Neste Oyj

Juha-Pekka Kekalainen - Head of Investor Relations Matti Lievonen - President, Chairman and Chief Executive Officer Jyrki Maki-Kala - Chief Financial Officer Matti Lehmus - Executive Vice President of Oil Products Kaisa Hietala - Executive Vice President of Renewable Products

Mehdi Ennebati - Societe Generale Matt Lofting - Nomura Nitin Sharma - JPMorgan Henri Patricot - UBS Joshua Stone - Barclays Capital Yulia Veselova - Merrill Lynch

Thank you and good afternoon, ladies and gentlemen. And welcome to this conference call to discuss Neste Oil’s first quarter results published earlier today.

I am Juha-Pekka Kekalainen, Head of Neste Oil’s IR. And with me here today are President and CEO, Matti Lievonen; CFO, Jyrki Maki-Kala; and Business Area EVPs Matti Lehmus of Oil Products; and Kaisa Hietala of Renewable Products.

We will be referring to the presentation that can be found on our website. As always please pay attention to the disclaimer since we will be making forward-looking statements in this conference call.

With these remarks, I hand over to CEO, Lievonen to start with the presentation. Matti go ahead.

Thank you, Juha-Pekka. Good afternoon ladies and gentlemen.

It's very nice to be here now announcing our first quarter result that definitely we are as a whole team we’ve very happy and very confident that we have been able to do very good strong first quarter and then looking also going to year ahead that it will be a good year. A few things about the first quarter and surely the market support us in the oil product side and the strong refining environment was in the place and of course into favorable U.S.

dollar, euro currency rate. But the same time I think that when we started the year, last year the global demand of oil were some 0.6 billion barrels per day and now the estimates for this year is 1.5 million barrel per day.

So we see that there is a demand and demand is coming of course lower crude prices. So that good also for the refining industry, so we’re looking very much also this year that market could bring us more.

But it’s not all came from the market our good results. It’s also very good internal performance what we have been able to do in all businesses what we have in three different business sector.

And I will say few words about this good internal performance. And starting a additional margin, it was in the both business very strong even you see in the figures that oil product in 4.1 barrel per oil per day the additional margin, but if you take the currency hedging so it’s over 5.

So we’re to speed what we have hand in the last year. So then also very good strong additional margin by renewable products and Matti Lievonen will tell more about those businesses and then we are very happy and pleased that we have been increase our nameplate capacity now in renewable.

Production unit up to $2.4 so plus 20% and the investment for this 20% is really minimum, so we have been able to do this capacity increase with very minor investment but moreover to good operational performance and learning the plans, doing the best outcome. Then in this market situation what we have, so we are very, very please and I am very pleased to put our refinery utilizes raised.

98% if we take account a good refining margins and this sort of utilization rate, so do doubt that we did a good result in our oil products. And also the renewable products 97% utilization rate based on with this new increase capacity 2.4 million.

So all in all I should say that as I have said now for a few years that we have the things in our hands and very good themes in place. The organizational change is what we have done has went well.

We are heading now to the or we are at a moment in the big turnaround in quarter and it’s also doing well in the first weeks what we have none there. So very please about the first quarter and then looking forward that we could do also very good whole year.

But let’s go now for financials and Jyrki Maki-Kala, our CFO will go through the financials. Jyrki Maki-Kala Yes, thank you, Matti.

This is Jyrki Maki-Kala, CFO and I will go through a few slides into the group level of financials. If we look the quarter one as a big picture, you are seeing this trend what also is very clear when looking our comparable EBITDA.

We had the improvement compared to last year in all our three businesses and it’s also very clear that this four times higher EBIT it really gain from all our businesses but mostly from oil product that basically had five times higher EBIT compared to last year first quarter. But it’s an excellent achievement what looking not just the market improvement but also the internal issues but also our CEO trust.

