Good afternoon, everybody. Welcome to discuss Neste's Q4 results that were published this morning. My name is Jukka Miettinen, and VP for Investor Relations at Neste. Here with me, we have our President and CEO Heikki Malinen and our CFO Eeva Sipilä. We are referring to the presentation that was launched today on our website early this morning. In the presentation, we will go through the key highlights, for example, our Q4 financial performance and the status of our key focus areas, including the performance improvement program and the progress towards our financial targets. We will be also discussing the key regulatory developments, key opportunities, and uncertainties in the market, as well as the outlook. We will have time for discussions with all of you. Please pay attention to the disclaimer, as we will be making forward-looking statements in this call.
With these remarks, I would like to hand over to our President and CEO Heikki Malinen. Heikki, please.
Thank you, Jukka. Good morning, good afternoon to everybody. Welcome also to this call on my behalf. Really looking forward to discussing with you about 2025 results, the last quarter, and also how this year will work. Okay, so let's start with a couple of slides here. First, I want to start with discussing the key figures. But before I do that, let me just make a few comments to provide you with a bigger picture on how I see the situation at Neste after having been in charge of the company now for a bit over one year and a quarter. I think overall, if we look at 2025, we had a good year. We have been able to achieve a financial turnaround compared to where we were just a few years ago.
I'm very pleased about the fact that in 2025, all of our businesses performed better. Each of them had their own successes. I want to highlight in the area of RP, specifically, that we were able to increase our volumes from 3.7 to 4.1 million tons of sales. In OP, I'm specifically pleased by the operational performance of the Porvoo refinery. If you look at the utilization of the OP business, which is mainly Porvoo, we achieved 90% in the fourth quarter, which actually is one of the best years we've had operationally in Porvoo's history. And we were luckily, of course, then able to capture the spike in cracks in the fourth quarter. Marketing and Services, we rarely talk about that, but still, they were able to improve their results by 10%.
They actually launched some very exciting new retail concepts here in the Finnish market, which have been received very well by retail and business consumers. We also met our financial targets for 2025. I was especially pleased that the performance improvement program that Eeva will go through in more detail performed really well. In fact, it performed better than I expected. I've done a number of these during my career, and I was really positively surprised how well the Neste team delivered on multiple areas, very systematically, quickly, and very efficiently. So a big hats off to the Neste team for what they did. On the regulatory front, the year was filled with all kinds of rumors and expectations. But in the end, I think the tailwinds are supporting Neste, both in Europe, gradually in the United States as well with the RVO.
Then we're starting to see initial green sprouts, so to speak, when it comes to SAF in Asia. Last but not least, I think overall, where we are today, we have a good foundation then to perform better in 2026. Then looking at Neste in a bit more detail, I always start with safety. This is the number one subject here in the company. Every meeting starts with safety. On the left-hand side, you can see our total recordable injury frequency rate. This really is people's safety calculated on a per 1 million tons. We were 1 million hours worked. We were able to reduce it a bit. We have a long way to go here. I think we have all the means and tools and skills to bring this down. We just need more systematicity and discipline. I'm not happy with the number.
We can do much better. On the right-hand side, we see process safety, which in the past has been pretty tough for Neste in some areas. But overall, if we look at last year, we made good progress. We are not yet at first quartile. We need to go lower. But still, I'm very pleased with how the year ended. 0.9 is a big improvement from the past. And one piece of information, which is not shown in this slide, but which I want to mention specifically, is that in the Rotterdam Capacity Growth Project, our expansion, we actually have had a very good safety year as well, good progress. And considering how large an undertaking Rotterdam is, and we have thousands of people on the site, so far we've done well. Of course, the work continues. Then a few numbers from last year, 2025.
Our Comparable EBITDA was EUR 1,683,000,000, over EUR 400 million improvement vis-à-vis the previous year. I was very pleased with that. On the other hand, you can see the term, the sales margins on renewable products, $411 per ton. We were impacted by the terms, term deals from the fourth quarter of 2024. They did impact that number. In the second half and in the final quarter, we saw prices rise. But we did have that overhang, as we often do when we term a part of the business annually. And then on the right-hand side, maybe I want to highlight the SAF volume. We doubled it to 867,000 tons, pretty much, I would say, at the level which is sort of reasonable given the amount of volume being sold overall.
As we know, the renewable, let's say, the SAF mandates have not risen as rapidly as we had hoped, but still over 800,000 delivered to our customers. Then on the fourth quarter, shown on the bottom left-hand side, our EBITDA for the fourth quarter was EUR 601 million. We had a very strong finish to the year on multiple fronts. As I said, all of our businesses performed better than the year before. And so, of course, we're very pleased with that. Free cash flow in the last quarter was exceptionally strong, EUR 809 million. Eeva will talk about the balance sheet further.
