS means that the U.S. margin environment was less strong than in the previous quarter. Let me finally make some comments on the sales margin, which was on an exceptional level of $806 per ton, and representing an increase of $27 versus the very strong level in the previous quarter. On one hand, we had the feedstock prices continuing their increasing trend, with average feedstock prices increasing by a bit more than 10%. And at the same time, the waste and residue price increase was less pronounced than for example, petroleum products or veg oils.
On the other hand, the margin was supported clearly by the increasing average sales price. Our sales performance was excellent. It included a successful sales mix optimization, but also the increasing of our sales premia. This was one of the key drivers behind the sales margin increase versus the previous quarter and explains approximately one-third of the average selling price increase. An even more significant driver was the increasing diesel price, and the overall impact of sales premia and diesel price exceeded the feedstock price increase, which then enabled the margin increase.
As a final comment, our hedging again mitigated partially the feedstock price increase, as we had quite a high hedging ratio in the first quarter. At the same time, worth noting that the absolute hedging result was slightly lower than in the previous quarter. Finally stating that our production had a very high utilization rate of 104%. It reflects the excellent reliability that we continue to have, and it did enable a production record as we did not have also any plant shutdowns. With these words, I hand it over to Markku to discuss the Oil Products results.
Thank you, Matti. Good afternoon, everybody. A quick update from Oil Products side. We had a strong quarter amid a very turbulent market. The comparable EBITDA was EUR 137 million compared to EUR 52 million the year before. Sales volume was broadly unchanged at 2.6 million tons, while refining margin improved from $6.7 to $10.3 per barrel. The average Urals share of the feed was still at 45% in Q1 2022 in average. This reflects the use of inventories acquired prior to the Ukrainian war. Urals sourcing was down by 2/3 in March and further down by 80% in April. Comparable RONA increased from -1.3% to 6% compared to the previous twelve-month period. If we turn to the waterfall.
The main improvement here really is compared to the first quarter of 2021 is from a total refining margin. This contribution is EUR 65 million. The other drivers are broadly unchanged. I would move over to the margins slide. The war in Ukraine has had a profound impact on the product and crude market. If we look at the product margin, we see diesel cracks reaching as high as $50 per barrel at the highest, and gasoline cracks at $25 per barrel. At the same time, Urals versus Brent differential has increased to more than $30 per barrel, reflecting unwillingness of the usual customers to buy Russian crude oil. As a final slide, a few words on the refining margin.
The total refining margin has been stable when compared to the previous three quarters at around $10 per barrel. The average refinery utilization rate was at a very good level of 92% compared to the 83% in the first quarter of 2021. Refinery production costs were $7.5 per barrel compared to $5.6 per barrel the year before. The higher utility costs were the main contributor to this increase. With this update, I'll hand over to Panu to talk about the Marketing & Services.
Thank you, Markku Korvenranta. Hello to all. This is Panu Kopra speaking. Solid financial performance continued in Marketing & Services in Q1. Actually, EUR 32 million comparable EBITDA was best ever Q1. Both gasoline and diesel volumes were slightly better than last year. Jet A-1 volumes increased a lot compared to previous year, but still approximately 40% less compared to time before pandemic. Light fuel oil volumes were very healthy, and I'm also happy to tell that Neste MY volumes increased by 26% compared to last year, which is good achievement taking into account record high prices at pumps. Fixed costs were a bit higher than last year, but under control. Main reasons for such good results were inventory profits and excellent pricing.
Since the war started and prices started rapidly to increase, we did a lot of work with pricing and focused on our pricing not only for the pumps, but also in B2B pricing. Therefore, we were able to deliver healthy unit margins. We also launched new EV charging service with one of our B2B customers in order to expand our sustainable solution offering. The first feedback from the customer has been very, very positive, so we continue to improve our charging services also in the future. This was shortly about Q1 in Marketing & Services. Handing over back to Pete.
Thank you, Panu, and let's now move on to the current topics. First, a few words on the progress made in our strategy during the first quarter. As announced in early March, we have agreed to form a renewables production joint venture with Marathon Petroleum in the United States. This will mark a major leap forward in Neste's renewables and growth strategy execution. Let's recap some highlights of the planned venture. Marathon's refinery in Martinez in California will be converted to a renewable fuel production. Neste will obtain a 50% interest in the Martinez Renewable Fuels project with production operated by Marathon. Neste's investment will be approximately EUR 900 million. The production is to start in the second half of 2022 and is targeted to reach full production of 2.1 million tons by the end of 2023.
The production output will be split 50/50 between the partners. Both Neste and Marathon will be responsible for raw material sourcing for the joint venture, and they will market and sell the products under their own brands independently. This transaction is subject to customary closing conditions and regulatory approvals, including obtaining the necessary environmental and other permits for the site. Combined with the Singapore expansion projects, we are set to become the only global renewable hydrocarbon producer with production in three continents and with 5.5 million tons of capacity by the end of 2023. The Singapore renewables capacity expansion project continues to be on schedule for start up by the end of the first quarter 2023. As announced in February, the engineering phase of the possible next world scale renewables facility in Rotterdam continues.