It was also a quarter where our IFRS EBIT was higher than our comparable EBIT coming out of still negative evaluation losses of our base inventory but we had the capital gain our electrical network that we have recorded in our first quarter positive 79 million. So these kind of things are in the background with our business results.

There are negative things in our net cash and also free cash flow position. But if we look the free cash flow position of minus 83 million, we are or we were at the end of quarter one in the position of our turnaround project, project about to start in well, so we had higher inventories relations to our products but also for our crude.

And we have built quite a sizable content inventories for the coming three quarter. So let me that way this minus 83 without these things would have been clearly positive free flow, not 100 million, not 500 million but something in between, so we had a very strong quarter one cash flow in the background.

If we then more to the next page where we have the bridge between the three businesses, you will see very clearly that this oil products improvement coming out of reference margin, coming out of the higher utilization rate, coming out currency changes. It’s very positive same also applies to renewable product products, currency one point there but also the action what the businesses has done during quarter one with sale allocation and also successful let’s say hedging what we have done last year had a positive impact for our quarter one results.

Resale has their best ever quarter one in the back pocket. It’s not easy market situation what we have everywhere but they have really improve their operations.

And in other we have then the operation of newness in our [indiscernible] in Finland. So it’s also lot of better improvement and better best business result what they generated this year.

The big chart is how to get different when we turn out to this next page where we have the by elements basically. You’ll see here only positive things.

Volumes very slightly, reference margin 90 million is coming from oil products and minus 11 from renewable, so renewable market was not that strong in our quarter one. Addition margin excluding the FX hedges again positive 30 million fixed cost good trend mainly coming out of the oil product.

And then FX changes, we have the other combination of the open let’s what we haven’t hedge, it was plus 50 and the hedging effect coming out of mainly the hedges what we have done last year and the impact for quarter one was 33 million negative. So the combination is 16 positive.

And then the others, it is mainly something to open with a bit more because it’s a very big improvement compared to 2014 first quarter, but one thing is that our quarter one ’14 was not that great. But on the other hand base oils our fleet what we have basically outsourced last year, the improvement coming out of these two elements was quite a bit in our quarter by quarter results coming up to this level of 36 million.

25 million of that is coming from oil products. But from 50 to the 215 this year, it’s a excellent start for the year.

And then turning out to these tow financial docket that we have, the rolling average of our capital of the taxes, the rolling basis is now 12.6, you will see that it’s one of the highest that we have had on rolling basis of clearly moving to right direction and leverage very comfortable between our limits 25 to 50 roughly 38% in our quarter one. So we have a good solid financial position going forward.

And I think now I had over to our segment head, so Matti Lehmus will start with the oil products.

Yes, good afternoon. This is Matti Lehmus.

And indeed when I go through the oil product result, I would start with the comment that I am very pleased with a good start for the year and a strong result in the first quarter with our EBIT moving to EUR156 million from a level of EUR32 million last year. If I look into the two main drives for this, then I think it’s clear that one thing behind it is good operational performance.

It was mentioned earlier already that for example in part where we’re able to run their refinery at the utilization rate of 98% which is very good. And at the same time, the reference margin was clearly higher year-on-year and we are reaching level of $7.45 per barrel after which is more than $4 more than a year ago.

So it is this combination that allowed us to do a very good result. At the same time right now, we are starting the Porvoo turnaround.

We did lot of work around preparations during the first quarter. And I am pleased to say at the moment that the shutdown itself and very well and we have this week starting the actual works.

So I am confident that the moment that we are moving well into this turnaround. It’s been a good start.

Moving to the next page and we’re looking year-on-year at the outperformance in terms of our waterfall picture. One can immediately see that the reference margin improvement is clearly reflected in the numbers EUR90 million improvement there.

At the same time also the additional margin improved slightly and here I make the comment that there was an improvement in spite of the fact that the crude oil environment is clearly lower and I’ll comment on that a bit later. On the FX side, it’s good to note that the impact after hedges was actually not huge, it was a EUR3 million positive impact and this reflects of course the fact that we had a high hedging ratio which basically neutralizes but of the strengthening dollar in the first quarter.

