Company makes third cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel rates

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By Elviira Luoma and Essi Lehto

HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel organization for the third time this year due to falling prices and also reduced its anticipated sales volumes, sending the business's share price down 10%.

Neste said a drop in the cost of routine diesel had actually impacted what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock stayed high.

A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has produced a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to hamper the nascent market.

Neste in a declaration slashed the anticipated typical equivalent sales margin of its renewables unit to between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well listed below the $600-$800 seen in February.

The company now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually forecasted because the start of the year, it added.

A part of the volume cut came from the production of sustainable air travel fuel, of which it is now anticipated to sell between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen formerly, Neste stated.

"Renewable items' sales costs have been adversely affected by a considerable decrease in (the) diesel price throughout the third quarter," Neste stated in a declaration.

"At the very same time, waste and residue feedstock rates have not reduced and sustainable product market rate premiums have stayed weak," the business included.

Industry executives and analysts have actually said rapidly expanding Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly growth plans in Europe.

While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable impact on biodiesel margins from a lower diesel rate was to be anticipated, Inderes expert Petri Gostowski stated.

Neste's share cost had reversed some losses by 1037 GMT however stayed down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki; Editing by Terje Solsvik and Jan Harvey)