Neste lowered its sales volume guidance for Renewable Products on Friday, as an unexpected production outage at the Rotterdam refinery will reduce production and thus sales volumes. To reflect this, we have lowered our near-term estimates for the coming quarters. The valuation of the stock is quite low, provided that Renewable Products' performance recovers to at least satisfactory levels over the next few years. Given the back-loaded nature of the expected return in the coming years and the difficulty in predicting an improvement in the market outlook for Renewable Products, we do not take a stronger view on the stock despite its significant medium-term potential.

Neste’s Q3 report or the first comments from the new CEO offered no surprises. The market outlook for Renewable Products, suffering from oversupply, is challenging also for next year, but with market growth, we expect the current low gross margin to be higher in the medium term.

Neste lowered its Renewable Products guidance for the current year on Wednesday. The underlying factors are more or less the same as before, and we continue to believe that such low margins will not last in the long run. We therefore believe that the segment's performance will recover in the medium term, although there is uncertainty about the timing of the stabilization of supply and demand.