Jukka Miettinen : Good afternoon, everybody, and welcome to discuss Neste's Q2 results that were released this morning. My name is Jukka Miettinen, Vice President of Investor Relations for Neste. Here with me, we have our President and CEO, Heikki Malinen; as well as our CFO, Eeva Sipila. We are referring today to the presentation that was released in our website early this morning. The key highlights of our presentation include, for example, the performance in the ongoing market volatility, our Q2 financial performance. We will be also discussing the changes in the RP demand outlook as well as opportunities and uncertainties. We will be -- we will have discussions with all of you, and please pay attention to the disclaimer as we will be making forward-looking statements in this call. But with these remarks, I would like to hand over to our President and CEO, Heikki Malinen. Heikki, please.
Heikki Malinen : Thank you, Jukka, and good morning to the folks in the U.S. and good afternoon here in Europe. I hope everybody is enjoying the nice summer we're having. So let's go into the presentation here. And first of all, this Q2 was the best quarter financially ever for Neste. I'm really pleased with the results. I'd say I'm also proud with the folks -- with the work that the folks at Neste have done. Things have changed quite a lot since the last 2 years. So of course, we at Neste are very happy with the improved financial performance. The market environment has been favorable for us, and we've been able to take advantage of the opportunities ahead. Also strategically, I'm very pleased that the Renewable Energy Directive III decisions have finally started to be implemented in Europe and also the RVO decisions in the U.S. were a positive signal also for us for the future. I think many of the stars around Neste are aligning nicely. Our financial position has strengthened, and Eeva will go into the balance sheet and cash flows more in more detail later on today. And then I said the work on Rotterdam continues. But always at Neste we start with safety because that is our license to operate. On the left-hand side, you can see our total recordable injury frequency rate. And for the second quarter, we had clearly better performance than we've had in the past. We had some cases injuries, but they -- I would call them minor, less risky. Our focus, though, in terms of people safety is to make sure there are no fatalities and no serious injuries. Work continuous, we are striving for 0. But overall, direction of travel in the second quarter was good. On the right-hand side, you see the data for process safety. We had very good performance for process safety in Q2, and we basically recorded no category 1 or 2 incidents. So very pleased with that performance. So let's look at the figures briefly. So on the upper left-hand side, you can see our Renewable Products sales, we sold over 1 million tons. And in terms of our financial results, in terms of EBITDA, EUR 1.2 billion, and that is record EBITDA for Neste. I'm very pleased with the RFP margin. I know a lot of us talk about the sales margin and follow that closely. $1,200 per ton is a record number. I think the way I sort of see it is that it is a positive signal that we have been able to monetize the market opportunity that has been here in the second quarter. In terms of refining margin for OP, $25 per barrel. Market conditions have helped, that is, of course, clear. But overall, if I look at the first half of this year, Porvoo as a refinery has performed quite well. And so overall, I'm personally pleased with the performance of the team in Porvoo. As I said, Eeva will go into the financial the numbers in more detail in a moment. So Eeva, I hand it over to you for a more detailed discussion. Please.
Eeva Sipila : All right. Thank you, Heikki, and good afternoon to everybody on my behalf as well. I'll start with the reference margin. So this graph illustrates the renewable diesel gross margins in the quarter. And you can see it was a volatile quarter. Margins charged up quite dramatically in the early part of the quarter, and then as the feedstock costs also kind of started to catch up, margins did come down. But overall, the average was still well above $1,000 per ton. For Neste, our comparable EBITDA for the quarter was indeed the all-time high of EUR 1.2 billion. And almost 3/4 of that came from Renewable Products. Oil Products enjoyed the exceptionally wide diesel cracks, whereas the Marketing & Services had a more challenging market with slightly lower volumes and tighter unit margins. We continued our strong progress in the performance improvement program. And the run rate -- annual run rate impact, we reached EUR 594 million at the end of June, whereas then the realized in-quarter impact was EUR 145 million. And if one looks at the impact split, so then 6% from cost reductions and roughly 40% from revenue and margin optimization. And as you may remember, we are pushing this program until the end of this year. So obviously, now coming to the sort of late part of the program. Moving then to the segments, and I'll start with the Renewable Products. So on the left-hand side in the graph, you can see that volumes were up from Q1, so sequentially up, but year-over-year, slightly down. Now importantly, the blue line kind of shows really the continued uptick in the margins. On the right-hand side then, we can compare sequentially the main items that affected the results. And you can really see that it was a story of margin and volume. Everything else was marginal. Starting from the volumes. So the RD market continued to be the more attractive market. So you see our SaaS volumes are relatively modest. Then looking at the main components in the margin, so we all know diesel prices were high in the quarter. But I would also draw your attention to the RIN prices. So we've seen a market strengthening in the U.S. market, started already in Q1 and continued in Q2. And that's obviously supporting our U.S. business significantly. Then on the other hand, our utilization rate of 75% was unsatisfactory. And hence, the work on operational reliability continues. And we are actually preparing now to implement broader upgrade work in connection with our upcoming turnarounds in the second half. You may remember that we have discussed the fact that some of the improvement actions are unfortunately very difficult to implement while the refineries are running. So they do sort of make more sense to combine with the turnarounds and when we have a general shutdown. Then moving to Oil Products. So again, on the left-hand side, the blue line shows our utilization rate. It was up to 90% in the quarter. I think coming so close to the end of the catalyst, very solid performance from the team to be able to drive at these levels. Again, on the right-hand side, if we analyze the main items explaining the results sequentially, so indeed, you see slightly lower sales volumes. And this is purely due to the fact that we are preparing for the turnaround and we actually sold very little spot volumes. We wanted to keep those in our inventory so that then we can fulfill our term sale promises to our customers in the third quarter. Then on the total refining margin in the quarter, it ended up at $25.8 per barrel. And actually, despite the outlook looking tougher at the beginning of the quarter due to very high crude premiums when we met last time, those premiums actually came significantly down into the May, June period, which then supported the refining margin to actually improve on the already strong Q1 level. And then finally, on the Marketing & Services. So indeed, a slightly more challenging market. Then again, as you may remember, you can well see from the graph on the left-hand side that the Q1 was quite