Translation: Original published in Finnish on 10/30/2026 at 8:20 am EET.

Neste's earnings continued to be a cause for celebration in Q3. The celebrations were also more spectacular than we anticipated, as the Oil Products margin rose higher than expected, and the sales volume of Renewable Products far exceeded expectations, too. However, the excitement surrounding the earnings was tempered by the higher price tag of the Rotterdam expansion and the delay in the ramp-up to 2028. This pushes expected earnings growth further into the future, prompting us to lower our target price to EUR 33.0 (was EUR 35.0). Nevertheless, we reiterate our Accumulate recommendation for the moderately valued Neste. 

Margin party gained further momentum in Oil Products

Neste achieved a record comparable EBITDA of just under 1.6 BEUR in Q3. This easily surpassed expectations, fueled by the better-than-expected performance of both main segments. Despite the maintenance turnaround, Oil Products' earnings rose to an excellent level, driven by the total refining margin, which was boosted by an exceptional market environment. Notably, the Q3 refining margin is roughly triple that of the past five-year average. The same market factors also largely supported the sales margin of Renewable Products, together with its strong demand picture. Nevertheless, the sales margin, which decreased from the high level in Q2, fell short of expectations but was offset by record-high sales volumes, thanks to high refinery utilization rates.

Volume growth pushed further into the future

Neste maintained its outlook for the current year, which points to a decline in sales volumes for Oil Products and stable sales volumes for Renewable Products compared with the previous year. While this comes as no surprise, the main news regarding sales volume trends was the status update on the Rotterdam expansion. According to Neste, the project's investment cost has risen to 3 BEUR due to construction delays. The company expects the expansion to be operational by the end of next year, with the ramp-up taking place in 2028. This was disappointing relative to our previous forecasts for sales volume growth.

Sales volume growth forecasts pushed further out

Following the Q3 results, we did not make any significant changes to our short-term estimates for the remainder of this year or next year, both of which had already increased substantially in our earnings preview. In contrast, our comparable EBITDA estimate for 2028 decreased significantly (-16%). This is because we had previously expected the ramp-up of the Rotterdam expansion to begin next year, and therefore our Renewable Products estimates included significant volume growth already for 2028. Now a significant portion of the volume growth has been deferred to 2029. Thus, we expect earnings to decline over the next two years, as our estimates factor in a scenario of falling margins in both main segments. However, in the current market environment, estimate risks are high in both directions.

Good expected return despite earnings growth shifting further out

Based on this year's earnings, the share's valuation is low (P/E ratio of 7x and EV/EBIT ratio of 6x). We expect earnings to decrease in the coming years, however, as a result of declining margins in the main segments. Consequently, we expect earnings to begin rising only in 2029, when sales volumes of Renewable Products begin to grow significantly. In our view, Renewable Products is attractively valued relative to its medium-term earnings potential, as the segment's valuation, based on the 2029 earnings estimate, corresponds to an EV/EBIT multiple of ~9x. As a result, we believe the long-term upside potential still provides an attractive expected return, even though expectations for earnings growth have been pushed further out.