Earnings Transcript for NTOIY - Q3 Fiscal Year 2024

Anssi Tammilehto: Hello all. Welcome to Neste’s Q3 2024 Results Webcast. My name is Anssi Tammilehto. I’m the Head of IR at Neste. Today we have our new President and CEO, Heikki Malinen; and our CFO, Martti Ala-Härkönen, our main speakers. As per usual, we will first start with our presentation and after that we will have time for your questions. As always, please pay attention to the disclaimer as we will be making forward-looking statements in this call. With these remarks, I would like to hand over to our President and CEO, Heikki Malinen.

Heikki Malinen: Good morning. Good morning, good afternoon, good evening, wherever you are. Welcome also on my behalf to this webcast, and thank you, Anssi, for those introductory remarks. Okay, so this is my first Neste webcast, and some of you may know me from the past, but please allow me to introduce myself briefly with a few words here to get us going. So, this is my 16th year as a CEO. I spent almost most of my career in cyclical industries, heavy industry industries which faced tough, fierce competition. I’ve spent my whole career involved in different types of transformations. I’ve led many transformations. That’s what I know and that’s what I do professionally. And I look forward to discussing with you about Neste, how we’re doing and also where we’re going from here in the years to come, and hopefully also meeting you in person in the not too distant future. This is my 8th day at Neste. I’m on an accelerated learning journey and I will be focusing very much now in the early days more on listening and learning and understanding, but at the same time getting very quickly ready to move then into execution mode and really with a very strong intent to make progress here within Neste. So those were sort of my opening remarks. And then if we start getting down to the order of the business of today, so a couple of key messages here for starters. So this is backdrop. I’ve already had a chance to talk to many Neste employees here in Porvoo facility. I visited the R&D center on my first day. I’ve seen the Porvoo refinery. I met hundreds of people, also had a chance to visit our foreign locations in Singapore and Houston, and Rotterdam so – and I’ve also spoken with a number of our customers. I talked to three CEOs of our largest customers last week and asked for their feedback and perspectives on the industry and on Neste. So I’m still in information collection mode, but a couple of observations still. First of all, my strong view here is that Neste is in a strong position. We are the pioneer in the renewable fuels industry. Really, Neste is the global market leader. We have the strongest technological and innovation base, and this gives us a profound advantage as we move forward into a more competitive industry. Our current performance is not satisfactory and we will discuss the causes to that here in a moment. But I still want to – just for those of you who look also at the really long-term, I just want to say a couple of things. One is, I mean, the green transition, it is coming. It’s inevitable. It’s very critical for the European economy. But the journey is not going to be linear. It’s going to be nonlinear and it’s going to be volatile and there will be phases when we go up and down, but I think the direction is clear. This is – it’s a growth industry and Neste is well positioned. But Neste is a corporation. We need more focus. We need more focus on revenue generation. We need to take a sharper view on cost and competitiveness and we need to keep an eye on the balance sheet and on CapEx. And so therefore, we have now launched a full potential analysis to develop a robust plan, and that work has now started. And then finally, I’ll comment in a moment a little bit later about what’s going on with Porvoo and the hydrogen electrolyzer we were – we had been planning to invest in. So here are some of my early observations. I won’t go through all the points. I’ll leave you if you want to take a look at it later. But let me just comment on a few things still, which I already referred to, but which I feel are very strong. In addition to the long-term fundamentals, Neste is in a unique position because we have a strong supply of feedstock. We understand the nitty-gritty of this business, and we have unique pretreatment capabilities and technologies and know-how. So that’s a good foundation. We have a huge R&D team. We understand the technologies. You go to Porvoo and you look at the R&D center there, it’s an amazing place. I mean it’s truly amazing. And I don’t know if anyone has in the industry in our sector, anything similar. And as I said, when I talk to Neste employees, I see really the passion in their eyes. People are very committed to take this company to the next level. So I don’t have any problems with the motivation of the staff. I mean people really have the fire in their belly to move Neste forward. We just need more clarity on the direction. But obviously, we have invested a lot in new capacity, and we already – and some of it is now starting and more capacity is coming. So for us operationally, we need to improve our ability now to ramp up those facilities and really to get more operational performance out of the fantastic assets this company has. So that’s more of an operational challenge for the new CEO, among other things. Martti will go and do a deep dive on the numbers. But obviously, maybe it’s – I mean very easy for me to comment on the left-hand slide, the price chart for the renewable diesel sector, the curve, the shape of the curve and the trajectory and the delta is very evident. I mean prices have corrected quite materially. And we are today in a very different spot than we were just a year ago. So that is one explanation for the change in profitability. I will – you will not hear me making forecast about prices going forward, I don’t do that. But I think we have a certain amount of volatility in these prices, and they can move in many directions. On the right-hand side, you can see the results performance overall compared to what we did a year ago in the third quarter. The change is really a major drop in profitability. But for me, that is more a challenge, an opportunity to improve. I look at the number and I say to myself, okay, what is it going to take from us to improve those numbers. And as I said, for me, that’s more of a – it’s an opportunity to show what Neste can do. So that’s how I look at that number, although in itself, it’s not, of course, something that we like. So as I mentioned at the beginning, we’re going to – we have started the full potential analysis. So what is that and why are we doing it? Well, as a person, I’m very fact-based. I am very analytical. I want to see the facts and numbers. So we’re now doing a deep dive where we can see basically the company, we’re looking at the revenue side, we’re looking at the cost side very comprehensively and we’re looking at the capital side, including working capital. And out of this work, we will come up with a robust plan, which will have clear prioritization and we will start executing in a logical sequence, in an order that makes sense from the standpoint of trying to really hit the heavy items first, and that execution will then start next year. And I will come back to you in the beginning of the new year when I have something more concrete to share. But I just want to give you a heads up that, that work has now started and it’s really essential, an essential tool for me so that when I now start leading the company that we get on the right trajectory, right clock speed and the right angle of attack, so to speak, from the get-go. Then today, we have announced a decision, which, of course, is unfortunate that we need to withdraw from investing in the 120-megawatt electrolyzer plant in Porvoo. Now Neste is very committed to decarbonizing our company, and Porvoo, of course, does have CO2 emissions. So our objective is to reduce those, and solve for that. But in the immediate situation we are now in. So we have two issues. One is the regulatory framework is moving in the right direction, which is positive. But the regulatory scheme does not sort of balance sufficiently well with the capacity that we were initially contemplating so the 120 megawatt. And then secondly, we are in a cyclical business. And it’s my point of view that in a cyclical business, we also need to look at the leverage. And we have set clear targets on where our leverage can go. And as the trend has been rising, I think it’s prudent for me as the new CEO to make a decision here and to just halt this project. Let’s focus on the things we are working on now, and we will try to see if we can solve this decarbonization problem in Porvoo, another way, get to the same result, but through a more core capital effective manner. So we will come back to that later in the future when we have a new pathway on how to do this. But overall, as I said, I want to confirm that we are committed to the decarbonization of the Porvoo facility. So those were my introductory remarks. I’ll now hand it over to Martti. Martti will then go into the Q3 financials. Let’s see if I can get the slide going. Martti will talk about that. And then I will come back later and talk about the outlook and give you some – a bit of a more broader perspective about opportunities and uncertainties in this sector, and then we will be happy to answer your questions. Thank you.