I think overall, I can say, as far as the balance sheet is concerned, that 40% leverage that we set at the beginning of the year as an absolute cap. Well, I think looking at the number, we can say that we're clearly now in much better shape than we were in the past. Maybe I thought we were in clear waters, but clearly, the direction of travel is very positive. So good on that front. The work continues, of course, into this year. We have a number of major things we are working on. The performance improvement program, as discussed already, and Eeva will go through in more detail, delivered EUR 376 million. So we actually achieved, on a run-rate basis, more than what we had set out as a target for the two-year program. So we've really done extremely well.
What I want to do here is, now that we will report to you, we're actually going to continue this program for another year, for 2026. And then we will, in 2027, move more into continuous improvement type of a mode. We are not setting new public targets for this year. But we will continue reporting to you on a quarterly basis how the work continues. What I can say is that after having observed the work for one year, I see there's still good potential to raise that number even more. So you will then get reports on a quarterly basis. And we'll then see where we end up after 2026, what the total final tally is. Rotterdam is a big undertaking. I go there almost every six weeks. During my last visit, I was impressed by the good work people are doing there.
It's very, very busy, very intense, a lot of people there. They're making now good progress. But as said, 2027 is then the big year for the startup. And then finally, operationally, we continue the work to increase our own production, to make more advancements there, and also to be commercially successful, and then, of course, gradually get ready for the Rotterdam launch in 2027. So those are some topics on the agenda of the company. We will be happy to discuss these with you in a moment when we get to the Q&A. Now, let me hand it over to Eeva to talk about the financials. Thank you.
Good afternoon on my behalf as well. I'll start with the renewables market. This slide shows the reference margin development of renewable diesel. As you can clearly see, the fourth quarter was better than the previous quarters of 2025. We have a bit of a sliding down effect during the quarter and then a small jump at the year-end, quite typical in a way that's some late buying, tightening the market, which, again, then typically also in early January of this year has then eased back. In this sort of supportive market environment, our EBITDA, on a comparable basis, reached EUR 601 million. In renewable products, we had a maintenance-heavy quarter, but higher sales volumes and margins offset the higher net production costs. In oil products, solid utilization and the November spiking gasoil market prices supported profitability.
Finally, marketing and services, we saw a nice sales volume increase in Finland and Estonia. Looking at the sort of full year 2025, so we reached almost EUR 1.7 billion in comparable EBITDA, and really thanks to higher sales volume and lower costs, as you see from the right-hand side graph. Like Heikki already mentioned, all the business areas improved from the previous year. We're very pleased with that. The performance improvement program, indeed, one year ahead of schedule, so exceeding EUR 350 million by the end of 2025 instead of the original target, which was only end of this current year. Very pleased with that. Of the EUR 376 million, that is the run rate. In the P&L of 2025, there is EUR 172 million that have come through.
This is just purely from the fact that, obviously, the run rate is ahead as the program started after a few months into the year and then getting sort of all activities ramped up. And before there is that annual effect, it comes then over the coming quarters. Like Heikki said, very pleased with the amount of activities and kind of actions and the overall engagement of the Neste team in improving our competitiveness. So we're absolutely pushing forward. 75% of what we've achieved so far has come really from cost reduction and the big elements being general procurement and logistics, and then 25% coming from margin and volume optimization. Then a bit more detail into the quarterly performance by segment, so starting with renewable products. So indeed, despite significant maintenance activities in the quarter, the sales volume reached 1.1 million tons.
Our commercial team did work very hard for this. The comparable EBITDA came pretty close to the third quarter level, which was always going to be a tough target since that was one of our more sort of solid operations. As you can well see, so sales volumes, margins supporting, and then really the maintenance cost visible in fixed cost dragging the result down. So there are no sort of surprises there, per se. Moving to oil products. High utilization. We're very proud of this. Especially now in Q4, this was really worth a lot of money for us because the market prices in diesel cracks really went up to almost $30 a barrel. Of course, us being agile and really on top of the market and being able to leverage that opportunity was very, very important in reaching the EUR 321 million for the quarter.
Indeed, our refining margin of over $20 is something we're very pleased and did require, as said, quite a spike in the market price. But good, really good work from the team here. With all the volatility that we can expect to continue in the global oil markets, I think this agility continues to be something that we're focusing a lot on in our performance management. Marketing and Services also did well. EUR 28 million unit margins were seasonally weaker. Then the fixed costs were also higher. We have a bit more higher investments ongoing in IT and then also the new retail Huili concept here in the Finnish retail market. Good work on the sales volumes from the team and then supporting the result onto the other direction. Moving then to cash flow. This certainly increased markedly. Obviously, improved results helped.