We are approaching the readiness, technical readiness of a final investment decision during the next months. This decision, as I have alluded to before, will be made independently of the joint venture with Marathon Petroleum. In the meantime, of course, we also are investigating the impact of the war in Ukraine on this project. Let's have a look at the second quarter. What do we see? We see the following. In Renewable Products, the sales volumes are expected to be slightly higher than in the previous quarter. The waste and residue markets are anticipated to remain tight. Following the Oil Products and renewable feedstock market price increases started in the latter part of the first quarter, the renewable sales margin is expected to be within the range of $675-$750 per ton.
Utilization rates of our renewable production facilities are forecasted to remain high. Oil products market is seen to continue to be very volatile and impacted by the Ukraine war and possible further trade sanctions. The total refining margin is currently expected to be at a roughly similar level as in Q1. It's good to remember that the high natural gas price impact that impacts our production costs with one month delay. Replacing natural gas with other fuels has been tested, and we are initially very positive about the results. Sales volumes are forecasted to increase slightly from the level seen in the previous quarter. With the base oils business now sold, only the long term offtake of Porvoo base oil production will contribute to the total refining margin going forward.
In Marketing & Services, the sales volumes and unit margins are expected to follow the previous year's seasonality pattern, and similar exceptional inventory gains as in Q1 are not expected. Some negative impact on demands and sales volumes is still anticipated due to the COVID-19 pandemic. We continue to execute our strategy and make investments in our business. Our cash out capital expenditure is estimated to be approximately EUR 1.9 billion in 2022, and that is now including approximately EUR 800 million for the Marathon joint venture that is still subject to closing. Other possible M&A is excluded from this number. With the sale of our base oils business, we have now concluded an impressive portfolio change wave at Neste. During the last three and a half years, we sold our Marketing & Services business in Russia. We exited Nynas.
We sold the non-strategic business units at Neste Engineering Solutions and our base oil business, including our participation in the joint venture in Bahrain. We also consolidated the oil products business through a restructuring that included the discontinuation of oil-based refining in Naantali. On the other side, we have concluded more than 20 acquisitions, including joint ventures and equity investment in start-up companies. These actions have aligned our activities to fit with our strategy to be a global leader in renewable and circular solutions. Today, more than 70% of our passionate employees and more than 70% of our investments are in the area of renewable and circular solutions, and this percentage continues to grow. As announced in February, we have a scheduled 6-week turnaround at the Singapore refinery in the third quarter and a 7-week turnaround at the Rotterdam refinery in the fourth quarter.
The negative impact of the Singapore turnaround is expected currently to be approximately EUR 90 million, and the negative impact of the Rotterdam turnaround is approximately EUR 100 million on the segment's comparable EBITDA. This concludes the presentation now, and we would now be happy to take your questions. Sharon, back to you.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone keypad. To withdraw your question, press the pound key. Once again, star and one if you would like to ask a question. Your first question today comes from the line of Mehdi Ennabati from Bank of America. Please go ahead. Your line is open.
Hi. Good afternoon, all. Thanks for taking my question. Peter, I wish you all the best in your new position, and I hope that you will be as successful as in your position at Neste. Thanks a lot, you know, for all the time spent with you. It was very interesting. Thanks a lot. I will ask two questions, please, on your guidance. First, the guidance on the oil production, on the Oil Products division, sorry. You are guiding, you know, on Q2 2022, your refining margin roughly in line with the first quarter, which was at $10 per barrel. I fully understand what you said. Now, there is a one-month lag on the gas price you pay to run your refinery.
What I did, I did something very simple. I looked at the average gas price from December 2021 to February 2022, and this is very close to the average gas price from March 2022 to April, you know, to today. It seems that you will not pay significantly higher gas price in Q2 than in Q1. Under that context, how is it possible for you to guide for refining margin in line Q on Q, knowing that diesel crack margin is currently $30 per barrel above the first quarter, and diesel represents 60% of your refinery output. There is something that I am missing here. It seems to be something really big. I want you to explain it to me, please.
The second question is about your guidance on renewable product margin. You used to beat, you know, the top range of your guidance by around $80 per ton during those last 2 quarters. Why should I think that you will not beat again your guidance in Q2 by another $80 per ton? Or what's the big difference here? Besides, if I remember well, you are long crude palm oil contracts, even though you don't use that much of crude palm oil as a feedstock, only 5%. Is it fair to consider that the export ban on crude palm oil from Indonesia could allow you to realize very significant trading gains? Thank you.
Yeah. First of all, Mehdi, I mean, thank you very much, I mean, for your kind comments and then of course also your very good questions as usual. Let me give a little bit of high level reflections on what you said. You base your assumptions, of course, on a current assessment of Q1 and how we move in Q2. I don't believe that we disagree on that both on the Oil Products side, partly, I mean, on the Renewable Products side, but especially on the Oil Products side. It's clear that the quarter has started very strong. But we may not forget that we are in the middle of a big disruption in Europe with the war that is going on.
That is why we have decided to continue to be prudent in our guidance and not base the guidance upon a statistical correlation between what has happened in the previous quarters, whereas natural gas prices, but rather on a qualitative assessment on what eventually could come. Fact is, as said, the quarter has started, I mean, quite well, and happy to hear, I mean, further comments on this, I mean, from Markku.