And of course moving forward, we expect that our effective FX rate will be reflecting the stronger dollar going forward. And like mentioned by our CFO, in the other segment both the source business, our fleets and also our trading activities went very well and that is why we can record a EUR25 improvement versus a year ago.

And then turning to the total refining margin, it continued a strong and positive trend, recorded $11.66 per barrel in the first quarter, which is $3.3 more than a year ago. And within the first command is that the reference margin of course more strong at $7.5 per barrel.

And it was mainly supported by first of all low crude price and weak physical crude oil margins which supports the reference margin. Then also linked to this, we did absorb good end product demand in particular in gasoline.

And this is also reflected then in stronger reference margin overall and particular the gasoline margins was strong in the first quarter. And finally it is fact that during the first quarter, there were a number of refinery outages.

There were some refinery strikes. This also has some short term impacts on the margin.

Then moving to the addition margin which was $4.2 per barrel, this level does reflect the very good operational performance. And it is good to know that it also include a negative impact from the currency hedging.

Without the currency hedging, the level would have been approximately $1 higher. The second command I would like to make is that also the crude oil price level had some impact on both reference margin and additional margin.

And what we are seeing is that the reduction in the crude oil priced tends to first of all support the reference margin but at the same time dilute the additional margin. So there is a relatively small impact on the total refining margin but the fact that the yield close value is lower moved some of the margin from additional margin to reference margin.

So all in all if I look at addition margin performance comparing it to year ago, we would have been roughly at the $6 per barrel level in comparable circumstances. Final comment on the market, turning to the next page on the left hand side you can see the product margins and it’s clearly it can be seen that compared a year ago it was in particular the gasoline margin which was clearly strong, also the fuel oil margins have strengthen because of the declining crude price.

The diesel market was relatively comparable to a year ago. And for example here in Europe we have had a relatively mild winter, so nothing exceptional on that side.

The other important market driver for us which is the euros versus spread price differential was at a quite typical level for this time of the year at minus $1.7 per barrel and we also expect it to continue to be in this range of $1.5 to $2 for the coming future. But with this comments, I hand over to Kaisa Hietala to comment on the renewable products business segment.

Thank you, Matti. Good afternoon, everybody.

This is Kaisa Hietala speaking. Indeed for renewable product the first quarter was all about our own doings how to create as good as possible additional margin.

The margin was not the most supportive as we can see from the reference margins, but we were very busy to focus on our own activities. Eventually our result was clearly higher.

Compared to last year Q1, we reached EUR42 million comparable EBIT. At the beginning of the year, we formalized officially our new nameplate production capacity to increase from 2 million tons to 2.4 million tons.

At the same time, we were successfully managing our margins and also putting quite a lot of focus on feedstock flexibility as well as to sales allocation. And these are the three contributors how we were able to increase the additional margin further.

In Q1, our sales split between Europe and North America was 78% to Europe and 22% to North America. And finally, the share of waste and residues we used as a feedstock during Q1 was 62%, so following the very good average we had also last year.

Let’s then look into the split of different elements of the results. I would like to point out there that our sales volume were slightly higher than last year during Q1, but at the same time the reference margin was really creating some challenges for us.

Then on the other hand, the FX changes were giving us a boost of EUR30 million. And the additional margin which includes our own operative activity.

We were able to increase 23 million. So all in all from the 12 million in Q1, we were able to reach to 42 in Q1 2015.

I am very pleased with this result. Then maybe a couple of words about the reference margins and additional margin.

We already noted that the reference margins environment was challenging for renewable products in Q1. And this is physical here in the picture.

But at the same time, our additional margin level was very good. If we compare to the some calculation system that we used last year with the varietal production cost environment $70 per ton.