But also a lot of good work on the net working capital side. EUR 809 million was the cash flow for the quarter. And this then resulted in a full-year cash flow before financing activities of EUR 759 million. And this really despite cash-out investments being EUR 260 million in the quarter, so a bit higher than the previous two quarters, the Rotterdam expansion and then the additional maintenance work behind that slightly higher figure. And as we've said earlier, the Rotterdam investment will keep our investment level high also in 2026. And then we have the Porvoo refinery turnaround coming up every two and a half years. And this is now the time it comes. And so that, of course, adds to the CapEx. But we are guiding on cash-out investments to be between EUR 1 billion and EUR 1.2 billion. So I would say very well in line with what we said a year back.
Still on the net working capital, so maybe a few words. So on the inventory side, you'll remember we were very clear that fourth quarter will be one of reduced inventories as we really push out the pre-maintenance buildup that we had to do in Q3, which hurt cash flow at that time, succeeded in that. But in addition, we had a lot of focus on AP and also AR. And I think, again, the sort of team did very well on that. And we're certainly very pleased with the outcome. And this then leads to us being well on track with our financial targets. So as Heikki already mentioned, leverage is clearly now below the 40% and the other financial target on the performance improvement also being accomplished. Now, work continues on both of these areas.
We have a lot of things we can and need to do still at Neste to improve, but successful delivery in any case for 2025. With that, handing back to you, Heikki.
Thank you, Eeva. So let's then talk a bit about regulatory matters. On this list, there's a lot of text here. Sorry for that. But I wanted to give you a full compendium of all the things we see happening on the regulatory front, both in North America, Europe, and Asia for the different products. I think just the fact that the list is quite long and much longer than we had earlier sends a message that things are happening here again. What's particularly interesting on the right-hand side is how much activity we see across all of Asia. Yes, there are small numbers. There are small mandates, 1%, 2%. In some countries, they're more on SAF for international flights, not for domestic flights. But still, Singapore has taken the lead with Japan. And now other countries are following.
In Europe, of course, for us, the big thing is the implementation of the Renewable Energy Directive III and specifically what that does to Germany. Since we last have spoken or since I last spoke, the process has continued in Germany. Now they are in parliamentary review in the Bundestag. We hope in the coming months then to get a final resolution. But so far, so good. Direction of travel is positive. As we estimate, by the end of the decade, the volume of renewable diesel should go from 5 million to over 10 million+ tons in Europe. Of course, for us at Neste, where we can produce both SAF and RD in our refinery, so this is really good news. Then in Europe, of course, the mandates will rise in 2030.
We are going to continue discussion with the European Union to make sure that that really then materializes. So overall, very good. And in the U.S., we're waiting for more news on the RVO, Renewable Volume Obligation, decision, which was part of the big, beautiful bill. And also there, we should hopefully get some more news towards the end of the first quarter. Focus areas for this year, I already talked about these a little bit. But if I just sort of summarize still what's on my and my team's agenda, so really continuing with the performance improvement program, there's a lot of activity. I've been positively surprised how much Team Neste actually is able to do on this front, maximization of our asset utilization.
Here, I would say that we have our work; we still have work to do, need to put more efforts into predictive maintenance, make sure that we really prepare for our turnarounds really well, we get maintenance done on time and on budget. This year in particular, we have the big TA coming in Porvoo in the fourth quarter or towards the fourth quarter. It's a very big undertaking. But we're monitoring that carefully so far. What I've seen, I feel good about the preparatory work. We also do external benchmarking to see how well we're getting ready. That benchmarking data also indicates that the team has done good work. We will be prepared then for the turnaround. Then Rotterdam already, we discussed, it is moving according to plan at the moment.
Market opportunities overall, our world in renewables can be a bit volatile from time to time. As said already, a lot of positive things happening now on the regulatory front. Let's see how those get implemented. But still, tailwind is clearly more positive. The big unknown for us is Chinese SAF volumes, how much will come into Europe. We know there's volume coming. Need to wait and see for the customs data to get a better view on that. We continue the work on SAF, anti-dumping duties to make sure we have a level playing field on SAF. And then on uncertainties, maybe I want to highlight the feedstock prices. Of course, in our business, feedstocks account for a very large share of the variable cost. So depending on how they progress for animal fats and UCO.