Thank you, Peter. I think you said all the essentials. The quarter has started well. The cracks are high both for diesel and gasoline. In that sense, very good. However, the utility costs continue at a high level. Quite right, the trend hasn't been quite as explosive as it had been earlier, so it's rather rolling in at the same level from month to month. When we look at the totality, we are still at a very high level. Back to you.
Can you please tell us roughly, you know, in April, so if I understand well, in April is the worst month for you because you are suffering from extremely high utilities costs, which are now coming down. What kind of realized margin did you get in April? Because all your peers, you know, are highlighting extremely extraordinarily high refining margin in April. So can you help us a little bit there? I understand your cautiousness, okay? I think this is fair. Just, you know, for us to understand, in April, were you significantly above $10 per barrel refining margin?
I don't think we comment on the specific figures. I'd rather say, repeat that we've seen a good April. We have very little visibility for May and June. This will be the main reason for us to say of an expectation of the margin at the same level as we had in Q1.
Very clear, Mehdi. I mean, it is not the $10 per barrel that we are seeing in April. You know we don't give a specific, I mean, guidance then yet on one month basis. Your assumption is right, that in April, I mean, the reference margin has set a very good start, is much better than $10 per barrel.
Thank you very much.
If we go, I mean, to the sales margin maybe on the Renewable Products, and then Matti will explain this as well. I think first of all, it's not because in the last quarters, I mean, that we did have a very positive beat. Let's not forget that above $800 per ton, I have never seen above $800 per ton. I know when I took over, we were talking about good margins, which were $400 per ton, so this is double than the $400 per ton. Let's put everything, of course, also in the right equation. Despite very high waste and residue costs that we are having, we're able to achieve above $800 per ton in Q1.
This was not something that we could anticipate when we were giving the guidance on Q1. As you know, we have then changed our guidance during Q1, and as a consequence, consensus has substantially also moved up. I don't see that we would be able to beat again this guidance that we are now giving $675, I mean, to $750 by another $80 per ton, simply because of the fact that even if fossil-based diesel prices continue to be very strong, but on the other hand side, waste and residue differentials have moved up, as Matti said, towards the end of Q1.
Yes, we still have a strong hedging position in place, and yes, we are seeing that in the first months there is a seven in front of it, in terms of our sales margin. Yeah, so we're not definitely not desperate. I mean, remember, these are very healthy margins if we talk about that. On the other hand side, when we reflect it just to bring a little bit of color around it, when we moved, I mean, from these qualitative guidance towards more quantitative guidance, we also said, look, we cannot guide, I mean, at the beginning of a quarter on a level of accuracy with very dynamic markets, which is $50 per ton. Yeah.
We have set for ourselves at that time that we said, look, $75 per ton is the range that we are guiding towards. But as I said, I mean, we start the quarter with a seven in the first month, but we have the volatility of course, I mean, in the next couple of months with a difficult visibility because of this war in addition to that. Yeah. 675-750 is the guidance, but we start with a seven in front of it. Matti, you want to add something?
No. Very well explained, Peter. Perhaps I'll just briefly comment, Mehdi, on your additional question, which was around this impact of the Indonesian ban, and perhaps reminding, indeed, like you say, our feedstock is mainly waste and residue. It was 95% waste and residue in the first quarter. From that aspect, we don't see perhaps that much direct impact. What is on the question around the hedging, this is actually not related. The way we hedge is that we are basically trying to hedge with an instrument which is typically palm oil, gas oil price differential, a proxy hedge of what our feedstocks and the end product prices would be. In a way, there is no direct link to this Indonesian ban.
It's more noting what Peter also said, that we continue to have a relatively high hedging ratio also in the second quarter.
Thanks very much, all of you.
Thank you. Your next question comes from the line of Joshua Stone from Barclays. Please go ahead. Your line is open.
Thank you, and good afternoon. I'd also say thanks to you, Peter, for the discussions over the years, and I wanted to also just share my, you know, best of luck to your new job. Also to you, Matti, congratulations on your new role and upcoming leadership at Neste. A couple of questions, please, on renewables. Firstly, there has been a number of countries in Europe that have been revising their biofuel mandates of late in response to high prices. I was wondering if you'd just share your latest thoughts on that. To what extent could that be driving some of the caution you're talking about in your margin guidance? And in particular, I wanted to ask about Finland, because clearly that's your home market with a, you know, sizable cut in the mandate there.
How are you gonna respond to that? Where will those volumes go? Does it impact your sort of investments you're thinking about or purview there? Then my second question on the feedstock environment. We're hearing liquidity is just simply drying up at the moment because the market's become so binary around export bans, mandate cuts. To what extent are you seeing the same thing? Has that affected your ability to procure feedstock in any way or even your ability to hedge? I'll leave it there. Thank you.
Let me go, I mean, to the first one. On the biofuel mandates, you're right, Joshua. I mean, here and there have been some changes on the mandates that have a short-term impact in our view. We don't see immediately, I mean, that the impacts will come in Q2. Let me remind you that we are not just dependent on one or more different countries in terms of our sales. We have expanded that substantially during the last three and a half years, and therefore this, let's say for us, relatively small impact in terms of demand reduction in Finland for volumes. We can easily move these volumes, I mean, into other markets. On the mid to long term, we don't see any influence on this whatsoever.