exceptional. We had quite a bit of inventory profits hiking the result. And in that sense, we're satisfied with the EUR 23 million achieved. The high pump prices are having an impact on demand when it comes to Finland and Baltics. And then the fixed costs are here slightly up, and it's really the ongoing investments into the network to improve that customer experience that we have been working on for a few quarters now already. Then moving back to the Group figures. So on the left-hand side, the cash out investments, very stable quarter from -- compared to Q1. Now as we have the plans ready for the turnarounds, we have been able to narrow our guidance on the full year CapEx, and we have today guided you on approximately EUR 1.2 billion, so the upper range of the previous range. And as said, really to -- we're trying to maximize the opportunity that those shutdowns give us to improve reliability. Then moving to the right-hand side, so cash flow before financing activities. Net working capital was a big mover in the quarter. The higher market prices obviously have an impact on all values [ they do to high ] cash and especially then combined with the fact that we are, as mentioned, preparing for the turnaround in Oil Products. So we have been running up inventories. So the combination of higher volume and high prices had a significant impact on cash flow. Considering all this, we have to be satisfied with EUR 164 million that we generated in the quarter, really thanks to the strong profitability. Looking forward, we all know the recent reescalation in the Middle East makes obviously predicting market prices very difficult. I would think that we all agree that they're unlikely to come down in the short term. However, from a cash flow point of view, as we get into Q4, I certainly expect our inventory volumes to come down, and that will then ease the pressure on the cash flow late in the year. And then to conclude, our financial position, strengthened market during the quarter. We took our first concrete step in deleveraging by tendering EUR 500 million of notes in -- successfully in the quarter. Now this took our gross debt down, and with a stable cash position, our net debt to capital went below 30%. I'm also pleased that Moody's noted our progress in strengthening our financial position with the recent decision from this week to confirm our A3 rating and with a Stable Outlook. All in all, we are comfortably hitting our financial targets set for '25, '26. And with that, handing back to Heikki.
Heikki Malinen : Thank you, Eeva, for reviewing the financial details. Now let's move on and talk about some other topical themes and the outlook. So first, an update on regulatory environment. As we all know, it is very critical that we make progress in this area as well. The important message to the market is that in terms of the European Union, the RED III implementation progresses. And you may recall that last autumn after the summer, there was news that Germany was going to increase its mandates for renewable diesel. It's taken quite a long time, but now in May, the German government and parliament had made its decisions, and we have a very positive outcome. Netherlands following. And most recently, Spain has also made a decision to implement RED III. So gradually, member state by member state, the directive gets implemented. And overall, the decisions are very positive, very favorable for renewable diesel demand here for the coming years. And I will then go through that in a moment with some other data. In the U.S., the decision on RVO, as said, very favorable significant anticipated demand growth expected. And it also takes away a lot of the uncertainty and ambiguity we've had regarding where will the policy go. But I said decisions are very positive for this sector. And then with respect to Asia Pacific area, it is, of course, a very large market, a huge amount of population. Australia is gradually moving forward. There are now discussions about a mandate for low-carbon liquid fuels. So let's see how that goes and whether the Middle East situation will further accelerate the trend. And then in Singapore, one of the leading countries in Asia, and this area is now moving forward then to implement, take the first step in the [ soft ] mandate. So overall, compared to where we were a year ago, I think a lot of clarity. I don't really see anything sort of negative. On the contrary, a very favorable outlook. And in that respect, for Neste, as we are investing in this sector, this is very important and favorable. Here in this chart, you can then see those legislative decisions being converted into absolute volumes. These are our estimates. On the left-hand side, you can see the global demand for renewable diesel, we're estimating it to be somewhere around 20 million tons. And with these decisions, we project demand to grow about 10% per year, even beyond 30 million tons per annum. On the right-hand side, we have the situation on [ SAF ]. No major decisions announced this year. We are on the current trajectory, still with 35% increase, still, of course, a small market, very nascent market. But of course, recognizing that the jet-fuel -- fossil jet-fuel market is huge and continues to grow, there is also significant upside potential in this area as we go forward. And of course, we are doing our own work to advocate the benefits of SAF and look forward to seeing the 6% then being implemented in 2030 in Europe. Here is just an updated photo on Rotterdam. I don't really have anything new of substance to report at the moment. As you can see from the photo, again, work continues. We have a lot of people on the site, a lot of activity. The work continues. My own view though is that if you compare now Rotterdam vis-a-vis the decisions that have been taken, so if you go back, remember a couple of years ago, there was a discussion of whether it makes sense to invest in this sector. quite a number of companies have canceled or postponed their investments. We made a decision to move forward even recognizing some of the uncertainty. It's my clear view that this was the right call to make at Neste. And the timing of this investment then in '27 with a start-up I think will be well timed now when the European demand outlook also looks quite favorable, so -- or looks really favorable. So overall, very pleased with this work and decision. Then a few words about opportunities. So the topic of our -- of the time is, of course, energy security, the situation in the Middle East, raised, of course, a lot of questions about how much energy reserves and supplies countries should have. Together with Eeva, we are of the view that this will increase the discussion about having more inventory, more production, buying more locally, and this in itself will also support the demand for renewables. The volume increases coming from RVO in the U.S. are substantial. That is going to help us also in our Martinez refinery in California. And we also see that the situation today is most likely going to continue for a while where the middle distillates market is tight, supply is reduced. And for Porvoo, in particular, Porvoo is very much focused and concentrated, optimized around middle distillates. So Porvoo is also benefiting from this opportunity. On the uncertainties, well, geopolitical tensions are high. and they are creating volatility in the oil market. So it is, of course, many things are possible. But so far for Neste, the direction of travel has been very supportive. The availability of production components is something we monitor carefully. We saw during COVID, there were disruptions in the supply chain. So far, we have not seen anything in our area, but we monitor very carefully that we have all important spare parts and chemicals and other things we need to