And then for these Annex IX feedstocks, will be critical to then determining the final margin of our products. So because we can hedge these costs to some degree, but not fully. And then I think on geopolitics and trade, otherwise, I don't see anything particularly new happening on that front that would impact Neste at the moment. So that pretty much is that story. Then in terms of dividend, our board recommends to the annual general meeting that the dividend would be kept at the same level as last year. So that is EUR 0.20 overall. And then finally, the outlook for this fiscal year. So renewable product sales volumes in 2026 are expected to be approximately at the same level as in 2025. Oil product sales volumes in 2026 are expected to be lower than 2025 due to the planned maintenance turnaround at the Porvoo refinery.
Those are our key messages at this stage. I think we will hand it over to the operator and take your questions. Thank you very much.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Alejandro Vigil from Santander. Please go ahead.
Hello, Heikki, Eeva, Jukka. Thank you for taking my questions. The first one is about the outlook for 2026. Of course, you are talking about this guidance of volumes flat year on year. And I'm wondering if something is going on in the utilization rates or why you see this flat performance year on year. That's the first question. And the second is regarding profitability. We have seen in the last couple of quarters EBITDA in the renewable products division of about EUR 250 million-EUR 270 million per quarter. This is a good indication of the current status of the market in terms of margins for Neste in this division. Thank you.
So if I take the outlook and if you talk about the profitability, so well, I would say that at the moment, with respect to our refinery, so we are running fairly close to the capacity we have at the moment that we can get out. We are constantly optimizing and trying to squeeze out more. But in our situation, any debottlenecking that we can do to get more out will have to happen during the turnarounds. And the next opportunity for debottlenecking will be end of this year, early 2027, when we have the next turnarounds in Rotterdam and Singapore. So you cannot do debottlenecking until you have done a certain amount of engineering and you've ordered different types of equipment and pipes, et cetera. So there's always delays to how quickly you can do the turnarounds and debottlenecking.
So that will be a story more towards the end of this year, early next year. And then Rotterdam, of course, will then be the big volume increase. And that will come in 2027. So that is the situation. And as said, we are trying to squeeze out safely and reliably as much as possible. But we have to overcome those debottlenecking challenges first.
Alejandro, on your profitability development question there, so obviously, sales market prices are important. We've had tailwind that we see continuing. At the same time, if you look at feedstock prices, 2025 versus 2024, they were higher. So we need to continue the work, really, on finding the right feedstock and really utilizing the whole global network that we have to maximize the margins. But importantly then, obviously, is the Performance Improvement Program. A lot of the actions are RP-focused. And as mentioned, we have more in the pipeline just from a sort of timing perspective, but still working on new actions. So we're certainly very focused on improving the profitability at RP. I think this is not a level where we're yet satisfied in any way.
Thank you.
The next question comes from Paul Redman from BNP Paribas. Please go ahead.
Hi, guys. Thank you very much for your time. Yeah, two, please. The first one is just back to sales volumes. Could you just be clear? You used to provide a breakout of weeks by refinery of how much turnaround activity will go on in the year. Could you just go through each refinery, just highlighting how many weeks turnaround you're expecting in 2026? Or as you just mentioned, Rotterdam and Singapore, possibly in 2027. Then secondly, I have a question about it's a bit longer term. So when we look beyond 2026, you previously guided to a material reduction in CapEx post-2026 as a Rotterdam facility comes online. If margins continue to be strong, the balance sheet will degear. How do you think about financial priorities post-2026?
OK, so I will start and let Eeva continue. So in terms of this fiscal year or so, we have these catalyst changes pretty much every year. And I cannot really give you an exact week number here yet for the turnaround in Rotterdam or in Singapore because they will also include debottlenecking work. So it isn't just the pure catalyst change, but there will be others. But the Rotterdam TA will be at the end of sometime in the fourth quarter. And then Singapore will start line two. Now, that's the first TA on line two. In Singapore, that will be starting probably as it was this time, mid-December-ish, somewhere there. And it will flow then into the first quarter. But the exact dates still will depend a bit also on the holiday season in Singapore with Chinese New Year, et cetera. But anyway, roughly there.
So Singapore more into the 2027-ish. And that will also include then debottlenecking work, which has to be done. Now, then to your question about beyond 2026 and CapEx and how we're thinking about that. So maybe Eeva.
Yeah, financial priorities post-2026, Paul, I think it was. So no news here, really. De-leveraging is the one word I would say that obviously, while we now had good cash flow and we've clearly turned a corner in leverage, the amount of gross debt remains high. And this year, being still a sort of CapEx-intensive year, is not going to sort of fundamentally change that. So then as we go into 2027, 2028, that's really sort of the main focus. And of course, in order then to build ourselves a stronger balance sheet and that we have more optionality a few years after that.
The next question comes from Henri Patricot from UBS. Please go ahead.