On the contrary, energy independence and therefore also more discussions around higher greenhouse gas emission reductions, higher independence from crude oil coming, I mean, from Russia, all plays, let's say, in the discussions that are currently taking place in Brussels with the council as well as with the members of parliaments. Matti, anything you wanna add to that, as well as the second question on the fleet, feedstock liquidity?
No. Thanks, Peter. On the first one, I would just emphasize what you said. The important thing is, of course, the long-term predictability and that commitment to that high ambition longer term continues to be there. That is, of course, very important. On the feedstock tightness question, how I would comment is, yes, like we have said in previous quarters, we have continued to see a strong and in a way, a tight feedstock market. From my perspective, it looks like more than this is driven by robust demand. When we look at the supply side, there are, of course, like always, specific regional impacts. You may, for example, at the moment have the Chinese situation on COVID impacting local UCO availability.
In the big scheme of things, we have continued to see availability of feedstocks being good for us, and it is more driven by the robust demand that has been there also for the previous quarters.
Great. Thank you. Thank you.
Thank you. Your next question comes from the line of Artem Beletski from SEB. Please go ahead. Your line is open.
Yes, good afternoon, and thank you for taking my questions. I would like to congratulate you on strong Q1 results with a couple of records being done once again. A couple of questions from my side. First when it comes to FID relating to Rotterdam and the delay on that side, could you maybe provide some further granularity, whether it's more about sort of the CapEx levels, what you have to investigate in this kind of inflationary environment, or is it basically some sort of, say, energy cost related topics and so on? Maybe question on that side. The other one is relating to fixed cost outlook for 2022. In the past quarter you have stated that those will be increasing by EUR 140 million.
Is there any impact or basically further pressure due to the fact that you are, basically, doing Marathon joint venture? Two questions. Thank you.
Yeah, on the FID, I mean, Rotterdam, strategically nothing has changed. Let me be very clear on that. I alluded to in my comments, this is a decision which is independent of our Marathon joint venture decision in the United States. The growth that we are seeing has not changed, if it is in sustainable aviation fuel, if it is in renewable polymers and chemicals, or also, if it is in renewable diesel, I mean, for road transportation. The whole discussions around Fit for 55, RED III, the ReFuelEU Aviation and so on and so on. Plus in addition to that, also a market that is starting to develop in Asia Pacific in certain countries is all supporting that. We have never said what month the decision would be taken.
We've always said, I mean, it is readiness in the next couple of months. We are currently continue to say readiness in the next couple of months, technical readiness. We highlighted also that we are of course also looking at what are potential implications because of this war to the projects, to how we set up the projects, how we follow a procurement strategy. Yeah, there are different aspects as this is a highly complex matter that we need to take into consideration to eventually come to the conclusion that what we had as a base case is unchanged or maybe we make a couple of changes here and there in how we are setting such a project up.
Since I will be gone when the final investment decision will be ready to be taken, then I would give that question to the future CEO of Neste. Matti Lehmus.
No, thanks, Peter. Just adding to the comments you made, indeed, these two different things. First of all, yes, we are approaching technical readiness for the investment decision. This goes to your question, that is what we are doing at the moment, finalizing the engineering, looking at the project market, equipment market, materials market. That is a very important part of the analysis. However, I think what is important is also the note that we said that the timeline for the decision-making will also take into account the current geopolitical situation. What that means is that there is of course we are also very closely following up this geopolitical situation, the possible impacts on overall economy, on the business environment.
Of course, the timeline to make decisions of the project is then may well be impacted by this geopolitical uncertainty.
Now the second question on the fixed cost outlook, I mean, we are not changing that under EUR 40 million number. Remember, I mean, the original under EUR 40 million number guidance that we gave was on the basis of not yet having decided the joint venture with Marathon Petroleum. We managed to beat our fixed costs, I mean, during Q1. The increase in fixed costs was relatively limited in Q1, and therefore we keep the guidance of the under EUR 40 million for the full year basis. Of course, what is not included in that are the production fixed costs because that will depend on the timing of the startup of the production in the joint venture with Marathon.
Okay. Good. Great. Thank you. Peter and Jyrki, thank you for all the cooperation over the past years and wish you all the best.
Mm-hmm. Thank you, Artem.
Yeah. Thank you.
You're welcome.
Thank you. Your next question comes from the line of Henri Patricot from UBS. Please go ahead. Your line is open.
Yes, everyone. Thank you for the update. Couple of questions from me. The first one on the renewable products side of the business. I was wondering whether you've been able to, I mean, hedge some of your exposure in the second half of the year. What sort of level compared to the first half? Secondly, on the refining business, can you give a sense of the potential financial impact of replacing natural gas in refining? Thank you.
Okay, let's go to Matti for the first one.
Yes. Thank you, Henri. Indeed, like we commented in the first quarter, our hedging ratio has been high. It has been over 60% of total sales. Also in the second quarter, it continues to be relatively high, a bit lower, I think around 50%. In the second half of the year, it's still lower. Overall, I think for the year, we are looking at something like 40% on average.
Okay. The second question on refining?