Our additional margin would have been $266 per ton. But now with the new calculation system including the lower varietal production cost of $130 per ton, the additional margin is showing $186 per ton.

And as said, we were successful in feedstock souring, our selection and the use of different feedstock as well as the margin management and the sales allocation throughout the quarter. Let’s then look into the European margins; in Europe the trend over the past 12 months has been down warding.

On the left hand side, you can see the biodiesel producers margins in Europe and we have seen almost $150 per ton drop from last year quarter one. And this type of a margin environment, I think Neste Oil’s flexibility and the global presence and especially the feedstock flexibility is really paying off.

So we were able to still maintain a good results and by increasing the additional margin. Then if we look into the North American margins, the volatility has been there but the trend has been more flat over the past 12 months.

But what has changed clearly since Q1 2014 is the level of the RIN prices. This is probably reflecting the overall supply demand in the market and also the fact that there is not decision on the lender’s tax credit nor the mandate levels for 2014, ’15 or ’16 yet.

We are expecting a proposal to come out on first of June and a final decision then in November. So with this comments from renewable products, I would like now to hand over to Matti Lievonen, how is covering oil [ph]

Thank you, Kaisa. As mentioned earlier that all businesses made a good result in the first quarter, so did also all retain, they made 17 million EDIT compared to 14 earlier.

And one good reason is the unique margin improvement especially in the Northwest Russia. Then we also introduced a low sulphur marine fuel for the sea area having good sales in there.

But then the Russian ruble, weaker ruble gave a 2 million negative impact to oil result. So as we looked there and then the waterfall so unique margin improved 6 million compared to last year.

And then FX changes ruble euro minus two. But now I like to turn to current topics and first outlook.

So we gave a guidance revised on 21st April. And then the new guidance is that group full year 2015 comparable EBIT estimate remained robust and to be higher than 2014.

So we see that the market is very well floating when we started the year but also internal performance is improving and also and we are looking for example renewable products, we see that there is a positive trend for us what’s coming to the freed stock prices like palm oil. Now the Malaysian palm oil crops has much better than earlier higher level also the inventories has increased, also the price difference of between soybean and crude palm is not attractive that soya users are turning to palm oil, so pretty good positive use for us.

Then the other thing is that we issued a ERU500 million fund in March. That was a seven year fund and carries a coupon of 2.1 25% that was clearly oversubscribed and some 150 investors was debating and bond was allocated.

Why we are doing that of course we use for refinancing and general corporate purposes. And next thing is the big thing is this major general in Porvoo we have covered that several times but it’s about eight weeks starting up doing demand in us under investment and then starting up to the facilities.

So it’s a big thing for us and now when the market up, we estimate that the negative impact is some EUR100 million for EBIT. Then one commercial thing is that the next we’ll host a Capital Markets Day in London on 15th September, 2015 and we will send the invitation for you.

Hopefully there is many we will see. And we focus on the same things what we have focused in few years because we don’t want chase our things.

We are like a tanker that is doing the things safety is first, cash flow. CFO mentioned that we look after that very carefully and it will increase that when the years is going further.

Refinery productivity and we are very pleased what’s happened in the last quarter and hopefully we could keep the same good running in the years going forward. And in customers and markets, the customers and margins, I was surprised when I made a speech to my people here in Espoo and then we went through the new products for example that we have introduced now.

And recently there was a 100% NExBTL now in State Senate in California. That’s a performance fuel as planned there.

Then we have [indiscernible] our NExBTL use it as a 100% in the trucks. And I am sure that the other truck suppliers will follow.

We have this low sulphur marine fuel that we have introduced. So a lot of good things is coming and then also this isolation investment we’ve been taking up we are starting up to refinery, so ones again good thing where we increase our margin and create into new markets.

And finally we are chasing our name Neste Diesel, this is the name Neste Oil conference call. Further it will be Neste.