Yes, hello, everyone. Thank you for the presentation. I have two questions, please. The first one is just a follow-up on the volumes for this year. Because I think Heikki mentioned that you're running fairly close to capacity at the moment. But your utilization rate last year was 73%. And Neste used to run much closer to full capacity. Are you saying that we should assume that full utilization would be close to this sort of level because of the frequency of the catalyst changes? Or is there some upside to that utilization rate over the next couple of years? And then secondly, on the sales structure for 2026, can you give us an update on the term contracts for this year? Where did you end up in terms of the split between term sales versus spot?
Any comment you can make on how this term premium looks in 2026 versus 2025? Thank you.
Yes, thank you. Thank you very much for those questions. Yes, the utilization level, I would like to see that also higher. But that will require some more work in the refineries. There's also a bit of how much do we swing between RD and SAF. So last year, we made over 870,000 tons-ish of SAF. So how much we're swinging back and forth between that also impacts the utilization. It isn't just a although we're happy about the flexibility, putting the SAF lines on also impacts a bit the utilization. So the more we can run with one grade RD in particular, that helps that. But we are going to try to improve that further and then do some more debottlenecking. Then in terms of the term contracts, I said in the last call, I said that we would take our time and not rush.
Well, in the end, then we did ultimately then go and term about 60%, roughly about the same level as the year before. So about that. Anything you want to add, Eeva?
Well, maybe just to mention, Henri, on the premium, so significantly higher than a year back. Obviously, the market situation was healthy. And thanks to that, that actually was behind our decision to term that much. I mean, originally, I think we discussed also with you that we'd aim a bit higher. But when the market was as good as it was, we felt it was the best decision for shareholder value.
Thank you.
Thank you.
The next question comes from Adnan Dhanani from RBC. Please go ahead.
Hi, thanks for taking my questions too, Henri, please. The first one on your CapEx, you were able to lower your guidance a couple of times last year and still ended up spending less than the final guidance at the end of the year. Just can we get some color on the moving parts there? Is that just a phasing thing? And if so, could that mean that this year's spend could be towards the higher end of the range you provided? Then secondly, on your performance improvement program, obviously, very solid results so far. And you've noted that the work continues in 2026. Are you able to provide any color on how much further upside there could be beyond the EUR 376 million that's already been achieved? Thank you.
Yeah, thank you. Maybe I'll take the second one first. And then Eeva can take a crack on the first one. On the performance improvement program, we had the four modules, which were there was the efficient organization, which has been done. There were items on procurements or sourcing. A lot of work has happened. Some of it will flow also into this year. There's the commercial piece. We've optimized our logistics and terminal networks. We've closed some terminals, which had very low utilization. So much of that work has been done. On the refinery side, we do see a lot of further opportunity. That module has been slower to progress because the changes we need to make to these lines, some of them may need some money or they just need some design work. And it just takes more time to do these adjustments, let's say, safely.
Plus, it's just simply more complex work. We will continue focusing, especially on the refinery side, in 2026. We are not going to give you any guidance or estimate on the upside. As I said, I only can state that I'm really pleased with what we have accomplished this year. We're going to continue focusing, particularly, on the upside on refineries. We will then report on a quarterly basis and try to provide you as much color as we can. That is the current way we're going to move forward. Then, in terms of the CapEx, so anything you would like to say regarding?
Yeah, we certainly—I think—it's not a sort of untypical phenomenon that you have a bit of slipping. I wouldn't say that it was more than a few tens of millions EUR. So indeed, we were expecting that that slipped. Now, the estimate is based on what we have currently. And yeah, then obviously, we've given a range just because there are some uncertainties. And I'm comfortable with the range. But indeed, I think it's a typical phenomenon. Sometimes really difficult to estimate exactly right then on how the sort of payments then go out. But not a big thing for last year.
All right, thank you.
The next question comes from Artem Beletski from SEB. Please go ahead.
Yes, good afternoon. And thank you for taking my question. So I have two to be asked. So the first one is relating to renewables volume outlook for this year and basically split between RD and SAF. Is it fair to assume that there will be growth in RD and maybe SAF volumes coming down just looking at market fundamentals currently and the SAF market being pressured by import volumes coming from China? And then the second question is relating to Q4 fixed costs when it comes to renewables. So there has been quite significant increase sequentially, I think, more than EUR 30 million. How big a portion of it was related to this maintenance activity happening in the quarter? And maybe you can provide some guidelines for this year as well. Thank you.
Thank you, Artem. So I'll take a crack at the first one. And then Eeva can talk about the fixed costs. So yeah, last year, we sold it was 3.5, hold on, 870 on the SAF, if I remember correctly. And then the rest was RD. I think I said on the call last time that if the SAF market doesn't develop well, then we have always the option to sell RD. And that is what we will do. So we're constantly optimizing. And depending on what really makes sense financially for our shareholders, we will run the refineries according to that. So it is possible that this year, we'll have a bit less SAF. But let's see. It's early. We're just in January. And let's see how the markets—what happens with the imports—we really don't know yet very well.