Yep. Well, thank you for the question. As we've said, we've testing the use of propane in our system to replace natural gas in production of hydrogen. If this is successful in the operating environment, in its full
Full force, it will substantially reduce our natural gas demand. This is done primarily to prepare for possible supply disruptions. In the current pricing environment, it will also have a positive margin impact from Q2 onwards. I would not at this stage put a figure on it, but there is a positive delta between propane natural gas.
Okay. Thank you. Peter, we wish you all the best in your roles. Thank you.
Thank you.
Thank you. Your next question comes from the line of Anish Kapadia from Palissy Advisors. Please go ahead. Your line is open.
Oh, hi. I had a couple of questions about the renewable diesel business. First of all, just looking at the market, there's a large amount of new renewable diesel and sustainable aviation fuel capacity planned. I was wondering if you can explain how you see Neste's competitive advantage versus peers. You know, kind of also in the light of you being happy to acquire a stake in Martinez that doesn't have your own specific technology. Really looking to see the risk of commoditization of the renewable diesel business and the squeezing of future margins. Then kind of second question, somewhat related to that. Neste's current valuation implies a very high EV per ton of renewable diesel capacity, significantly higher where new build and replacement cost is.
I was just wondering if you could explain the rationale for this, and, you know, if that continues, would you be looking to make more acquisitions at around new build costs similar to Martinez? Thank you.
I mean, as the, I would say, the inventor of renewable diesel and the player in the market that has developed this market, we of course have a closeness to our customers, a huge amount of different customers, different business models that we have implemented. Not just are we selling in one country, two mandated parties, for example. We are also selling directly at the pump. We're selling, I mean, in B2B. We're having circularity models with McDonald's and others, I mean, in place. In addition to that, we also have a leading access to waste and residues. We are collecting through quite some acquisitions that we did in a short period of time.
We're collecting used cooking oil, for example, in the United States from about 50,000 restaurants. These are things whereby we are, of course, also providing quite a lot of services to those restaurants. It's not easy, I mean, to replace such an enormous network that we have built up over the years. It's not just limited to the United States. It's also in Europe, in animal fats. It's in China, in Australia, and so on and so on. I have more than 30 years, I mean, in the chemical industry and do not believe everything that I see that is being announced.
Either it will not be financed, and it will not see the construction, or it will not be at the same time as it has been announced, or it will not be in the size as it has been announced. We have seen a lot of these announcements already disappearing or being pushed out as well. The other point I would like to make is what I said also in my comments, we are the only global producer in this field. That gives us, of course, quite a lot of optionality, things that we have demonstrated, even if there was more capacity that came on stream last year. The third point I would like to make is we are not just in renewable diesel.
We currently are the leader in sustainable aviation fuel, and we are in more than 20 different airlines. We are in more than 20 different airports as well. We continue to expand our access so that we have different business models, including also into plane supply of sustainable aviation fuel across the globe. Of course, with our facility that we have in Singapore, we are ideally placed to capture the growth in Asia-Pacific as well. Then on renewable polymers and chemicals, if you look at our capital market sales presentations, what is our value proposition there? It's on one hand side the renewable hydrocarbon that we already have in place with important partners that are leading companies in polymers and chemicals across the globe.
In addition to that, also, we are one of the leaders in terms of chemical recycling. Taking that waste and residue that comes out of waste plastic and then recycle that, take the carbon out of it to make a new hydrocarbon that is a drop-in solution in a steam cracker. There are lots of fields that we are working on, is my message, with an important access to customers in different companies in different regions, plus also, the upstream integration into the waste and residue. When we're looking at supply and demand, then we do not see over the next visible period that you have, which is normally around five years in this type of an industry, that there is a disruption in supply and demand. Why?
It is because the demand is growing, I mean, substantially, and a big part is that because of the regulation. I would leave it there. Of course, I could go on, I mean, for an hour in a Capital Markets Day presentation type of approach. We do believe we're very well positioned in this market. If there would be more competition in a particular region, then of course, we have the flexibility then, as we have done in the past as well, to shift to other markets or to other applications.
Great. Thanks very much for the comprehensive answer.
You're welcome.
Thank you. Your next question comes from the line of Erwan Kerouredan from RBC. Please go ahead. Your line is open.
Hi, thanks for taking my question. I've got a follow-up on the renewable product sales margin. Last quarter, you mentioned that the average selling price was up $150 per ton quarter-over-quarter, with underlying diesel driving roughly 50% of that increase. The question I have is: Did we experience similar contribution in the first quarter? I guess looking ahead, can you just clarify the linkage between the underlying diesel price and the ASP in European contracts? This is my first question. The second question is just a teeny-tiny detail. Peter, you mentioned 50,000 restaurants in the U.S. when it comes to UCO collection. I vaguely remember 40,000.
Has it been growing over time, or is it resulting from like further like minor acquisitions that you made, or organic growth at Mahoney, or just, I don't know, an updated number? Thank you.
Erwan, good questions. Thank you for that. I mean, on the first question, on the term deals that we are having, in the majority of the deals, we have an underlying, fossil-based diesel. So we're fixing the price premiums in the negotiations with our strategic customers. For this year, we have about 75% of the planned volumes that were in term deals. So you can almost assume that on the 75%, practically everything has an underlying component, which is, fossil-based diesel. And Matti alluded to that. I mean, on Q1, about one-third was because of the higher price premiums, and about two-thirds was because of the higher, fossil diesel. On the second question, yes, I did not make a mistake when I was talking about 50,000 restaurants.