Martti Ala-Härkönen: Thank you very much, Heikki. So let’s now go into the figures. I’d like to start by saying that financial wise, the main theme in our third quarter results is that it reflects really the further weakened market, both in renewable products as well as in oil products. Like Heikki already mentioned, our current result level is unsatisfactory, we realize that. The challenging market conditions clearly impacted our margins, while on a positive side we see clear initial progress on cost savings. More specifically, our third quarter EBITDA was €293 million. That is 72% down year-on-year. Last year in the third quarter, we had the peak quarter of that year, our result at that time north of €1 billion. Going more specifically into the segments, in the Renewable Products, our comparable sales margin was US$341 per ton, down about 62% from the last year’s high level at US$912, or 10% still from the second quarter level of US$382 per ton. Similarly, in oil products, our total refining margin was US$10.6 per barrel, down about 60% from last year’s high level at US$26.9 per barrel, and down also by 30% from the second quarter US$15.1 per barrel. So the challenging market condition is very clearly visible in our third quarter figures, both in renewable products as well as in oil products. But on a positive note, our sales volumes increased quarter-on-quarter, both in renewable products. That includes also SAF sales where we reached a new quarterly high of 112 kilotons, clearly up also from the second quarter as well as in oil products we had a very solid performance and good sales following the turnaround in Porvoo in the second quarter. On a positive note, furthermore, our fixed cost savings are becoming now clearly more visible what we’ve been initiating over the last 12 months and starting to be visible. Our total fixed costs in the third quarter were markedly below our last year as well as the previous quarter. However, it’s very clear considering the challenging market condition that further performance improvement actions will be required going forward. I’d like to take one more metric from this slide, which is that our greenhouse gas reduction in the quarter was 3.6 million tons. That is a clear increase year-on-year over the 2.5 million tons last year. This is a clear improvement, of course, about our environmental handprint. Here, we visualize the key market environment drivers that impacted our margins in the third quarter. In the third quarter, looking first at renewable products, and comparing to a year ago, our margin was above all affected by a substantial decrease in diesel price. The weakening diesel price was also the main factor quarter-on-quarter. Being more specific about that, European Northwest diesel came down about US$65 per ton from the second quarter compared to the third quarter average or the South Coast diesel in the U.S., even US$80 per ton. In addition, when we compare year-over-year, the U.S. bioticket and renewable credit prices as well as spot premiums in Europe have both clearly weakened in a yearly comparison. At the same time, the waste and residue prices have remained relatively flat and not really giving us a helping hand margin-wise. On a positive note, during the third quarter, the credit prices, however, they slightly strengthened versus the second quarter levels. At the same time, in Europe, the spot premium still remained weak. And also in oil products, that is – that goes for our product cracks, they decreased very clearly during the third quarter and the decline is very visible both in year-on-year as well as in quarter-on-quarter comparisons. Our focus on efficiency, net working capital optimization as well as balance sheet strength, those are set to continue going forward. In this slide, I’m sharing a few highlights of each of these from the third quarter. First, as to our fixed cost efficiency, in the third quarter our comparable fixed costs were €16 million lower than a year ago. And more specifically, our employee benefit costs were €126 million in the third quarter. That is €36 million below last year at €162 million. We also now forecast that our total fixed cost will be lower compared to last year. Still in our second quarter report, we set that slightly higher. Yet, of course, considering, I’m stating that again, considering the challenging market conditions, all our efficient actions naturally need to continue going forward. Second, looking at our change in the net working capital in our cash flow statement, our third quarter net working capital change was €143 million positive versus €268 million negative last year. There is a clear improvement year-on-year. And more specifically, in the third quarter, we succeeded in reducing our inventories by almost €600 million versus changes in receivables that was also due to a higher sales volumes as well as payables contributing negatively to our networking capital change. Of note that also year-to-date, there is an improvement in the networking capital chains – compared to last year. And if you look forward, net working capital optimization continues to be a very high focus area for the Group. Also in the fourth quarter, we have set very clear end of the year targets and actions both for Renewable Products, as well as bulk products, as well as Renewable Products. Finally, preserving a strong balance sheet continues to be a cornerstone of our strategy and financial planning. We are extremely determined to focus on the balance sheet strengthen, and the same goes for preserving a strong liquidity. Here I would like to note that at the end of the third quarter our liquid funds as well as committed, unutilized, credit facilities totaled about €2.6 billion. That’s actually up by €149 million from the end of the second quarter. Looking here more specifically at our cash flow in the third quarter, our cash flow was mainly impacted by the weak EBITDA, as well as by somewhat higher quarterly CapEx compared to several earlier quarters. Cash flow before financing activities came in at slightly negative for the quarter at - €16 million, yet a clear improvement over the first two quarters of the year. Our cash-out investments totaled €488 million in the third quarter that is clearly above, for example, last year’s level of €258 million. The turn rate in our total net working capital was 41 days compared to 40 days a year ago. So at about the same level, if we look at our cash flow trend, I think, that the actions are already starting to be visible also here in the third quarter. Going forward, cash flow and as I mentioned, net working capital optimization, they continue to be very high focus areas for us in the fourth quarter. Let’s then turn to our third quarter Group result bridges by business segment, as well as by business driver. When first looking at the third quarter comparison bridge by business segment year-on-year, that is here on the left hand side, we can see that all our business segments contributed actually to the decrease in comparable EBITDA year-over-year. Positive contribution only comes from others, including eliminations, but it consists of common corporate and functional costs, which as such