We don't have any data yet, really, for 2026. Then based on that, we'll have to make a choice. We will go with what really maximizes value for the company.
Then on the fixed cost, Artem, so indeed, the growth in fixed costs was really all around maintenance. And looking into 2026, so we'll have a similar phenomenon. That obviously, we have some of the performance improvement savings coming through in the fixed costs. And that's supportive. But then at the same time, we will be increasing somewhat the money spent on maintenance for the obvious reason that we do want to sort of max out on the utilization and reach a better utilization, as Heikki already mentioned. So that will probably mean that in a way, net-net, there's not much improvement in fixed costs, per se, to be expected. But of course, we're very focused on all elements and on the margin then to sort of improve profitability. Nevertheless, fixed costs, relatively speaking, is not the main item.
OK, that's very clear. Thank you.
The next question comes from Henry Tarr from Berenberg. Please go ahead.
Hi, and thanks for taking my questions. The first one is just on premiums and margins. So I think you talked about higher premiums into the term contracts. Obviously, there are lots of push and pull factors, et cetera, driving margins in the renewables business. But as we stand here today, then looking into 2026, does it make sense as a starting point to think about the sort of second-half levels from last year being a good base as we think about modeling renewable products? I think that's my first question. Thank you.
Well, I think that if you use the second half as a reference, it wasn't that maybe impressive in the beginning. So I would say that we're aiming to sort of aiming upwards on that. But like you rightly say, so obviously, the premium we fixed is dependent also on what happens on the feedstock side and how we're able to optimize. But I think it's fair to say that our ambition is higher and hence the higher term rate.
I think the feedstock pricing is, of course, really critical here for the final margins.
Yes. That's probably my second question then, which is, what are the key sort of drivers and risks that you see for this year on feedstock?
We try to buy from all jurisdictions. Globally, we're continuing to expand our reach both for animal fat, for UCO. And what's been really interesting, of course, now with the new RED III requirements is these Annex IX feedstocks. I think we're well positioned, actually pretty well positioned on these Annex IX feedstocks, which I think could become an asset here as we go forward. But let's see. And then in terms of UCO, what I think is playing here a lot into the equation is how much will Chinese demand be? Hard to predict. And then also, what happens with the RIN D5 in North America? So I think those are the two maybe triggers which could then impact both UCO and animal fat prices. And then, of course, how much supply of animal fat is available, particularly out of Australia?
So I think those are the sort of dimensions or things which are moving the market. But as I said, I think overall, we're probably the largest buyer of these feedstocks globally. And we have a good sourcing organization. I think we're very well on the pulse of the market. And we have multiple sources to buy from. If one area looks more expensive, we then always have the opportunity to look for other sources. I think that is an advantage. Feedstocks are really critical in this industry.
OK, thank you.
The next question comes from Naisheng Cui from Barclays. Please go ahead.
Hey, good afternoon, everyone. Two questions, please. The first one is a follow-up on term sales. I just want to clarify on the ability to lock the margin. From your previous answers, am I right to understand that you can lock the sales price but not the feedstock price? So we can still see a bit of volatility on the margin? My second question is on one of your peers' comments. Your other European energy peer CEO mentioned some bearish comments on SAF mandate. I wonder what's your view on that. Thank you.
Well, do you want to comment on the hedging?
Yeah, sure. So indeed, I think, Nash, the challenge on the feedstock side is that not all of those products can really be hedged. They are not open, transparent markets. So more on where you can hedge is then on the sort of soya palm side. And that means that there's certain limitations when we sort of term a sale. But of course, we sort of they do over time, usually sort of have a correlation. And then we sort of try to optimize based on the sort of experience we've built on how to do so. But indeed, there is a certain open position and hence our cautiousness on the commenting on the final sales margin.
Regarding your question about the SAF mandate, so I said before that at least based on the conversations I've had and we've had with the European Union, they are pretty committed to implementing the SAF mandate for 2030. I mean, between now and 2030, nothing specifically will happen. There will be a review probably somewhere between now and 2030 about these mandates. I know the airlines are, of course, pushing back and trying to move the 6% into the longer-term future. As I said, our indication is that the mandates are going to grow. 6% is the number which has been decided. I'm very pleased with what we're seeing in Asia, gradually starting to see mandates coming there as well. I think that's a very positive sign.
If Asia now starts to move forward, why would Europe then suddenly move backward, especially when Europe has been the one really pushing for SAF to start off with? So if we hear something different, we will report to you. But I'm not aware of anything that would derail the 2030 program, at least not at the moment.