This has, I mean, to do with the fact that we have continued to expand our Mahoney platform. Remember when we did the first step and bought Mahoney, we said it is a platform. Since then, we have added quite a lot of bolt-ons to the platform through acquisitions, and in addition to that, we have been able also to grow organically. Remember, in my opening comments, I said we have more than 20 acquisitions that we did during the last two years. If you just look at the big ones that we have announced, you will not come up to more than 20, which means that we have done quite a lot of other stuff, which is smaller and therefore more in the bolt-on box.
Understood. That's very clear. Thanks and best of luck for the new role at LyondellBasell. Thank you.
Thank you.
Thank you. Your next question comes from the line of Matthew Blair from TPH. Please go ahead. Your line is open.
Hello. Thanks for taking my question here. I just have one. It's on the upcoming Canadian CFS regulations that should start up in December 2022. I'd like to get your opinion on how significant you think this will be. You know, on one hand, the Canadian diesel market is twice as big as California, and we've seen the California LCFS program raise RD blend rates up to 25%. On the other hand, there's been some commentary from the Canadian regulatory officials saying that, you know, not all companies will be required to comply right away and that the program probably won't even reach a deficit until 2027. Just like to get your opinion on how significant this will be.
Yeah. I mean, if you look at it, over the mid to long term, so five-10 years timeframe, it's like you said, I mean, Canadian market is quite big. Yeah. So the opportunity value is extremely high. You know, we're talking about a demand then of multiple millions of tons. If you talk about it, I mean, on the next couple of years, then we're gonna have to see, I mean, how it is gonna be implemented. It could be easily, let's say, a market demand which is adding to the total global demand of about 1 million tons. Yeah. It will depend a bit on how it will be phased in and how then it will be enforced by the authorities.
Yeah. Generally spoken, this is one of the markets that we, of course, also have on our list as a potential, important market.
Great. Thank you.
Mm-hmm.
Thank you. Your next question comes from the line of Sasikanth Chilukuru from Morgan Stanley. Please go ahead. Your line is open.
Hi. Thanks for taking my questions. I had two, please. The first one, I was just wondering if you could comment on your expectations for the LCFS credit prices. It was mentioned during the call earlier that the softening was due to the supply-demand dynamics. Do you expect the trend of decline in LCFS prices to continue over the remaining part of the year? Or was there anything specific one-off that impacted the prices in Q1? The second question was related to. I was wondering if you saw any potential risk to operations, even temporarily for the Porvoo refineries, if there was indeed a disruption of gas supply to Finland from Russia. You've talked about testing the use of propane as the alternative.
How quickly can this be put in place in order to minimize the risk of any disruptions?
That's the first question. Let's go to Matti on the LCFS expectations.
Yes, thanks for the question. Perhaps in a way, the general comment commented on it also in earlier quarters. What we of course keep monitoring is this general supply and demand. If you, for example, look during the whole year of 2021, how this credit balance and credit bank in a way has developed, then we could see that during 2021, it started from a quite high deficit, but there have been some builds. That's quite natural in a way that we have seen the LCFS credit price reflect that development. Going forward, it will obviously, like always, depend on one hand, fuel demand development. We have the positive thing underlying that the carbon intensity target is increasing every year, which increases the needs for the credits.
Ultimately, of course, there is also new supply of both renewable fuels, or it could be renewable electricity, et cetera. We don't actually have a view which would be somehow different from what the market reflects. I mean, that of course reflects the current understanding of all these different drivers for the short term.
The second question is for you, Marko.
Yeah. Thank you. On the natural gas and replacement of it with propane. Our intention is to be able to do the switch from natural gas to propane without a major impact on the operations in Porvoo. That's clearly the goal. As Peter said, the first indications of our test runs are positive, so I've no reason to believe that we wouldn't be able to do that.
Great. Thank you.
Thank you. Your next question comes from the line of Matt Lofting from J.P. Morgan. Please go ahead. Your line is open.
Hi. Thanks for taking the questions, gents. Two, if I could please. First, on the feedstock side of the equation, I think you talked earlier about tight markets, but availability within those tight markets still being good. Within that, clearly the waste and residue component moved to the sort of top end of the historical range in Q1, 95%. Can you talk about that a bit more in terms of the extent to which that's an active shift in the context of higher absolute pricing through the vegetable oil complex and the extent to which we should expect to see that continue to trend higher towards 100% as we look forward? Secondly, I think you talked earlier around supply and demand, and particularly the sort of supply side of the equation.
Could you expand a bit on demand, the sort of the strength of market demand you're seeing for renewable diesel through the course of the last three-six months and, your thoughts on the sort of demand setup as we look forward? Thank you.
Yeah, thanks, Matt. Very good questions as well. There are different aspects, I mean, to your first question. On the feedstock availability and accessibility, just like during the pandemic, when restaurants were closed down and so on, due to the fact that we have that extremely broad network now in from collection aggregation in the waste and residues and the different types of waste and residues that we are collecting, we don't see for our company difficulties with the availability and the accessibility. The second point on the crude palm oil sustainably sourced phase out, this has been a strategy that we have discussed in the executive committee with a clear commitment from the entire executive committee that we wanna go to 0%.