produce, that we have them in stock in the right amounts. Feedstock prices, well, over the last year, if we look at Europe, we've seen feedstock prices maybe rise about 10 percentage, maybe a bit less than that. In the U.S., clearly more. It would not be unsurprising if gradually also the pressure on feedstock price rises comes also gradually more to Europe. But so far, in the first half, we have benefited from the fact that feedstock price increases have been fairly moderate. And of course, at Neste, we are buying from all sources globally, so that allows us to try to take advantage and optimize feedstock sourcing depending on where we see market opportunities to buy cheaper. And then, of course, we have the question about inflation and impact on non-macro if this Hormuz situation continues longer. Then my final slide on the outlook is Renewable Products sales volume in 2026 are expected to be approximately at the same level as in 2025. And Oil Products sales volumes in 2025 are expected to be lower than in 2025 -- sorry, Oil Products sales volumes in 2026 are expected to be lower than in 2025 due to the planned maintenance turnaround in portable. The Group's full year 2026 cash out capital expenditure, excluding M&A, is estimated to be approximately EUR 1.2 billion. There are 3 scheduled maintenance turnarounds in the second half of 2026, with the following approximate durations. In Porvoo, we have an 8-week turnaround starting now end of August 2026. In Rotterdam, we will have an 8-week turnaround during the fourth quarter of this year. And in Singapore, we're going to have an 11-week turnaround starting in December 2026 for one of the production lines. So in this stronger market, we have updated our plans on turnarounds. And we believe that there are attractive business cases to invest in Singapore and Rotterdam more, particularly because, first of all, of course, on safety, we always need to make sure we have good safety levels, but we also need to improve our utilization, and we believe these turnarounds will help that. And secondly, we need to continue expanding our ability to process a variety of feedstocks, also more challenging feedstocks, with higher bio premiums. And we believe that the EU mandates are also driving towards that direction. So those are some of the reasons for the longer turnarounds in Rotterdam and Singapore. So with those comments, I guess we'll move on then to the Q&A.
Operator : The next question comes from Alejandro Vigil from Santander.
Alejandro Vigil : Congratulations for these record results this quarter. And my first question is about the outlook for Renewable Products margins in the second half of the year. I know it's difficult and you try to be cautious, but if you can elaborate about how July started and your view about margins for the rest of the year. And the second question is, thank you very much for these views about the long-term demand for renewable diesel and SAF, and also just your thoughts about supply because, as you said before, there are many cancellations of projects and delays, so it looks like the demand supply it could be quite tight in the coming years. Your thoughts would be very welcome. .
Heikki Malinen : The first question is a tough one. It is very -- we've seen from the past that it is quite difficult to forecast the movements in sales margins. They move -- they can move fairly quickly. And of course, considering the fact that underlying you also have the price of gas oil, that is also -- can be very volatile. Anything you would like to add, because I'm really more erring on the cautious side, but...
Eeva Sipila : Yes. Maybe Alejandro, just to note that our base case assumption would be that during the second half, we see feedstock costs going up, somewhat then the diesel price is really now depending on the situation in the Middle East, that I think we're all -- all just need to kind of follow that very closely and then sort of discussing during then the quarter as the second half goes that where -- how that looks.
Heikki Malinen : On your question regarding long-term demand, I mean the outlook is really, I think, even more favorable than we would have thought here a year ago at this time. On supply, of course, that's a good question and an important question because, of course, the commercial side is very much dependent on supply and demand. Well, I think as far as we can see on this, as far as large-scale projects like Neste Rotterdam 2, I don't think we can identify a single major one that's underway. And recognizing that it actually takes quite a long time to get these projects started. It is not that easy to start or even restart the project. So I think that does give us some sort of highway here to move. Coprocessing is, of course, one clear potential source, and some refineries are doing that, and we'll do that. And then, of course, we have -- when you look at the European market, you have the question of imports from Asia, particularly -- and then there have been some imports from North America. But I think overall, if we look at the situation as it speaks, I would just say that Rotterdam 2 is coming online at a good time. And the demand looks to be out there, so the timing is really good.
Operator : The next question comes from Kate O'Sullivan from Citi.
Kate O'Sullivan : So Q1, you highlighted priorities before considering the next phase of growth, bringing Rotterdam online, demonstrating returns on that investment and continuing to deleverage. And since then, we've seen margins have remained exceptionally strong. So assuming Rotterdam ramps successfully and the balance sheet reaches a level you consider appropriate, what becomes the company's next strategic priority given the structural growth outlook for renewable fuels and net days position? As the market leader, should investors expect Neste to do another meaningful phase of capacity expansion? Or do you -- increasingly the focus shifting towards maximizing returns from the existing asset base?
Heikki Malinen : Very important strategic question. I think this is something we will have to come back to as we get into 2027 and 2028. At Neste, our current focus is very much now on getting returns. So we've invested quite a lot. Don't forget, we also have the Singapore Line 2 investment. Both of these investments, we have to get into a phase where we get our returns up. So that is really the priority number one. And if we look at then beyond the 2030s, we have mentioned that we've been looking -- we are looking at [indiscernible] as a new technology that's out in the public. So for me personally, for the next few years, it will be about deleveraging, getting our operational performance even higher, getting utilization higher. That's where our mind is set. And thoughts beyond that, we will then have to come back to that at the appropriate time.
Operator : The next question comes from Adnan Dhanani from RBC.
Adnan Dhanani : Two from me, please. Just the first one, if you're able to provide some color on the turnarounds this year. Particularly interested in what the utilization rates could look like, both the enhancements that you're working at Rotterdam. And on the flip side, I appreciate you said there was a good business case for those turnarounds. But is there any scope to make those events shorter? Because obviously, you'll be going off at a time where there are pretty strong margins in the market. And then just second one on OP. So if I look at your numbers this quarter, the middle distillate sales volumes fell quite a bit quarter-over-quarter in your overall sales split. Obviously, the time where distillate margins have been very attractive. A number of your [indiscernible] peers have been maximizing their sales for those products? I just want to understand what would you do in the future?