have clearly reduced year-over-year, and thereby, the allocation of timing of these costs to business segments may vary year-over-year and as well as also by quarter. When looking at the comparison bridge by driver year-over-year, on the right-hand side, we can see that there was a positive impact of €87 million from higher sales, and that’s positive. There was actually a positive sales volume contribution from all our business segments. On the other hand, the major decline in EBITDA comes from declining sales margins. And again, unfortunately – actually from all our segments, in total, €839 million. Here, we again observed the impact of the adverse market conditions. On a positive note, like already mentioned, the Group’s comparable fixed costs were €16 million lower than last year. As to a business segment level analyses here, we have first the third quarter comparable EBITDA bridge for Renewable Products, LFS [ph] as well as a longer trend of renewable sales volume as well as comparable sales margin by quarter since the beginning of 2020, that’s the graph on the right-hand side. Our comparable EBITDA in Renewable Products was €106 million in the third quarter. Year-over-year that was positively impacted by a high sales volume, which contributed a positive €62 million. There the main reasons are our total sales volume in the Renewable Products was now 999 kilotonnes, almost one million tonnes versus 883 kilotonnes a year earlier, there is growth of about 13%. Out of which SAF volume reached a new quarterly high of 112 kilotonnes, up from 36 kilotonnes a year earlier. Just to note that the share of sales to North America was 49% in this quarter, and to Europe 51%. Going forward, we expect our SAF sales to further increase towards the end of the year. Our sales margin had a negative contribution to the EBITDA by €492 million. They are the main elements, like I outlined before, were clearly declined diesel price as well as weaker U.S. credit prices and weaker spot premiums in Europe. During the third quarter, there were also planned maintenance shutdowns, both in Singapore original line as well as in Rotterdam. And this is reflected in the utilization which was rather low at 52% compared to 92% last year at our all renewable production facilities. And maintenance shutdowns also contributed to an increase in total production costs which impacted also the comparable sales margin. Martinez continued to have a diluting impact on Neste’s overall comparable sales margin as well. On the right-hand side graph, we can see the markedly decline in comparable sales margin during this year versus early years. As required, we are now reporting that very clear. Also Neste, we are prepared to optimize our production capacity in renewable products according to the market situation if necessary or required. It’s good to note also here that after the third quarter planned maintenance shutdown in October, we have reported that Singapore’s first line, that is the original line, encountered an unforeseen equipment failure that led to the shutdown of the production line at the refinery. This is also expected to influence some renewable diesel customer deliveries to the U.S. in the fourth quarter. Here, we have the same third quarter comparable EBITDA bridge for oil products, as well as a longer trend line of the total refining margin in U.S. dollars per barrel as well as utilization rate by quarter since the beginning of 2020. Our comparable EBITDA in oil products was €141 million in the third quarter, year-on-year, positively impacted by higher sales volume, contributing €24 million. Sales were north of three million tonnes or about 140 kilotonnes or roughly 5% higher compared to a year ago. There was solid operational performance throughout the quarter at our Porvoo refinery. The decline in EBITDA comes compared to last year from the market in a weaker total refining margin in total, contributing $347 million year-over-year. Oil product cracks basically declined in a yearly comparison. But overall, the key product margins still stayed above the pre-COVID averages. The summer driving season and as well as the calling season, was supporting demand in the third quarter, but at the same time, the weak industrial cycle affected middle distillates demand, and the expected weather-related risk did not materialize. Brent crude oil prices were very volatile actually, during the third quarter, ranging between US$70 or up to US$89 and the quarter ended at about US$73 per barrel for the Brent crude price. On the right-hand side, we can see also the market will decline total refining margins for oil products during this year if we compare it on that especially to former years 2022 and 2023. Here we see the third quarter comparable EBITDA bridge for Marketing & Services as well as on the right-hand side, along the trend line of the comparable EBITDA, as well as comparable RONA, return on net assets of this business segment by quarter since the beginning of 2020. In Marketing & Services our comparable EBITDA was €32 million, down €10 million from a year ago. That was mainly due to the unit margins, which were tighter and had an impact of €8 million on the comparable EBITDA. The decline in unit margins was primarily driven by the decrease in global oil product prices, which led to inventory losses. The prior years benefited in turn from a significant increase in Brent crude oil prices resulting in turn in higher unit margins. Fixed costs were €3 million higher also year-over-year, mainly due to an ongoing ERP replacement, that is IT costs. Overall, I would like to say that we are satisfied with the performance in Marketing & Services. We have been able to maintain high market shares in our respective markets, and the performance overall has been relatively steady and returned strong. I’d like to note here that the comparable RONA was almost at 30% at the end of the third quarter, although the EBITDA in this quarter was impacted, like I said, by inventory losses. Also like to note that in Marketing & Services as opposed to our other two business segments, renewable products and oil products, the inventory gains and losses are continuously reported in the result of the business. I will close up by taking a short look at our performance against our financial targets. At the end of September, our comparable ROACE calculated over the last 12 months was 8%, and of course, not meeting the group’s financial target level of higher than 15% ROACE. Going forward, actions will be required, of course, to change this trend. As to our leverage, net debt to total capital, it averaged 35.2% at the end of the third quarter, which is still meeting our financial target level of less than 40% I’m overall somewhat quite satisfied that we were able to reduce the growth trend line in leverage in the third quarter. Having said that, of course, we have really high focus on cash flow, like I said in the fourth quarter. And also a high focus on preserving, going forward, where we determine the strong balance sheet. Also in the longer term, that is an absolute high priority for us. I will stop here and hand it back to Heikki, who will next continue on our outlook.