We are now at a bit less than 5% of the total equation. We said latest 2023, but we are doing, I mean, the fastest we can. If I look at Matti was a very important member because it's in his area in the executive committee, that strategy is not changing. Matti.
No, this is clear. We have for a long time focused on waste and residues, and we have that commitment to phase out palm oil by the end of 2023. Of course, next year then with the startup of our partnership in the U.S., there we will then also need to develop the feedstock base, given, let's say also then the technical development of that facility.
Yeah. Yeah. Of course, very clear in the U.S., I mean, in the joint venture, we're not talking about crude palm oil here, but then, we're talking eventually about starting up with soybean oil and technical corn oil. In terms of market demand, and I would expand it a little bit, your question, Matt, from renewable diesel also to SAF and renewable hydrocarbons for polymers and chemicals. We see very strong demand. You saw, I mean, the numbers in Q1. Of course, we're preparing a little bit because we have these important shutdowns in the remainder of the year, Q3 and Q4, as we guide it towards as well. Therefore, we're very happy that we reached another production output records in Q1.
We also said in Q2, and that is also an indication of very good demand, that we expect that the volumes will be higher than in Q1. This is in all the areas. I mean, it's in renewable diesel, it's in sustainable aviation fuel. As said, I mean, it's also in polymers and chemicals, the renewable hydrocarbons, where we see more and more actions, even if that market is not regulated yet, coming from the brand owners as well as coming from the big players, producers of polymers and chemicals, in the world. I also highlighted, I mean, in terms of market demand that keep on repeating that, Asia-Pacific continues to develop very well.
As a consequence, it means that the original concept of deciding on the investment in Singapore in December 2018, remember, the concept was that we would export to the West Coast of North America. Well, of course, it's clear from what we said in the joint venture with Marathon Petroleum, is that a part of the new capacity that we're building up in Singapore, we will need for our customers in the three market applications in Asia-Pacific. Sharon?
Thank you. We will now take our next question from Kate O'Sullivan from Citi. Please go ahead. Your line is open.
Thanks for taking my questions, and good luck, everybody, with your future news. Firstly, on Renewable Products, going back to the weakening credit price environment that we're seeing in the US, how much more flexibility do you have to move more volumes into Europe through the end of the year? You were 68% in the first quarter. If credit prices continue to weaken into early 2023, would you reassess the portion of term sales you allocate to the US? I'll come back on the second question.
Okay. Mattis.
Yeah, thanks for the question. Now, like we have communicated, it is very typical for us that when we look at our annual sales plan, we do a significant share of term sales. We have also communicated this year that share of term sales is around 75%. That means that only some part of the volume is flexible to be shifted. In that sense, I don't have an exact number. I mean, it's. You can see from the earlier quarters also where that range has been. That is the type of flexibility that we have.
Okay, going into next year, if there was a continued weakening environment in the U.S., would that kind of change your thinking on how much you allocate into that market?
Well, we have always, I mean, said that our model that we are running is a very flexible one. Leveraging upon the optionality that we have and then shifting volumes to where we believe we have the better sustainable value.
Mm-hmm.
Does that mean that, just like in the past, that we are completely exiting certain markets because the value is too low compared to some others, while I don't believe that would be sensible because we also have strategic interest in those markets as well. Yeah. You saw, I mean, in the last couple of years where we then moved, I mean, more to the United States because of course we had very, very good margins, and then we did less in Central Europe. Then again, we had quarters where we then said, "Okay, we have better margins in Central Europe," so we shifted then more to Central Europe.
We are a global player, so we never exit the market and then come back into a market because as I have alluded to also in the past, this is a specialty type market. It's the service that we are bringing, I mean, also to our customers, this is not a commoditized market.
Great. Just on feedstock supply. You've got by the end of next year expected 5.5 million tons per annum. I'm just wondering what proportion is covered by your existing feedstock platform across the Neste or Agri trading Mahoney. Or is there any need for additional bolt-on acquisitions to get to that volume coverage? If you could provide any color on the proportion of feedstock sourcing by region.
Yeah, I mean, first of all, the conceptual strategic aspect of that, Kate, is that we always wanna have more access to feedstock than we have own needs. This is currently already the situation that we have, and we are currently not using all the feedstocks, for example, that we are collecting in the United States through our platform. We are also trading some feedstocks in the marketplace and supplying them to other players in the market. We always every time we are looking at the feedstock and our growth platform that we have in terms of capacity new builds, I mean, for the Renewable Products, we always reflect upon the fact, do we have an accessibility, I mean, to the feedstocks?
That's why we're building up that entire network on a global basis. That is something that's set, I mean, in the strategy, and Matti has been core in that because he had the responsibility both on the production capacity increase as well as on the feedstock buying and trading, as well as, of course, also on the expansion of the feedstock platform on a global basis. He has been very core of that and will continue to drive that forward.
If I just add a short comment on your regional question, I would comment that all the main regions are important for us, because we have indeed built over the last years a big, global platform. Whether it's Asia-Pacific, whether it's Europe, whether it's the Americas, all of these actually have a significant role in our feedstock sourcing. Like Peter commented, we have important strategic supplier partners in all these regions.