Heikki Malinen : Just comment first on the TA utilization, the timing of RD and -- Rotterdam and Singapore, and then Eeva can talk about the middle distillates and where we are. Well, we obviously recognize the market situation and are not going to spend any extra days on these turnarounds. In terms of Rotterdam Line #2, we had the start-up 3 years ago. This is the first major -- I'm sorry, Singapore. Singapore Line #2, is the first major turnaround that we have. So that is explaining the turnaround duration. There's more work to do. And then in terms of the utilization level, there are certain upgrades we have to do in the lines to get utilization to a higher level. I don't want to guide on what -- or comment on what the utilization could be, but we do financially believe this is an attractive business case. Then in terms of Porvoo, middle distillates.
Eeva Sipila : Yes. No, I mentioned a few points already, obviously, in this market, I think everybody who has a diesel slate has been pushing to max. But as I mentioned, that we're coming so close to the turnaround, our catalyst is quite worn out. So I think the team really did its utmost to sort of push for the sort of 90% utilization. And then I said, whilst our sales volumes were down, we did produce. So they are now in inventory, so that we can then sort of deliver to our customers during the turnaround. So with those 2 topics, I think we're happy with the outcome. But indeed, recognizing that now our focus is on getting most out of the turnaround and then really sort of ramping quickly up for Q4 in case the market is -- continues to be this tight in the middle distillates.
Operator : The next question comes from Sasikanth Chilukuru from Jefferies.
Sasikanth Chilukuru : I would again come back to the -- on the turnaround activity. I just wanted to understand if you could -- or if you could provide more details on the issues that are actually affecting these lower utilization. What is actually going wrong? And why is utilization low? Is it more to do with some units not functioning well, and thereby actually for the turnaround work, how much of the work is affecting liability and how much of that is actually improving the slate of feedstocks that you could use? If you can provide some color on that. The second one was related to the 2016 (sic) [ 2026 ] CapEx. Now it's at the higher end of the previous guidance range. Wondering what was it that kind of got it to this higher end. Slightly related to that, if you comment on where we are with the revised budget of EUR 2.5 billion for the Rotterdam expansion plan. Are we still within that budget?
Heikki Malinen : If I start first. The renewable energy directives are hearing in the markets very much into more and more complex feedstocks. And at Neste, of course, one source of competitive advantage for Neste has been that we're able to use a variety of feedstocks. We source them from all over the world. We've been really trying to push, get into the more complex part of the market because also the bio-premiums are higher, the margins are higher. So legislation is directing the market towards that, but also we at Neste want to be the front runner. And consequently, that technical -- the challenge to process is higher, and that requires certain material upgrades in the [indiscernible]. That is what's driving that. And we believe there's a financial return for pushing in that direction with higher margins, but we need more volume, and that's why we need to see upgrades into the lines.
Eeva Sipila : And then to your questions on the CapEx, so we started the year with a range of EUR 1 billion to EUR 1.2 billion. And then now as the plans of more become more concrete, we have sort of narrowed and wanted to be more specific on the guidance, partly also because our first half spend is perhaps slightly lower so that you don't then assume that this 2/3 of that, this is a linear development rather, that the second half is more heavy. And as Heikki said, it really is just a reflection of how also all these sort of additional aspects. These are not just sort of traditional catalyst changes that we're talking about, and that kind of explains the EUR 1.2 billion. Then on Rotterdam, so no news to report, so the EUR 2.5 billion, we're still working with that.
Operator : The next question comes from Henri Patricot from UBS.
Henri Patricot : Two questions from me following up on the topic of the Renewable Products margin for the second half of the year. So just firstly, when it comes to what we've seen in July, obviously, higher diesel prices. You mentioned that you expect feedstock prices to likely be higher in the second half of the year. So is that something that has offset the higher diesel prices already in July or just expecting that prices for feedstocks are likely to be higher for the rest of the year? And then secondly, I was wondering if you could give us a sense of whether there's a difference in terms of the split between spot sales and term sales in the second half of the year versus the first half.
Heikki Malinen : You want to take the first?
Eeva Sipila : Yes, I can take the first one. So I would say now there's sort of reescalation in Middle East, so the feedstock markets haven't reacted that fast. It's more in the general trend that we see strength both in the U.S. and European market where we clearly seeing more buying of feedstock, and that's kind of a more sort of continued. Of course, it's good to appreciate that we are hedged partly on the gas oil, so these sort of spikes we suddenly get don't necessarily materialize in our margins. So that's maybe the cautionary comment on what's happened now in the past sort of week, 1.5 weeks.
Heikki Malinen : Yes. And in terms of term sales, so we mentioned, I think it was end of last year that we have turned about roughly 60%. I would use that number throughout the whole year. There are some months when we have a bit more, months, a bit less, but that is sort of the rough number through the year. Yes.
Operator : The next question comes from Derrick Whitfield from Texas Capital.
Derrick Whitfield : I have 2. First, building on the last question, how are you guys thinking about term pricing exposure for 2027 given the strength of the market at present? And then second, could you speak to how you're thinking about the allocation of RP sales across your end markets, the regulatory markets, as you guys [indiscernible] exceptionally strong here in the U.S. and are moving higher to bid for imports?
Heikki Malinen : Could you repeat the second half, please, one more time. The line was a bit unclear. So please, if you can, the allocation question.
Derrick Whitfield : Sure. So second, could you speak to how you're thinking about the allocation of our RP sales across your end markets? The regulatory markets in the U.S. are quite strong as you guys highlighted and moving higher to bid for imports.