Heikki Malinen: Thank you, Martti. So let’s go to the outlook. Let me just highlight or read the main things here for the renewable products sales volume is expected to increase from 2023, and to reach an approximate number of 3.9 million tonnes, plus-minus 5% in 2024, out of which SAF volumes should be in the range of 0.35 million to 0.55 million tonnes and the full year 2024 average sales margin would be in the $360 to $490 per tonne range. And on Oil Products, sales volumes in 2024 will be lower than in 2023, impacted by the Porvoo major turnaround in the second quarter and the full year 2024 total refining margin will be lower than 2023. An additional information is available in the presentation. Now let me finish off with the slide you will see me present where we have our quarterlies, really want to take always a bit of a step back here and look at some of the opportunities and uncertainties in the business and in the sector also and in the economy, which are relevant for Neste. So the things I want to highlight, obviously, is that if we look at opportunities, global macro starting to improve, China is starting to gradually stimulate its own economy. Europe starts to get its own plan and house back in order. And of course, the U.S. economy has been very robust. If – things – this trend – goes – continues, things should start picking up in that respect in the economy. Diesel prices have corrected quite a lot, potential recovery, let’s see next year. Then we have this whole question of effective implementation of climate regulation. A lot of regulation is coming online, for example, RED III, how will the European Union can actually take that into concrete implementation, what is going to be the industrial policy of the European Union. How will the European Commission, now when they come on board, how will they implement these things. I think the Commission and the European Union is very deeply embedded and deeply, let’s say, committed to the green transition, although it does have a bit of a – from time to time, a bit of a, how should I say, uncertain moments as we’ve seen from the media. But I think the direction is clear. And then Neste’s potential I mentioned to you in the beginning that we have now started this full potential analysis, and we are then going to come back to you with what we are going to do, focusing on things we can control ourselves. Now in terms of uncertainties, I want to highlight three. This whole question of geopolitics, we have the U.S. election. What’s going to happen, what’s going to come out of that remains to be seen. But of course, there is an uncertainty one has to consider when one is a global company like Neste. This question of the U.S. CFTC versus PTC, of course, if PTC continues, that would be positive for us. And then finally, also, when I mention unfair trade policies, Neste is investing heavily and has invested heavily into Europe. We’re now building world-class facilities in Holland, in Rotterdam, we have two lines, second one converted – first one converted, second one is being built as we speak. I personally believe and Neste believes that there needs to be a level playing field when it comes to trade and global trade. We have renewable diesel is covered by these trade protection measures related to antidumping. And it’s our view that SAF also needs to be included in this EU ruling. So, we will advocate strongly that SAF is also included, we think it’s only fair. There needs to be a level playing field, especially when European companies are investing so much capital at the front end of a growth trajectory. So, that is just a point of view we have here now at Neste. So, ladies and gentlemen, those were our remarks. I think we are still on schedule and very much look forward to your questions. So, I guess back to the operator.