And as mentioned several times, we are not going back to history and change out ways how it was first time. There is good things we want to carry out and Neste name is a very good and we are very proud of that.

But we have changed a very much our corporate structure and also the things when it comes for examples renewable in 40% our result. In the last two years, we are putting very much effort to customers and offerings and also the services.

We have more than 1,000 people in our engineering company serving also the other. And also we feel that now it’s time to go forward and then change also the name back to Neste.

Thank you very much and now we are ready for the questions.

So hi, good afternoon all. So I will ask few questions please.

The first one regarding your recent increase with ’16 EBIT guidance, is on your guidance only based on higher reference refining margins assumptions or is there something from another division due to increase your guidance such as higher renewable fuel additional margins estimate given that which going high this quarter? And I have another question regarding the renewable fuel division.

US EBIT which propose the value disadvantage for the outcome, do you think the mandate announcement could be a key driver for the US valve margins, let’s RIN value is the mandate is entirely revised up. Do you see that the current RIN value reflect higher mandate, could you talk about this.

And finally last question regarding what Jyrki Maki-Kala on the inventory building, it looks like if I understood well you build your inventory for the three quarter, meaning that your oil pricing is you should have let’s say potential positive on your refining margins, will this be taken into account on your additional margins. I just wanted to understand how it work.

And what kind of working capital should we consider for the rest of the year? Thank you.

Thank you, Mehdi. It’s Matti Lievonen here.

First your question was our guidance for this year and is it only the reference margins coming from oil product. No, it’s not, we had good first quarter and especially came very much from good reference margin for oil products but then also the renewable if they could result.

So we look the whole business, all the business areas and we see as I mentioned that also the other business areas could improve the result. So it’s not based only with the reference margins in oil product side.

And then biodiesel mandate, I hand over to Kaisa.

Thank you. So this is Kaisa speaking.

So the question was regarding the EPA renewable biometric obligation for years 2014, ’15 and ’16 which EPA has announced to publish a proposal of 1st of June this year. This is a regulatory process and after the 1st of June there will be a commentary period and the final decision is estimated to be reaching in November.

For this type of processes, it’s a very speculative to start to consider how the market would react. And all in all the market elements behind the supply and demand and so on difficult to estimate, so we don’t really have a view on the market moves - potential market moves regarding the proposal.

But we are very happy to have a now date defined by EPA, so that finally the mandates will be proposed and then we are really, really hoping that the final decision will be taking in November. Thank you.

And then the third quarter - this is Jyrki Maki-Kala relating to discuss the flow that I was mentioning. And it’s really that we at the end of the quarter one we have prepared for the turnaround.

Turnaround growth in the sense we have a higher product inventory that will be and now used during quarter two but we also utilize the strong market that was there and we have build contango storage for the mainly for quarter two and quarter three and little bit also that will come out late in quarter four. And of course this will increase or has increased our working capital a lot at the end of quarter one.

But the profit is coming out of the contango will be then recorded for our additional margin for our coming quarters with oil product. So it’s a very positive thing what we - have weakness at the end of the quarter one for the coming quarters.

Thank you very much all of you for your answer.

Yeah, thanks. Two question if I could please.

Firstly just one probably on cash flow, I think you talked through some of the moving parts in your comment earlier. I just wondered if you could and sort of talk about how you see underlying cash generation going forward and also the timing of some of them all that’s lumpy cash flow expecting later in the year and the BTC and insurance receivable from last year.

And then setting that in the context of the guidance update from earlier in the week where you perhaps and see Neste’s leverage position settling on range around into year end? And then secondly just coming back to the maintenance of Porvoo , you referred to EUR100 million impact clearly the inventory against.

I am just wondering if you could give us a sense of how much of that 100 million impact in the current environment, you think you can offset by selling of that inventory that have been build through the contango? Thanks.