Heikki Malinen : Yes. No, thank you. So yes, it is -- I think it's very, very quiet now. Summertime is -- summer season is upon us and most of our customers on vacations in August. So I think we will then come back to this term question later in autumn. But as you said, it's, of course, clear that price level at the moment is on the higher side. We will have to have the negotiations, as always, with our customers and see then what is -- what are they looking for, for 2027, and then customer by customer negotiate based on what type of needs they have. So I can't really comment on that, but recognize your question. In terms of allocation of volume, you may recall that a few years ago, we allocated -- or we had to reallocate Singapore volumes over to Europe. European demand has been very good and continues to be very good. So a lot of that -- the European market continues to be very important for us. Martinez is now the primary source for our volumes in the U.S. and Martinez is running well. And that's basically the situation for Neste at the moment. So nothing really to tell about that at the moment.
Operator : The next question comes from Paul Redman from BNP...
Paul Redman : Two questions, please. The first is just to come back to margins and try to reframe the question. Can you give us any indication of what you've had in July? So has July on average been better than what you got in 2Q as an average? That's both for the Oil Products business and the Renewable Products business. And then I wanted to touch on the performance improvement program. I wanted to ask where we can go from here. You're clearly making big savings and big revenue benefits from this program you put in place over a year ago. So yes, where can we go from here? And then secondly, how much of that is baked into the margins? How much of the cost and revenue over the savings over the past year are now coming through as $1 per ton on the margin?
Heikki Malinen : So maybe I'll ask Eeva to comment on the numerical side, and I will then talk about the performance improvement program, how we move forward.
Eeva Sipila : Yes. I think what comes to July and the couple of weeks. So obviously, I would say that generally, when you have a sudden reescalation like we've seen in the Middle East, it usually people -- the first reaction for customers is to wait and see kind of what's coming out of this. So we haven't, in that sense, seen huge volumes, but I would say that no change in RP, whereas then in OP, obviously, the cracks have reacted and that comes kind of quicker through. Now then the question is what happens on the crude premiums going forward on this. But that hopefully sort of helps you forward. And then.
Heikki Malinen : Yes, I think on -- well, we kicked the performance improvement program at a time when the markets were very weak, our results were really poor, and we're trying to accelerate and extract value quickly. And if you remember, we had the headcount reduction exercise. We took out a lot of costs from sourcing, and we're able to capture some really quick wins. We've also been able to save quite a lot and optimize logistics and improve our commercial approach on the market. So I think these are in some ways, some of them on the sourcing and on the headcount, they're done and that value has sort of been captured. I think going forward, though, our focus very much is in the refineries. It is a longer-term journey. You are hearing that we say that we have these turnarounds. We need a bit more time to do them. There is -- we need some money for that. But I think they are attractive investments. They will yield better utilization, and it's clearly worth doing, but that is sort of a bit beyond the current program of performance improvement. I would say, though, that in terms of the -- from a leadership standpoint, implementing this program has really shown that by being very, very systematic in driving performance inside Neste, we can yield a lot of benefits. I think the Neste team has learned a lot from these 2 years of running the performance improvement program. We have hundreds of ideas. We have hundreds of people contributing to that. We've been able to find a lot of things turning every rock. And there are still many ideas out there that we will sort of implement in the coming years. But I think as far as the program is concerned, the sort of the big push has now been accomplished. And we're gradually -- as you can see from the Eeva slide, the cash is coming in, and we're booking them into the profit and loss statement.
Operator : The next question comes from Matthew Blair from TPH.
Matthew Blair : In RP, if we look at the comparable sales margin versus your index, capture rose to 118% in Q2 from 102% in Q1. What were the tailwinds here? And do you think the 118%, is that a reasonable assumption or at least a reasonable baseline for the third quarter? And then my second question, you mentioned the strength of the U.S. RVO. Do you think the U.S. is going to be short RINs at the end of 2026? Or would you think that the RIN price will move to a level where the U.S. will be attracting significant RD imports? And has Neste received any sort of interest from like U.S. refiners in terms of raising RD flows from Europe to the U.S.
Heikki Malinen : Do you want to start?
Eeva Sipila : Yes. On the RP margin, so with all this volatility and now in the external market, so I would be cautious on drawing conclusions on a single quarter. This is hardly a normalized year. I think the difference partly between Q1 and Q2 is that we had more levers in Q2. You may remember that Q1, we were -- it was a very heavy turnaround quarter. So just kind of less levers to address. And I think in that sense, obviously very pleased that we're able in a very turbulent environment kind of really drive value. I think it kind of shows and speaks for the sort of improvements we've been able to push through in -- for instance, in our commercial and feedstock operations. But as I said now, sort of especially Q4 for RP will be sort of very much affected by the turnarounds and by default, our levers will be again be slower. So that's maybe good to take into account, Matthew.
Heikki Malinen : Maybe your question about sort of allocation, I would just say that the Martinez volume is about -- roughly about 1/4 of our sales. So the last few years have been very tough in the U.S. market. And now gradually, that business is starting to generate more value. It also, of course, is then shown in our average sales margin. So people easily forget that we actually have quite a large U.S. presence through Martinez. So happy to see that move upward. For the coming half year with the turnarounds in Singapore and Rotterdam, we're pretty busy taking care of our European customers and Singapore will be contributing in this market. How does the world then look like in '27 later on, that is -- remains to be seen. Singapore always has the option to ship its products, both East and West -- but at the moment, our focus is pretty much more on the European continent, where the demand is also very robust. And then Martinez, of course, is -- now needs to start proving itself also with a better profitability.
Operator : The next question comes from [ Teodor Sen Nilsen ] from [ SB1 Meter ].
Teodor Sen Nilsen : First, a question on dividends and buybacks. Given your very strong year-to-date performance in earnings, how should we think around the dividends and potential buybacks going into next year? Second question, that is just a follow-up on the CapEx guidance. Is it any cost increases involved in the fact that you lift the low end of the previous guidance? Or is it just more work to be done that has driven that you have removed the low end of the guidance?