Operator: [Operator Instructions] The next question comes from Alejandro Vigil from Santander. Please go ahead.

Alejandro Vigil: Hi, all. Thank you for taking my questions. And Heikki, best of luck in the new challenges. The first question is about recognizing you have been just a few weeks as CEO of the company, and probably you will have more color. You said not in the beginning of next year, but which are your priorities, thinking about the company in terms of capital allocation within CapEx and all the distributions, for example, looking at the situation of overcapacity in the market, et cetera. And the second question is about today, we have also seen a big transaction in your sector with very high valuation multiples, or at least attractive valuation multiples. What Neste needs to do to show the real value in the company? Thank you.

Heikki Malinen: Yes. Alejandro, first of all, thank you for your kind words and look forward to a discussion with you and your colleagues in the years to come. Big questions, very important questions. I will not punt on them, but I need to give you just the answer I can give you, I think in terms of capital allocation. So as we’ve said before here, and Martti also confirm, I mean, this is a growth business. It will grow long-term, but the growth trajectory is non-linear, and so we need to think about how we add capacity as we go forward, so that it is in some logical balance, also, with respect to our ability to fund those investments. We now have those two large investments, as you know, Singapore, Rotterdam. For me as CEO, it’s very much about getting those completed, ramped up, and then commercializing them. So one thing which would be one of my key priorities, which I can see already now is Neste’s commercial excellence, we need to get much closer to the customers, we need to be much, much more active, and we need to make sure that we move this volume profitably. So maybe I’ll leave the first one there. And then in terms of valuation and value creation, honestly, I want to do my homework thoroughly. I have a reasonable understanding of the company, but it’s too high level. So let me do the homework and then come back to you with something solid and robust and something which is clear also to the Neste people, because ultimately, whatever we say, we need to deliver. So sorry for the delay, but you have to wait until early next year.

Martti Ala-Härkönen: Alejandro, still asking that with your second question, did you want to highlight the KKR buying the 25% stake in Enilive or I heard you say today or that was just a general question.

Alejandro Vigil: Yes.

Martti Ala-Härkönen: Yes, just on that, just – we just of course, been following on that and we realize Enilive was valued at €12 billion and KKR now they concluded buying a 25% stake for €3 billion, out of which, if I have it right roughly €2.5 billion by buying shares and with €0.5 billion investment straight into the equity of Enilive. So yes, we need to analyze that further, but yes, good valuation in this case anyway, a short comment.

Alejandro Vigil: Thank you.

Operator: The next question comes from Erwan Kerouredan from RBC. Please go ahead.

Erwan Kerouredan: Thanks for taking my question and welcome to your new role, Heikki, and thanks for the introductory comments and the relevant details on your past experience. I’ve got two questions, please. First, on guidance for next year, not so much on absolute numbers, but more on communication style, do you consider shifting to metrics other than the RP sales margin towards next year? Do you think the market is focusing on the wrong metric when it comes to Neste? This is my first question. And then my second question is on the slide where you highlight the strength and the areas of concern, especially on the strength and where you highlight feedstock and pretreatment, up until, like last year, feedstock and pretreatment was an area of priority for potential strategic acquisition. I understand that the framework now is completely different, but given where we are in the cycle and given the decision you made at Porvoo, does it still leave some room for potential strategic acquisition in the feedstock and pretreatment space for next year. These are my two questions. Thank you.

Heikki Malinen: So Erwan, thank you very much. I hope I pronounced your name correctly. So thanks for those. Obviously, we take the matter of guidance very seriously, and it’s our job to make sure that when we guide that it’s somehow helpful also to the investors, but also something that we can – we understand and can control. This is what Martti wants to say here, but my own view is we take it seriously. We will look at that and consider if changes need to be made. But if we make changes, I cannot yet say what those would be. Again, I need to think carefully what the right approach here is. But Martti, anything you want to add at this stage?

Martti Ala-Härkönen: Yes. Thanks, Erwan for the question. We cannot really comment on you saying if the market has been too much focused on the wrong metric. We know it’s been very much focused on the RP comparable sales margin. Of course, the future mid-longer-term outlook should be more important than the short-term performance. That’s the only thing I comment on that side.

Heikki Malinen: And then on the M&A, the feedstock, obviously, feedstock is strategically super important for the company and pretreatments as well. The way I would look at it is that we continue to scan opportunities where obviously we have our eyes open and we’re monitoring. But at the same time, if there are different size of things you can do, right, small, small, medium and large. So I think I would just now pace myself here and say, I’m going to do the homework, but we will keep our eyes open if something interesting pops up.

Erwan Kerouredan: Thank you very much. That’s helpful.

Operator: The next question comes from Christopher Kuplent from BofA. Please go ahead.