That's very helpful. Thank you so much.
The next question comes from Alice Winograd from Morgan Stanley. Please go ahead.
Hi, just one from me, please. You said about 60% of sales were termed. Can you give maybe a breakdown between Europe and the U.S. within the term sales? Because the EU margins have been extremely high for the better part of the second half, I think upwards of $900 per ton. If there's any indication that a lot of these term sales are in Europe as opposed to the U.S., this has some read across to margins, right? Appreciate any color you can give. Thank you.
Alice, thank you for your question. Unfortunately, we only provide information on the aggregated number of terms across the region. So we do not break that out by markets in more specific detail. So sorry about that. But thanks for your question.
The next question comes from Iiris Theman from Carnegie. Please go ahead.
Hi. Thanks for your presentation. I have two questions, please. So the first one is related to renewable diesel prices, which have come slightly down from Q4 over the past 2-3 weeks. So what has been driving prices lower? And do you see any drivers that could affect prices for the remainder of Q1? Yes, so this is my first question. And the second question is related to your utilization rate in RP. So I think previously, you highlighted the 80% utilization rate as a good proxy for this year in RP, while now it seems to be 75% or something like that. So is there anything that has changed since the Q3 presentation when you highlighted this 80% proxy? Did you, for example, have longer maintenance in Rotterdam or Singapore that basically has impacted your volumes this year? Thank you.
So thank you, Iris, for your questions on the RD prices on the last few weeks. I cannot report anything particular. I think partially, it can be also a bit sentiment-driven how these mandates are coming into play. But I think overall, I cannot report anything specific about that. I think what is good is that the level is, of course, much higher for us compared to where we were last year. I think we've now gotten to a more, let's say, healthy level. And I think for Neste, that is what's really critical here. On the utilization level, as I said earlier, we feel that we have more work to do in terms of these refineries. At the moment, we are running at a level which is fairly close to well, let's say that is the performance of the day, if I would say so forth.
Part of our PIP program, our performance improvement program, specifically focuses on getting more improvements out of the refineries. And therefore, we want to also get that number up. But that is the health of the refinery at the moment. Regarding the turnarounds that you referred to, Singapore, I think, is very close to starting, if not starting. And both turnarounds have been done. We don't comment specifically on the individual turnarounds, per se. But both of them have now been completed.
OK, thank you.
The next question comes from Christopher Kuplent from BofA Securities. Please go ahead.
Good afternoon. I'm afraid I'm going to keep asking about turnarounds. I'm going to focus on Porvoo and the oil products division. As far as I can recall, this used to be a four-year cadence for major turnarounds. I think the last one we had was in Q2 of 2024. Maybe it's my recollection that's off. I thought it was next going to be in 2027, which was already, to me, earlier than the usual four-year cadence. You're now, as far as I can tell, telling us that that 2027 may actually happen in 2026. I wonder not whether you can give us the exact week when it's happening. I wonder what your thinking is behind reducing the cadence and what can explain the more regular turnarounds and shutdowns.
And lastly, again, this is not about a turnaround but about Rotterdam and the ramp-up that we're looking forward to for 2027. Can you give us an insight into how fast you think that ramp-up can happen once you've gone through the latest rounds of debottlenecking by the end of this year and you then bring the new units online? Is this a three-month process, a 24-month process, 12 months? What's a reasonable expectation for the speed of that ramp-up, please? Thank you.
Riyad, thank you very much. I think the first question is easier for me to answer. It's a good question. The reason why we have gone to a more frequent turnaround is very straightforward. Here in Finland, in the Nordic markets, what we have concluded is that the four-year cycle is just simply too big a turnaround to pull off safely and reliably. There are certain sort of limitations on how much workers and contractors we can actually physically get into this fairly small market. And therefore, we've concluded that breaking it into smaller parts simply makes the turnaround more manageable. This is purely driven by efficiency and safety and productivity rather than anything particularly different. So it will be a bit smaller scope but then more frequency.
So then, yeah, so the 2.5-year cycle is what is the way that our engineers have concluded is the safest and most efficient way to do it. Obviously, I cannot tell you the exact day when we're starting. We will report back to you on that later. But we are spending a lot of time, really, to do our utmost to get this turnaround to be good. The previous turnaround we had actually was quite successful. If we look at the performance at Porvoo, I think part of the explanation why we've done so well is that in terms of utilization, is that the previous turnaround was done really well. So taking learnings from the previous one into the 2026 program hopefully will then yield good results. Regarding Rotterdam ramp-up, unfortunately, here, I cannot give you any information yet.