Eeva Sipila : Well, I can maybe start with the latter. So now obviously, we gave the guidance in February. So I would say that we had a pretty good view on the sort of cost levels of various components. Naturally, the Middle East situation has stretched supply chains. So we see inflation in certain areas. But as I said. I think we're still -- we've been just moving in the range we already guided on. So it's more a proxy of adding more work in the turnarounds. But yes, but that hopefully answers your question then.
Heikki Malinen : Yes. Regarding your question regarding dividends and buybacks. So if I recall, we paid for 2026, we paid 154 -- for 2025, we paid EUR 154 million, right? And so of course, looking to continue with the dividend payments this year. The absolute amount, though, we need to see how the year concludes. And then, of course, the Board will make its own recommendation regarding dividend payout. I think Eeva and I have been very clear that at least management view is that we need to continue deleveraging the company. And we are not there yet. So that also needs to be factored in as we look at dividends. But as I said, we will come back to that later in the year when we have a chance to get a better view on how the year ends and then see our monetary requirements then for 2027.
Teodor Sen Nilsen : Understood. Will you consider any buybacks at all?
Heikki Malinen : I can't comment on that question, sorry.
Operator : The next question comes from Nash Qui from Barclays.
Naisheng Cui : Two, please. The first one is on RP term sales. You locked in 60% of your volume in a lower margin environment back in Q4, yet you beat the spot reference on Slide 9, I remember, with record high margin this quarter. How should we understand the term sale impact on your margin going forward? Or in another way, what have you done right this quarter to achieve such a big margin? And was there any favorable one-off items? And my second question is on RP sales volume for the second half. I understand there's heavy maintenance in Q4, but how should investors think about sales volume split in 3Q versus 4Q? How much flexibility do you have to front-load the sales into Q3?
Eeva Sipila : Well, if I try to answer both questions. So you may remember that even in term sales, typically, the diesel component is open. So obviously, we have benefited from that partly hedged. So we haven't got the full impact. But still, I would say that, obviously, in these markets, that has contributed to the term sales as well. We kind of haven't missed that component. Then like Heikki mentioned in the previous answers, the U.S. impact where clearly in a much better place with our U.S. margins, thanks to a stronger market. So really, those 2, not really any sort of one-offs that, as I said in my commentary, really volume margin, sorry, everything else was pretty marginal in the quarter. And then when it comes to the sales volumes, so obviously, we will prepare for the fourth quarter turnarounds in the same way as we're doing now in OP, so that we will produce in Q3 to then be able to deliver to our customers in Q4. So the sales volumes difference maybe is not that significant, but now our focus is clearly in Q3 really to optimize on the production and drive utilization even if we are coming to the sort of end of the catalyst in Rotterdam clearly now in the coming weeks. But that really. And then the better we are able to execute the turnaround, then maybe we have some spot business in Q4 still as an availability opportunity, if you may, if the market continues to be this strong where that would certainly be something we would aim for. But maybe a bit early to comment on that yet.
Operator : The next question comes from Yulia Bocharnikova from Goldman Sachs.
Yulia Bocharnikova : May I please follow up on Martinez and the U.S. market. We've seen very strong RIN prices, but also quite significant rally in feedstock prices. Is Martinez exposed to U.S. domestic feedstock price rally or maybe there is any opportunity to optimize to maybe import cheaper feedstock from abroad given where RIN prices are? Yes. Is it still basically margin dilutive to the overall margin or not anymore?
Heikki Malinen : Well, for Neste, of course, if you recall, we also have our Mahone business where we are actually heavily involved in the [ YUGO ] collection ourselves locally. So that gives us, in some ways, it's sort of a physical hedge. Because as the prices go up, of course, we benefit from the Mahone side. So that does adjust. I think overall, the decisions on the feedstock choices are made by the joint venture and they make their decisions independently. And it's their decision then to decide how to optimize that. .
Operator : The next question comes from Henry Tarr from Berenberg.
Henry Tarr : Two from me, please. The first one is just, was there an impact of hedging on the results as you look for Q2? And the second one, I think you mentioned earlier that you were looking at lignocellulosic potentially. So could you give a little more color on that as a technology and how interesting you find it?
Heikki Malinen : Eeva, maybe you touch on the hedging and I'll comment on ligno.
Eeva Sipila : Sure. So it was -- had less impact in the quarter. I mean the movements were big, but we had perhaps more netting than we even estimated ourselves in the sense that, obviously, from the gas oil hedges, we continue to take a hit. We have hedged at very different levels before the Middle East crisis, obviously, and that continues to come through. But then again, on the feedstock side, we had a positive hedging result as some of the feedstock took quite a big jump, especially in the U.S. market. So the net impact was rather modest and, hence, I didn't flag it earlier either.
Heikki Malinen : In terms of your question regarding ligno, Neste is the world's largest buyer of these waste and residues. If we look into the 2030s, we still see ample supply available on these feedstocks, cooking oil, animal fats, a number of vegetable oils. But of course, as we develop our business over decades, we need to also consider what would be the next source of feedstocks beyond, and the ligno pool is substantially larger than what we have in waste and residue. Technology is complex. We've been developing it for some years. We believe we're on to something. But there will be phases where we will need to pilot this more on industrial scale or before pre-industrial scale before we really know. So I would just say that we have wanted to mentioned ligno to provide the markets with an understanding that we believe there is a chance to develop a source for material molecules beyond waste and residue. And this is what we're driving for. But this is definitely a 2030s story. So before 2030s, we would not be in industrial production.
Operator : The next question comes from Christopher Kuplent from BofA.
Christopher Kuplent : Just 2 more from me, if I may. Firstly, I appreciate, Eeva, you couldn't give us an update on the Rotterdam budget, but maybe you can talk us through the time line. We've approached 2027 by another 3 quarters. So I wonder whether you can be more specific around when you expect first production and probably, more importantly, about the expected ramp-up period because, as far as I recall, the Singapore new line that is now going back into maintenance did have, let's say, a rough start. So I wonder whether you've taken any lessons from that in order to prepare for a smoother ramp-up, shorter ramp-up period in Rotterdam. And then secondly, looking at your H1 run rate for CapEx, would it be fair to say that EUR 200 million ex turnarounds is a useful calculation to then say, okay, in the second half, you're obviously busier on turnarounds, so they will cost you an extra EUR 400 million? Is that a fair calculation?