Christopher Kuplent: Hi, there. I think Bank of America is nicer than BofA, but good afternoon, good morning everyone anyway. Heikki, I’m not going to embarrass you, the anticipation is growing by the minute for your CMD next year. So I want to focus on what’s going on right now. I wonder whether you can give us a little bit more of an update on the issues that have coming – come through on the – on ramping up the original line in Singapore. Anything would be quite helpful if you can give us the backdrop to why things are moving more slowly, and any indication for how quickly you think this can be sorted out? And then a question on the quarter, you’ve mentioned SAF making new records volumes-wise. What can you tell us about the impact on the margin? Has it been accretive? Yes, no, to what degree, in the same way you’ve been highlighting Martinez being dilutive. That would be helpful. Thank you.

Heikki Malinen: Well, thank you. Good two questions. Thank you, Christopher, also feel free to ask me anything, I answer if I can. But on the Singapore original line, so I mean reality is that in process industry, and I have a lot of history and experiences. Unfortunately, sometimes in these large lines, when you’re ramping up, things can happen, and you can have technical problems, which is the case. We have our best engineers working on it 24/7. We have our global experts supporting the work. I know the repairs have started, I have personally spoken to our local plant leader there in Singapore. So I get a regular update. We are on top of it. But I want to underline the thing that at Neste, whatever we do, we always go safety first, volume second. So the repairs have to be done correctly and so that there’s no safety risk. But I cannot give you a definite date, but I can confirm that the guys are working 24/7, and we have the best expertise that Neste has available to try to solve this.

Martti Ala-Härkönen: Yes. Thanks, Erwan for the – I’ll try to answer the second question. So obviously, we are not – we cannot give any of our own prices, like we have said before. However, we can pay reference to the Argus and Platts open databases and their reference prices. So looking at the Argus price, the SAF price was about US$3,000 per tonne last year. It average about – if I have it right, about 2,460 in the second quarter. And actually, unfortunately, with kind of following also the trend overall in the markets and renewable diesel, it came down about $480 per tonne in the Argus reference prices, where it averaged about bit south of $2,000 per tonne in the third quarter, so down about $480. And right now, we have it 25, I have it right in the reference price between $1,800 and $1,900. If you would divide that by the jet price, jet fuel price, about $700, you have a ratio of about 2.6. Of course, also the jet price have come down. But obviously, of course, we are a big supplier. We have different criterias as feedstock and so on. So this is not any quote on oil prices, but this is straight from the Argus database, their reference prices.

Christopher Kuplent: Thank you, Martti. And I presume at those levels though, it has been accretive to your margin that you’ve reported.

Martti Ala-Härkönen: That we can say it’s been accretive also in the third quarter, like we said. And like I said, we’re looking forward to increase our SAF sales also in the fourth quarter from the third quarter level.

Christopher Kuplent: Understood. Thank you.

Operator: The next question comes from Giacomo Romeo from Jefferies International Limited. Please go ahead.

Giacomo Romeo: Hello, thank you, and welcome, Heikki. Two questions. I think I want to go back to your final slide because you raised two important points there. And first one on the move to BTC from BTC. Is that still your base case that we’re going to see a move to BTC from the first of January? And if that is the case, do you expect you will need to redirect some of your volumes from Singapore to Europe? And sort of how are you thinking about the trade-offs there and also in the context of terms contract renegotiations that are occurring right now? The second question is about the point you raised on unfair trade policies. And you make the point that you are seeking an extension of the anti-dumping measures taken in the EU to the Chinese staff imports. Just wanted to clarify, can you reopen the RD anti-dumping case? Or do you think you will need to start a new probe? And what’s the time line there?

Heikki Malinen: Yes. So good questions. I think on the U.S. situation, I think these are, of course, it’s our best guess. I mean, we don’t know for sure, but it would be more sort of that most likely the BTC and I think it’s probably 50/50, BTC probably not being extended is a possibility.

Martti Ala-Härkönen: Yes. Thank you, Heikki. There is a bill currently in the Congress to extend it for another year. We don’t know if it will be a bypass. So the base case for us is that the CFPC would be what comes out. But we’ll see in a couple of months down perhaps more.

Heikki Malinen: Indeed. But in terms of the optimizations, of course, the good thing here is that we have opportunities to optimize, that we have assets on multiple jurisdictions, which allow us to try to maximize margins and revenues in different market circumstances. But ultimately, minings will be driven by value and opportunity. So if this were to happen, then we will try to find the best mix in terms of feedstock and market demand and optimize accordingly. So yes, to be solved, upside here. The upside is we have ability to do things. So that would be my response. And then on the trade matter, I just wanted to raise this more as a topic here because I think this is a bit of a philosophical question also with respect to investments in Europe and the whole commitment of Europe in terms of the green transition. And I come from another industry where if you follow those, these are daily topics. So I have a fair amount of experience and history from understanding these. But in terms of how we practically go forward, I can’t really comment on that yet. I just want to raise, I think it’s an important topic, and we will talk about it also in the future, and also with the respective authorities that deal with these matters.

Martti Ala-Härkönen: And to your question, Giacomo, I think there is still a little bit of time to, it hasn’t been a final verdict before starting a new probe. So to include SAF into the Chinese related anti-dumping duty, it now encompasses only biofuels…

Heikki Malinen: Indeed.

Martti Ala-Härkönen: …including renewable fuel – renewal diesel.

Heikki Malinen: Indeed.

Giacomo Romeo: Thank you.

Operator: The next question comes from Sasikanth Chilukuru from Morgan Stanley. Please go ahead.