Okay, so I’ll start with the cash flow items Matt, as looking for the whole year figures and I am talking about the cash flow. We are very confident about the solid performance that we had in quarter one that will continue in the sense of working capital changes.

We had a high working capital in quarter one like I mentioned you to the turnaround of the contango, but that will be reduced to a meaning when we are heading toward the year end. So I am not worried about the cash flow at sense.

We will deliver what we are promising. But certainly working capital overall is in focus.

I am not talking about payables or receivables, it’s all the inventory what you need to manage according to the demand and we have this special cases now with turnaround in contango. But that will be really used and we will have a positive impact going forward.

So in that sense I am very confident about the level of cash flow. And then the BTC certainly is another topic.

We will see go into what a year end what it will be and concerning the 2014 BTC, there are more receivable of the money that we need from the USA and that’s the best thing could success so far.

And this is Matti Lehmus. I am commenting on the question Porvoo.

Indeed we made the comment that EBIT impact of the maintenance shutdown is expected as roughly EUR100 million. It is updated obviously because of the stronger market compared to one quarter ago.

And this number reflects mainly of course the value of the loss production that is clear, that is where it comes from And obviously yes, we are - we have built product contango to be able to supply also those term contracts which we have in place, the fact that the market is in a contango structure, will give us some contango profits. But of course the order of magnitude is more than that EUR100 million, it’s clearly smaller.

Okay, thanks very much. If I could just follow-up just on the first point around cash flow and Jyrki if you could just then comment on total on where you looking, so putting all the cash flow together, where do you see leverage into the back end of the year compared to now?

Thanks.

You mean the whole, the group level leverage?

Yeah.

I think what we have said is with this range of 25 to 50 and we are now at the level of 38 when we have a high working capital was certainly looking forward. But it will be better, I think that’s the only way that we can describe at this point.

Great, okay, thanks a lot.

Hi afternoon, everyone. First question on currency hedging strategy, maybe you could explain how you’ve positioned as at the end of Q1 and when should we expect to see the benefit of U.S.

dollar appreciating in Neste’s earnings. So what I am trying to get here is we’ve seen some negative impact of those hedges in the numbers that you have reported today.

Should we then expect unwinding of these hedges and hence a positive contribution coming through which is obviously a beneficial environment given U.S. dollar is appreciating?

And second question on renewable side, now U.S. export of just about 20% in Q1, in an environment what seems like a stronger margin environment compared together.

So maybe some flavor there as to how you are thinking about your U.S. export strategy, how you position in Q1 and what were the key drivers this between Europe versus U.S.

output exports? Thank you.

Yeah, if I little bit comment about the hedging and then the position that we had at the end of quarter one. The hedges that we had in place and the impact that we had in quarter were mostly done last year’s quarter two and quarter three when the U.S.

dollar was still 1.30 something, so that’s why so called effective rate that we had in our books for quarter one was 1.22 versus the market rate of 1.13. Certainly the improvement will be there for our coming quarter has the all hedges from last year where we look will vanish and we have a change slightly with the hedging since the early part of March.

That we are currently hedging against U.S. dollar.

It will change certainly going forward but we’ll see how that will change. But certainly the impact, the positive impact will be higher going forward, that’s - if the U.S.

dollar stays at this level 1.8, 1.9 that sounds very clear.

And this is Kaisa speaking. Regarding the question on Q1 sales volumes to North America being 22% than what is the reason in behind it.

We had our Singapore major turnaround taking place last autumn and we were completing it at the end of October. However, building the inventories to such a level that we could have maximized the sales to USA in Q1, of course that the impact is clearly coming from there.

But then going forward, our key element is the flexibility to optimize between different markets. And our sort of sales allocation is always depending on the development of the total sales margin and this is the key driver for us when we are selecting the sales markets.

However, my expectation is that we will see increasing sales to North America now when the Singapore base inventories have been able to fill up and the refinery is functioning as planned.