Eeva Sipila : Well, if I, Heikki, take the first one and then come back, take the one on the [ RD CG]. So Christopher, Q1 also had its turnaround. We had a turnaround in Martinez. We had a turnaround on the other Singapore line. So I think drawing the conclusion that it will be sort of outside of turnarounds maybe is to a bold statement. The big differentiating factor perhaps is just that the OP, Porvoo turnaround, is we're talking about EUR 400 million alone in that. And that really comes in mostly in Q3, probably some tails cash-out still in Q4. Obviously, all the invoices will not come in Q3. So that really is moving, and then the slightly additional spend on to 2 RP turnarounds.
Heikki Malinen : Yes. The Singapore start was not the easiest. I think we've historically had a reasonable good track record, but Singapore was not an easy start. Granted though, we were also, post-COVID, maybe that time period added to some of the challenges. But we've done a lot of internal analyses and recording on what went well and what didn't well. We've moved a number of the people who were actually working on the Singapore start-up, they're now working in Rotterdam. So we'll try to make sure that knowledge is and has been transferred. So I think that is an important step in terms of how we staff, how we assess the team. At this stage, 2027 start is what we're able to communicate. We're not -- I mean we're not able to give you a more accurate timing at this time. But when we have a better understanding, we will, of course, be communicating it to the markets, but still need to be patient.
Operator : The next question comes from Artem Beletski from SEB.
Artem Beletski : Still 2 to go from my end. So the first one is relating to Renewable Products. And could you maybe comment on fixed cost outlook for second half of this year? And has there been something exceptional in Q2? And then come into Oil Products, and could you maybe talk about opportunities to lock in product margins within the segment to any meaningful extent when it comes to volumes, given the fact that spot margins are extremely high so also forward margins have -- forward cracks have moved up quite substantially?
Eeva Sipila : If I start with the fixed cost in our RP. So obviously, there's some seasonality in the quarter, between the quarters and then maybe a sort of positive issue per se. But obviously, with the high results from RP, we've increased bonuses, and that's actually, to an extent, that it's visible if you compare Q2 and Q1 fixed cost. Everything else I think more falls in the line of the seasonality. And then, of course, the -- it does a lower utilization usually brings us a certain sort of hassle costs in these, and we had some of that certainly in the first half. So aiming for a better situation in the second half, but that, of course, remains to be sort of proven.
Heikki Malinen : On OP, well, in terms of our customer base, so most of our sales are in the Nordic markets and we have a certain amount of larger B2B fuel distributors with whom we do business. These are usually annual negotiations for the following year. So I think your question was asked already earlier that these are sort of on the higher level side. We just need to see how the conversations then go with the customers in the autumn period and what they need and what they would like to have, and then we will make proposals and negotiate accordingly. And let's see where we end up for 2027.
Eeva Sipila : And maybe just adding, Artem, to that, that obviously, the turnaround kind of limits a bit our ability to use all the levers in a way we have to be a bit cautious on how much product we have at hand because the turnaround success is obviously highly important to that. And let's hope we have an opportunity to optimize that in Q4 when we ramp up.
Operator : The next question comes from Alice Winograd from Morgan Stanley. .
Alice Bergier Winograd : I have a couple of questions, please. First, I would say, more structurally, there's been a huge amount of volatility in prices. Last year, there was the rally into year-end, and then this year, there's the Middle East, there's the ramp in the U.S. mandate. So I'm interested in -- do you see a change in consumer behavior? Are people interested in locking in potentially longer-term supply contracts or to change pricing structure, so they're less exposed to the volatility? And second, on the cost side, have there been any other costs other than feedstock that could affect the capture rates in this disruption? So for instance, shipping natural gas, hydrogen. Interested in your views.
Heikki Malinen : If I start with the volatility. Yes, I mean the -- of course, the problem is you're -- always when you have volatility, what type of scenario are you reacting towards or trying to mitigate or minimize. And this has been a bit of a guessing game here because we've -- all of these, I guess, I could call them shocks in some ways have been coming from unexpected directions. But I have to say that our customer needs vary, really significantly. There are some customers who much want security and guarantee and others who are big buyers and then maybe the part they buy from Neste is more variable. So it's really -- I cannot generalize because I said the customers' needs are so different across the spectrum of customers we have. But I would agree with you, the volatility has been significant. And it doesn't make the negotiations easier because you always, I'm not sure exactly how we -- is this the right solution then for the next year? But I guess that's just a sign of times we're living now at the moment.
Eeva Sipila : And then Alice, to your second question, so you raised a good point that shipping costs have obviously also been impacted by the disruptions in geopolitics and we've seen them sort of hike up significantly. Now fortunately, we've had, since last year, quite a lot of the performance improvement actions really on logistics. Because clearly, that was an area where we had to do much better, and the timing has been right, we really needed to sort of up our game to face this year's market. It continues, obviously, as now with the reescalation, continues to be something that we need to sort of be very closely monitoring and trying to optimize how we sort of route and how we plan for logistics. And then as Heikki mentioned also in his opportunities and risks slide, that just availability of certain components is, in this type of environment, just very important. And so we have a lot of extra work going around just to sort of be very -- know exactly what we have, what we're going to need, plan ahead with the suppliers, working much, much more closely with them to ensure that we don't get any production issues, which, obviously, in this market would be extremely costly. So we're trying at all costs to avoid any disruption. But it's certainly -- that's why we also highlighted in the risks.
Operator : The next question comes from Matt Lofting from JPM.