Sasikanth Chilukuru: Hi, thanks for taking my questions. I had two, please, both related to SAF. The first was regarding SAF sales. You’ve highlighted voluntary SAF demand has not been realized as expected so far. I was just wondering what the reasons were behind this? What has changed? And how does this imply for next year sales? Do you expect airlines to meet these mandates – to meet the mandates when they start next year? How should we be thinking about SAF sales in the next year? The second one was on the Rotterdam SAF optionality project. I was just wondering where we are with that as it started producing already the focus on that project is.

Heikki Malinen: Yes. On the first one, so obviously, I have to also ask for Martti here to add to my commentary. But I mean, I think the mandates are coming and it’s clear. I mean, they will happen. How that – is it from January or is it from June or May, let’s see, but I think it is coming and it’s a 2% until 2029, and then it goes up to 6%. So I think that’s given, people will need to follow that mandate. The question with voluntary is also – I think it’s – I mean, the way I sort of understand it and I need to learn more, but the way I understand is, of course, airlines have made big commitments. The reality is there is no other way in the near -- whatever the next half decade to abate carbon other than SAF. That’s the only way. So this product has to be used. And consequently, if airlines intend to stay to their commitments, they will also need to be voluntary reductions. And also, you have corporates and others who also are taking their own decisions. I think the only problem here is that the economy is not great. Rates have gone up. There’s been a lot of inflation, and I think in the full supply chain, whether it’s the consumers or the corporates or the airlines, everybody is seeing a bit of a cost pressure here. So I mean I understand, of course, if you’re the CEO of an airline that you’re trying to find the optimum given your own business. But I think the major trend here is that the mandates are coming. Anything -- and on the RD -- on the Rotterdam one line, ready to go here?

Martti Ala-Härkönen: Yes. Maybe just on the SAF. So we have seen a little bit less voluntary demand now during this year, we expect, of course, higher sales in the fourth quarter. And it’s an uncertain thing for next year, how much they will be voluntary. We are -- definitely, we believe very much of the -- of course, the mandated demand, optimum demand will come in place, but the level of the voluntary demand is more of an issue. And hopefully, we can know more during next year. Then to the Rotterdam optionality project, I think you referred to the -- our renewable jet fuel project. So the mechanical works are there complete, we are still waiting for certain documents from authorities to be able to ramp up, we hope to be ramped up and that we have started also production by the end of the year.

Sasikanth Chilukuru: Thank you.

Operator: The next question comes from Artem Beletski from SEB. Please go ahead.

Artem Beletski: And Heikki providing your initial thoughts. Actually I have three questions. So the first one is your commentary in the report relating to reoptimization of global production capacity in context of the U.S. regulatory framework. Could you maybe a bit elaborate more about this? So is it relating to basically volume reallocation, adjusted production or is it something potentially more structural what you mean there. And then, I would like to ask about the term deal negotiations. Any comments on that front. So I understand that the vast majority of those deals are likely to be -- yet still to be signed maybe in November, December. And the last one is just on current trading. So looking at some pictures you are presenting today. So there seems to be some signs of improvement when it comes to, for example, RP price in LCFS and greens. Can you confirm that this is also something what you are seeing what comes to your own operations and margins.

Heikki Malinen: So maybe if I start with the first two, if that’s okay, and Martti, then you can build on that with the second and third. So I think in terms of reoptimization, you said reoptimization, capacity management and structure. So definitely not structural -- so it’s very much about leveraging the platform we have, taking advantage of the assets in different places and then trying to optimize. I mean the reality is we have a lot of skills here in terms of how we manage the fee combined -- or match the feedstock with the customer demand, and that’s where we’re good at. So that is something that we would have to do then more, and that would be number one priority before we look at anything else. And we would work very hard on that reoptimization before anything else is considered. Then on negotiations, negotiations have started, right?

Martti Ala-Härkönen: Yes, the term negotiations have started okay. We are reading, of course, various options how also to maneuver taking into account the current, you could say, difficult, more challenging pricing environment in terms of pricing mechanisms. Really, we have nothing at this stage to say on that side. We need to come back later during the quarter or early next year. And then to the current trading of some of the market parameters, thanks, Artem for, by the way, these questions. So you’re right. So the LCFS as well as the RINs, they have appreciated somewhat. Now further during, I think, the last -- when I looked at LCF, it was about 67 for the credit and RINs may be at 68 coming -- both I think, a bit below 60 in the third quarter. Also, the spot premiums, if you look at the Argus database, I think the average for RD in the third quarter was, again, referring to the Argus data like US$1,560 per ton. Now there’s been an uptick in October to over US$1,700 recently, so from US$600 to about US$1,700. However, having said that, so it’s important to note that during this year, we have turned on the RD side when we talk about European spot premiums, 75% or even up to 80%. So the spot premium hikes don’t really effect to any bigger extent of this year’s margins. But it’s, of course, positive if this trend would continue thinking about next year. Then a very important contributor is the diesel price. The diesel price went, like I said, downwards clearly in the second quarter. Now in the beginning of the third quarter, it first appreciated back to our over US$700 per ton, but now the latest price was again about US$670. So that, on the other hand, has been moving as a very reason towards the wrong direction. So you have both positives and some negatives here in the big picture.

Artem Beletski: Okay. Very good, thank you.