And maybe one more follow-up please. This is in regards to the proportion of waste and residues input, now that 62% on average in Q1, should we expect an increasing trend in waste and residues inputs as a proportion over the remainder of the years.

I mean how do you think the input categorization and the margin benefit that flows through because of that given the importance as European indicators have been quite weak especially in relation to palm oil.

And if you remember from the capital markets stay last year, one of the key additional margin drivers for renewable product is the feed stock flexibility. Last year, we were able to go beyond 60% of use of waste and residues but during the Capital Markets Day, we announce that our target is to be able to use 100% by 2017.

That target remains strong and we are working towards it. The 62% in Q1 is well aligned and then how is that developing in the future depends not only on our own capability but also on the different feed stock markets and availability of different raw materials and the price relations between different raw materials.

So we are continuously optimizing also the feed stock mix.

Thank you. Thanks.

Yes, good afternoon, everyone. Thank you for the presentation.

I have few questions on the renewable because you had - see a very strong margin in Q1. I was wondering if you would could give us any insight into which markets were that’s really profitable and which kind of feed stock did you focus on to create a traditional margin?

And another follow-up on the hedging, obviously you are reducing the hedging on the currency, but are you increasing the hedging levels on the refining product in particular given the strong margins that we are seeing at the moment and the good forward gap that you’re mentioned in your release? Thank you.

So this is Kaisa speaking. Regarding the first question on the additional - strong additional margin and the different elements we have there, I think in Q1, we were able to maximize the whole flexibility that we have in our system.

Our raw material sourcing and the feed stock mix was optimal. Also our refineries they reach the 97% utilization rate and now this 90% is calculated from the new nameplate capacity 2.4 million tons.

And then finally, we were able to allocate the sales such a way that the most optimal margin was reached. And these three elements basically they play the key role when discussing the additional margin.

And then there was a question about the hedging in the oil product side reference margin, we are doing that. So we pull all the market, so we are not hedge for the future.

And if you look the full watch for the next year, it’s really low shortage, no point to hedge anything, so.

Okay, thank you.

Hi, good afternoon. I’ve got three questions please.

One on the dividend, trying to getting in the renewable business, it look like continues to well, you continue to good level of additional margin, you’ve increased your capacity while controlling variable costs and would it pay the level of profitability in more sustainable or phase has been little maybe weak before and the dividends to yielding and now yielding that 2.5%, when do you think is the right time for this strong performance to be reflected in higher returns to shareholders. And could you even consider anything like special dividend?

My second question is on the inventory levels and then potential losses. You’ve been building product to ahead of maintenance, is there any - are you susceptible tool to if product prices come down over 2Q, are you susceptible are annual write downs or have to have to the bulk of it is already been done in terms of losses?

And then the third question is very quick one on the renewable variable cost that you’ve changed from 170 to 130, are you to - tell us what the volumes are assumed within the new $130 a ton guidance? Thank you.

Okay, thank you, Joshua. It’s Matti here.

Concerning the dividend, so we have this policy that we are giving out one third of comparable net results and that’s what we are doing and of course when results are improving so we are giving more. And yes, it’s true what you said about the yield, it’s 2.7 but the same time, I think that we should remember that our share price has increased in a remarkable way in the last two years.

So that’s also something. But thus we have mentioned I think that’s a really good question.

As we have mentioned during the Capital Markets Day and investor presentation, so we always saying that we want to keep a steady dividend payment. So dividends are one key of our cash flow share, who we share the cash flow.

Then, Matti Lehmus.

So, this is Matti Lehmus. There was a question on the inventories and anticipation of the shutdown on the write down risk.

Like you know we have a policy that we don’t hedge our base inventory and that in intact. However, when we look at the inventories and anticipating of the shutdown these are treated as contango inventories and those we hedge.

So we do not have any risk apart from the normal ones that we have it all by base inventory because of these extra inventories.

And then finally - this is Kaisa speaking. There was a question regarding renewable product, variable cost.