Matthew Lofting : I wanted to ask you about operational performance, the journey that you're on and how it interacts with future maintenance requirements on the renewable refinery assets. Eight and 11 weeks into the sort of the second half of the year, respectively, obviously, relatively long-duration schedule. When you look beyond the second half of this year and the investment and maintenance cycles for 2027 plus, should we expect sort of similar duration in the future is required in order to get the assets to where they need to be on a midterm basis? And where also do you think sort of CapEx 2027, 2028, as Rotterdam phases off, settles relative to the EUR 1.2 billion for 2026?
Heikki Malinen : If I just start with operational performance and then Eeva, you can talk about the CapEx numbers. But I will go back to my earlier comment that the utilization levels need to be higher than what we see in RP. And clearly, we have -- we are -- we have been on a journey. Of course, starting up these facilities, I think we talked about Singapore challenges. I think overall, Singapore has moved in a much better direction. The longer duration, as I said before, for Line #2, that's partially linked to the fact that we have the first major turnaround after the start-up. But overall, we do see that the operational performance and utilization level is going to require making certain modifications to the lines and augmenting the materials. And that also relates to the fact that we're trying to push into more and more into the tougher segments of feedstocks and tougher segments of the business where the premiums are higher. And there's a business case -- attractive business case for doing that. And the combination of monetary -- margin potential there, but then also just getting the utilization levels up, that's the driver behind the TAs. I can guarantee you, we have looked at the time needed for these TAs with a really fine toothcomb. Every single extra day, if we can shorten it, we will do it. But that is just getting a number of things into these refineries, it just takes. It's labor, it takes people, and you have to do the installations have to be done really professionally and well. So the quality of the maintenance work is high quality. So I'd rather to take a few more days to make sure the work is really well done than we do a shortcut and then we have issues. Ultimately, we have to run these refineries in a very safe way, and we're not going to take any risks on that.
Eeva Sipila : And then to your question on the CapEx. So obviously, the Rotterdam growth project has been -- had a heavy impact on our CapEx needs for now a couple of couple of years and it tails then still in '27. But then from '28 onwards, that will move out. I think it's a bit early to guide on '27, '28 otherwise. But I'd just say I think our job, with Heikki, obviously, to drive return for our shareholders. And if it then requires CapEx, where we have attractive paybacks, then we will look at them. You can expect us to sort of want to push forward with them, and whereas then if we don't see the proper returns, then we will be much tighter on CapEx. So there's good and bad CapEx in my books and a lot of gray in between. So it's really how rather than focusing on the number especially. I think we will be in a very different place from a financial position point of view at the end of this year. And I take that as purely a positive because then it gives us opportunity and options to look at options that we didn't perhaps have 1.5 years back. So I think the turnaround we've done has been tremendously important, successful so far and really so that will enable us to make them the right decisions for future returns.
Operator : The next question comes from Tony Jones from Rothschild. .
Tony Jones : I just have one left on working capital. inventory in the quarter was up nearly EUR 1 billion year-on-year. Could you give us a bit of an indication how much of that is finished products versus inflation, and the mechanics of how that might unwind in the timing in the second half?
Eeva Sipila : Well, I would be sort of shy away from giving you exact numbers. It is specifically the volume in OP. But of course, it is combined with the fact that we've added volume. You maybe -- you get a good proxy if you look at the sort of what we didn't sell versus produced. You get an idea on the inventories. And then obviously, the sort of market prices, whilst they were slightly lower at the end of the quarter, now they're back up again. So that's maybe good to take into account. So both aspects were important. The one we can work with is the inventory [indiscernible] and that's where I said that we're obviously focused on delivering better cash flow than in -- for the full year. But that will be very much sort of Q4 question. And in Q3, then there's less we can do and then we're more sort of need to sort of -- to see what happens on the market prices.
Operator : The next question comes from Matti Kaurola from OP Corporate Bank.
Matti Kaurola : I think the -- now we've been addressing a lot of the short-term matters herein, call it. But in the longer term, your market intelligence team has grown very, very well [indiscernible] demand growth [indiscernible] that we saw in '23 when they were hinting about kind of the oversupply in the near term. So my question is that in the longer term, how do you see the [ SAF ] market on like there is European demand growth, but is that taking place in 2030 when there is going to be a big jump in kind of the mandate? Or is there more kind of a linear path there assuming? And then the second one, I'd like to still address about volumes next year. I think, Eeva, you told us during the Q3 call that, for this year, 80% utilization rate would have been justified. But if we think next year, is that something up to [indiscernible] or could be problematic [indiscernible]?
Eeva Sipila : Well, I can maybe start with my previous comment that that's why we call 75% unsatisfactory, that we're not at 80%. But then, Heikki, to the SAF question and how we see that.
Heikki Malinen : Well, we hope it would be more linear. At the moment, things are moving forward. I think SAF is here and I think that it is the mandates, we believe, will go up even though there's certain industry participants are pushing back on that, I do believe we're going to see higher mandates. And I would be personally very surprised if at 2030, [ 6% ] were to be withdrawn. But I think it's going to be more and more heading towards the 2030s. As said earlier, for Neste, of course, the great thing is we can optimize between SAF and renewable diesel. We have this optionality, it's a real asset for us in the company.
Operator : There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Heikki Malinen : So thank you very much for the call today in the middle of summer. I said it's been an exciting quarter for Neste, all-time high results, something, of course, we're super happy about. We're pleased about the fact that the financial position is stronger. And Eeva mentioned also the Moody's rating matter. On the regulatory development, I just want to underscore the fact that, I mean, these are major decisions now that the member states have made. We believe this is a strong tailwind for the sector. And the situation with Hormuz, of course, will raise this whole question of energy security to a much more bigger topic. So that's why I believe this tailwind we're getting from regulatory side will be strong and more durable than maybe in the past. And overall, we're well positioned to capture market opportunities. We will invest in these lines to get these utilization levels on RP higher. And I think that positions Neste really well then for the future. And when we add Rotterdam 2 line coming, I think that puts us in a good position for the coming years. So with those words, I hope you all enjoy your summer vacation, and we will then see you again later in the fall when we report back on Q3 results. Take care. Bye-bye.