Great. Thank you.
Thank you. Your next question comes from the line of Raphaël Dubois from Société Générale. Please go ahead. Your line is open.
Hello, good afternoon. Thanks for taking my questions. Two, please. The first one is on hedging. You said that in Q2 you will be still very much hedged, probably like in Q1. Can you maybe say a bit more about how it looks like for H2? Still on hedging, considering that you will quit palm oil purchases from the end of 2023, does it imply that you are going to change the way you hedge? It would be great if you could tell us a bit more about that. Finally, with regard to the ramp-up of the facility in California, could you please just reiterate how quick the ramp-up will be and the positive or negative effect it will have on your average sales margins as the ramp-up occurs? Thank you.
Mm-hmm. If I take your first questions, the first question at least around the hedging, then Q2 hedging ratio is expected to be approximately, yeah, at, let's say the same level, as in Q1. On the second half of the year, it's as usual at this point in time, it's always a bit lower. Matti, if you wanna put a percentage on it.
I actually referred to it in one of my early answers. It was around 60% in the first quarter, a bit lower in the second quarter, but still high around 50%. The balance of the year, if you look at it now, is somewhere around 40%, as indeed the second half is lower ratio.
Of total sales.
Of total sales.
Mm-hmm.
Exactly. Perhaps I can comment briefly on the other question. The way we are building our hedging strategy is that we are using indeed palm oil, gas oil, typically as instruments to be a proxy hedge for the different feedstocks we are using. It's actually we don't directly see in a way a link to the share of palm oil we are using because it's a proxy hedge also for the other feedstocks. Of course, we continue continuously developing our hedging strategy and also especially in depending on the region we are into using the type of instruments that we feel have the best hedging capability.
Thank you. On the U.S. facility, please?
Yeah, on the US facility, I mean, the timeline that we have, I mean, currently, we are seeing that there is very good progress that is being made by our partner that is in charge of course of the environmental permitting and so on, because they are of course in California, they have the experience there. That's why we said, I mean, we expect, I mean, that this is now we are on target. We expect in the next couple of months that we will be able to close that. Once the environmental permits have been granted, it's normal that you then immediately start building. We expect that will happen then as well. That would then lead, I mean, to first volumes. Matti?
The target is that the startup could occur by the end of this year for the phase one, which was 750 kilotons full capacity, and at the same time, like Peter said, that depends then on the timing of the closing of the permits, et cetera. That is still the target.
Yeah. Again, that capacity you need to take for us, and let's say 50% of it, yeah. The 375 that we have alluded to before is our part of the first step of the investment.
Excellent. On the impact on margins, please?
The impact on margins will be dependent on the conditions of the market at that point, when we are starting up.
Everything else equal, can you at least say if it's positive or negative? If it was to start today?
Well, are you talking about the absolute margins? Definitely it is possible. It is positive. If you're talking about the average sales margin, yeah, dollar per ton.
Yes
... of course it is clear that, if we produce and sell in the local market, you need to take the margins that can be made in that local market and then calculate, in your business model, yeah, with the volumes that we would then have. Yeah. As such you can calculate what the impact would be on the average sales margin. It's very clear that we would. If you look at it, I mean, from a joint venture point of view, that the volumes in that joint venture, we would then sell in the local markets. Of course, this would enable us, coming back to the comments I made before, that we have then volumes in Singapore that we can then sell in other markets and hopefully also at very good margins.
Great. Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star and one on your telephone keypad. Once again, star and one if you would like to ask a question. There are currently no further questions. Sir, I will hand the call back to you.
Yeah. Thank you very much, Sharon, and thank you everybody for, as usual, very good questions and very active participation. You alluded already, I mean, during the call, but let me repeat it. As you know, I will hand over my responsibilities as president and CEO of Neste Corporation to Matti Lehmus, and that will be now on Sunday, May 1, 2022. I would like to conclude by saying that I feel grateful for having had the opportunity to lead such an amazing company for close to four years. I would also like to thank our amazing, passionate leadership and the employees for their drive and focus. I also thank you, our analysts and investors, for your trust in me, in Jyrki, in our executive team, and in our employees.
Without your trust and continued support, Neste would not be the same successful frontrunner and company. I wish the best of success to Matti Lehmus as the new President and CEO, and Martti Ala-Härkönen, the new CFO. They will be supported by an outstanding leadership team and the whole Neste organization. The company is in great hands with this outstanding team, and our strategy remains valid with full board support. Neste's transformation story will continue. I thank you very much, and I wish you all that you stay safe in this environment and as well healthy. Thanks a lot. Yeah. Jyrki?
Yes. Also from my side, as this is my last working day in Neste and also the last quarterly report, I want to thank all of you for your continuous support on Neste. Many of you have been with me during this nine years of journey in Neste, and it has been really a pleasure working with you. As I said in Capital Markets Day 2015, "Don't stop believing." That is exactly what you have done. I wish all of you nice weekend and the continuous support on Neste's future as well. Thank you all. Martti Ala-Härkönen will then start as my successor first of May, and certainly wish all the best to Martti and good discussion with you going forward. Thank you all.
Thank you, Jyrki.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.