Neste Oil Surges to Five-Year High on Renewables: Helsinki Mover

Neste Oil Oyj, the best-performing major European energy stock, jumped to its highest since July 2008 in Helsinki trading after saying full-year earnings will exceed analyst estimates as renewable-fuel sales gain.

Neste rose 14 percent to 17.41 euros at 12:30 p.m., bringing this year’s advance to 78 percent in the best year-to-date performance among Stoxx 600 Oil & Gas index members. The shares rallied as much as 17 percent, the most since Aug. 1. Trading volume climbed above 1.8 million shares, more than double the three-month average.

Finland’s only refiner is benefiting from higher renewable fuel sales particularly in the North American markets, the Espoo-based company said today. It increased its estimate for the unit’s operating profit to more than 200 million euros ($265 million) from over 120 million euros.

“California will be an important market for Neste Oil’s renewable diesel business,” analysts at Nordea Bank AB said in a note. As Neste’s NExBTL product meets the state’s own standards, it could sell about 290,000 metric tons this year of the biodiesel there, or about 18 percent of total production, the analysts said.

Neste said today its comparable operating profit for 2013 will exceed 530 million euros, 15 percent above the average estimate of nine analysts in a Bloomberg survey and more than any single estimate. The company’s comparable operating profit excludes inventory changes and one-time items.

Biodiesel Demand

Dividends should be “back on the agenda” as investments are complete and money is “flowing in,” they said. The company has paid out 33.25 cents a share on average to investors during the past four years, compared with an annual mean of 87.50 cents in the four previous years. Neste will hold an event for investors tomorrow in London.

Neste is benefiting from increased demand for biodiesel. The European Union has set a target to get at least 10 percent of land-transport energy from renewable sources by 2020.

“We are clearly impressed by Neste Oil’s earning power among European refiners,” Matteo Bonizzoni, an analyst at Kepler Cheuvreux in Milan, said in a note to clients. The guidance upgrade was mainly due to low palm oil prices and high Renewable Identification Number prices in the U.S., he said. Bonizzoni upgraded his recommendation to buy from hold, raising the 12-month price target to 17 euros from 14 euros.

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