The fact that we took it down from $170 per ton to $130 per ton for 2015 and what was the volume assumption behind it. And we have not changed the overall calculation methodology behind it, so we are using the full capacity as a metric guidance here.

Okay, that’s helpful, thank you.

Good afternoon. Thanks for taking my questions.

I’ve got three if I may. The first one, could you please explain how you think about the demand for incidence you gave a very precise number of 1 to 1.2 million barrels per day for this year.

So if you could tell us whether you think by product or by region, so how do you try to estimate that? And the second question relates to pricing trends so far, if you could just maybe give us some color regarding the light products versus heavier products and the pricing you’ve seen so far?

Thank you. Bye-bye.

Okay, so Matti Lievonen here. What’s coming to the demand, surely if you think about the crude price has decrease so dramatically, so the main driver for the demand growth is of course developing countries like Africa, Asian countries, even South American countries, those are where the demand.

I don’t see that always see the countries have very demand is going. But I like to look at very closely also that how is the USA gasoline demand now going up in when we driving season we start when there is low prices in the gasoline.

That’s if you look to overall demand. And there is also some other things that like it’s related a bit on palm oil as such because there is a palm oil based biodiesel produced by Indonesia and then that has been sold in Africa and other place.

And now when the fossil fuel prices has been down, so those biodiesel they are not into market anymore because those countries are using the fossil fuel. So there if effect also the demand crude as fossil side, but then there is also not good demand for palm oil, that’s probably also could be the future that we see that the inventories will go up.

And then Matti Lehmus will give lights in heavy products.

Yes, Matti Lehmus here. So just comment on the pricing trends how is it.

So if you look at the first quarter like mentioned, it is clear that the two strong performers in the mix were gasoline in particular and also fuel oil. And if you look at that and gasoline of course has benefited from the demand, strength that we have seen in the developing countries but also in the countries like the U.S.

for example where we see very healthy demand for gasoline at the moment. And the fact that we are now entering the driving season and the fact that we continue to be in a price where crude is relatively low compared to a year ago.

It looks quite positive for the gasoline demand also going forward in the near term future. The fuel oil is that’s a bit different, here we see just structurally impact that when crude oil price is low, it tends to support the fuel oil margins and again that is something that will most likely continue as long as we see these kind of crude price levels.

Diesel I would say has had its normal relatively solid performance. We haven’t see any abnormal spikes nor low, so it’s been at a very normal level.

Hi, thank you very much. Just in terms of your storage capacity, the sides proving for the Porvoo outage, have you in anyway being using your storage facilities in any strategic way to take advantage of the fuel and the crude price or anything like that.

Have you been doing that?

This is Matti Lehmus. So what we said is, yes we have anticipated the shutdown with product contango.

At the same time, you are right that we have very significant storage capacity in Porvoo in particular also for crudes. And yes we have taken advantage of these storages in order to take advantage of that contango structure in the market and we will obviously be looking at releasing these during the second half of the year.

Thank you very much.

Hi, thank you very much. Just would like to come back to inventory building and the potential impact on the additional margins.

So imagine - let’s consider on that you build your inventory at the price 55 they were up and we remained for the rest of the year at a price of 65. Taking into a fact that refining margins remain volatile, refining margins remain at the same level, should we consider that your additional margins might increase by 65 minus 55 meaning $10 per barrel just in order for me to understand if I mechanics?

You are right about - this is Matti Lehmus. So you are right about the trend.

Like I mentioned, if the crude oil price goes up, it potentially increases the additional margin. The impact is some decimals, that’s the impact for $10 per barrel that you had as a result.

Okay, thank you very much.

Okay, thank you very much. This is Juha-Pekka speaking.

If there are no further questions, we thank you for your attention and participation. As this was the last quarterly report on the Neste Oil name, next second quarter results will be published on the 5th of August.

Until then thank you and good bye.