We're so in the midst of building the refinery. You know we are one year late from the initial schedule that was published, I think, in the summer of 2022, if I remember. And so there's still a fair amount of work to do. I think probably well, let's see. When we are closer to startup and when we are in that phase, we will then start telling you more about the ramp-up curve. But at the moment, unfortunately, I don't have any meaningful information to share with you. So sorry about that. Thank you.
No problem. Thank you.
The next question comes from Yulia Bocharnikova from Goldman Sachs. Please go ahead.
Hi. Thank you for taking my questions. I have two, please. First on SAF. So given we see currently SAF trading at discount to RD, is it correct to assume that 100% of SAF should be sold on term contracts? And if you could give any clarification if there is any premium of SAF to RD in terms of prices in term contracts. And the second one on hedging. So you mentioned so there is still palm oil or soybean hedging. Is my understanding correct that if we further see lower diesel prices and higher palm oil prices, that would result in a positive hedging impact in Q1 2026? Thank you.
Hey, Julia. How are you? So let me address the first one. And then on hedging, Eeva. So indeed, you are right that SAF is trading, unfortunately, at a discount to RD. I mean, SAF should be trading at a premium because obviously, it's a more advanced product and more higher value-added product. But that's how the market is today. I can't comment on the particular prices or how we do the terms. The only thing which I will just say is what I said earlier is that when we look at the SAF business for us, we pretty much optimize it based on what creates more value for us. And depending on the commercial returns, we will then adjust our lines accordingly. That's really all I want to say about the SAF commercial aspects. Hedging then, please.
Yeah. I would say, Julia, that higher diesel is better both in RP and OP, kind of irrespective of hedging. Now, obviously, that can sort of have some impact. But so in that sense, your conclusion maybe is a bit sort of too focused on the palm oil side. So the diesel component is important in both businesses. And of course, what we've seen so far in the quarter is a healthy level of diesel prices, even if we're not sort of where we were in that sort of November spike.
Thank you.
The next question comes from Matti Kaurola from OP Corporate Bank. Please go ahead.
Hi. Thank you for taking my question. Two questions. First, regarding your production flexibility. So could you open up your kind of flexibility to produce more SAF in case the market is recovering? So how easy do the switches? Are we speaking about, as an order of magnitude, one quarter or something like that? And then the second one is regarding trade policy. So could you help me to understand why these ADDs that were on Chinese SAF are pending? Because on the face of it, it's pretty much the same as with RD as in, where we only have those ADDs in place.
Thank you, Matti. I'm sorry. At least I had some difficulty in hearing the.
Yeah. The first question from Matti was around how easy it is to switch [crosstalk] .
Yeah. That's what I got. [crosstalk] What about the second question?
And then the second was on trade policy, that's why I believe, Matti, you asked that why are we yet to see any ADDs on SAF, that the case would be similar to RD and when we only have it.
[audio distortion]
OK.
The production is happening in the same facilities and same companies.
Right. OK. So very good. So on production flexibility, so it is the advantage of our production system is that we can fairly quickly move back and forth in the lines. It is something in our system. I mean, these lines do have that flexibility. But of course, we only do it if we think it is financially viable. The switch is we're not talking of very long lead times to go from one product to another. So I don't know if I have much else to say there. Anything you want to add on the flexibility?
No. No.
And then on the trade policy, yeah, we are actively working with the European Union on this. But the European Union takes its. They have their own procedures. They have their own methods and approaches on how they review these things. They have to do a lot of data collection. Sometimes it just takes time to get the data for them to do the actual calculations on potential injury. We don't have deep insight into how the processes work inside the Union. We are hopeful that in 2026, we actually could see some progress. We will report back to you the moment we know that the European Union is moving forward. I really hope they will make a decision this year. I really hope so.
Thank you so much.
The next question comes from Alastair Syme from Citi. Please go ahead. There are no more questions at this time. So I hand the conference back to the speakers.
OK. Well, thank you for your questions. Thanks for taking the time to discuss with us about 2025 and 2026 outlook. I want to really summarize our presentation with four main points. Looking at last year, I'm very happy with how we were able to deliver the financial turnaround compared to 2024. As you've heard, really phenomenally good success on the improvement program. Really very happy with exceeding the targets. And I believe there's more to come. And we will report to you on a quarterly basis. Regulatory development looks to be favorable. And as referring to Matti's question about SAF anti-dumping duties, hopefully, we can report something on that as well in 2026. And really, I believe we have a good foundation. There is still opportunity to improve the company. And we are working towards getting full asset utilization in place in 2026.
And then 2027, Rotterdam Two is coming. So with those messages, both from Eeva, me, and Jukka, wish you all a very good day. And look forward to seeing you then after Q1. Take care.