Operator: The next question comes from Peter Low from Redburn Atlantic. Please go ahead.

Peter Low: Hi, thanks. In Renewable Products, you cite higher production costs due to kind of the maintenance shutdowns in the quarter. Are you able to quantify the impact of that on the margin and perhaps whether you’d expect a similar impact in 4Q given the Singapore turnaround? And then my second question was on hedging and really your risk management approach in renewable products. I would have expected your hedging program protect to at least partially from the fall in diesel prices that we’ve seen this year and in this quarter in particular, but it doesn’t really seem to have had any visible impact on the 3Q results. Can you perhaps explain why that’s the case? Thanks.

Martti Ala-Härkönen: Thanks, Peter, for the question. So the higher production cost, rightfully so, I mentioned that because of the maintenance shutdowns, it had an impact. Well, yes, the impact was negative in the range of US$40 to US$50 per ton, we can give out that figure in the overall margin. So that was both the diesel price, then this on the negative side impacting the third quarter margin. On the positive side, an appreciation from the U.S. credits. Actually, there was a positive contribution, not a very large one, but also from hedging in the third quarter, coming mainly from our margin hedging in the EU side. In the U.S. side, it’s been a little bit site based. And also from basic utilities, we had slightly negative. But overall, a positive contribution from hedging. Our hedging ratio was 46% in the third quarter. At this moment, the ratio is 46% also for next year. I’d like to pick up one element there further. Of course, we used POGO, palm oil, gasoil difference as a proxy hedge. And we’ve seen more recently, both palm oil going upwards, on the other hand, diesel downwards. So the spread has widened. So particularly on the European side, we have hedges in place, which has smoothened out the impact you referred more to the diesel price, so yes. And then you asked also about the higher production costs, what could be their impact. Too early to call for the fourth quarter, but typically, if we have maintenance shutdowns, we have ramping up importantly also at Martinez. So this overall incurs some more costs to our comparable sales margin.

Operator: The next question comes from Michele Della Vigna from Goldman Sachs. Please go ahead.

Michele Della Vigna: Thank you very much. It’s Michele Della Vigna here. Heikki, congratulations on leading a key European clean tech leader, although clearly at a bit of a challenging time for margins. I wanted to ask you two questions. The first one is a little bit more strategic. You clearly say that the performance of Neste was not satisfactory outside of the difficult market conditions. What would you have done differently at Neste in the last couple of years? And are there any clear low-hanging fruit that you think you can work on with clear benefits for the next couple of years. And then my second question is more about regulation. You talked about rising renewable diesel demand next year. We certainly get to the same outcome. But I was wondering if you could quantify perhaps how you expect the German renewable diesel regulatory changes perhaps to impact their demand in 2025. Thank you.

Heikki Malinen: Yes. Now what a tough question on looking at the past, I mean, I think it’s sort of not really kosher to start evaluating also past performance beyond what the numbers currently say. I think at this stage, my response to your question, was it [indiscernible] by the way, as I understand, it was a Michelle there. It’s simply that we’re going to do our homework now very thoroughly. I’m not going to start second-guessing what would have made sense in the past. The past is the past. And we’re going to get our homework done. I’ve told you the key areas we’re going to focus on, the commercial side, a full review of the costs, both variable and fixed, and then a complete review of the capital side. And the answer is going to come out of those on how we create more value. What would have I had differently? I cannot -- I mean, I can’t give you an answer off the cuff, that is not sort of prudent even. But on the regulatory side in Germany, I think we have some positive views on that? Or how is it?

Martti Ala-Härkönen: Yes. Correct. Thanks, Michele, for the great question. Thanks also for a report highlighting this. So firstly, we think very positively on the recent regulatory changes in Germany. Finally, it’s a big market, of course, if that would open more into RD and then renewable fuels in general would be great news. There are a couple -- several elements there. First one is already in the spring, there was the elimination of the so-called upstream emission right certificates as a compliance option from 2025 that we think could have a positive contribution to demand of, say, roughly 300 kilotons. Then also, there is a general increase in 2025. So next year in the GHG quota, I think it’s going up to 10.6% from 9.4%. So this is still RED II. And that could bring 50 kilotons or perhaps even more. And the RED III transposition is a further opportunity on top. And naturally, also that there’s EU-wide import duties now for Chinese biodiesel could have some positive impact. Then there is one more important element, which is there is a proposal at this stage, which we haven’t yet fully evaluated, from outside, it’s a pause in the so-called carryover of the GHG certificates from compliance years in 2025, 2026. So you couldn’t carry those over what you have left, but then it’s done for previous years, I think if that proposal will come through, that should have a further positive impact, but we haven’t quantified that impact at this stage.

Michele Della Vigna: Thank you.

Operator: The next question comes from Iiris Theman from Carnegie. Please go ahead.

Iiris Theman: This is Iiris from Carnegie and thanks for taking my questions. I have two. So firstly, I think previously, you have talked about SAF demand of 4 million tons next year. But basically, what is your current expectation for next year in terms of SAF demand. And secondly, in terms of investments, so are there any other investments basically that are under consideration or could be delayed, especially thinking about your Rotterdam capacity investment that should be ramped up in 2026, but are you still planning to do it as previously planned. Thanks.

Heikki Malinen: So I do not comment on the SAF volume estimate for 2025 in terms of demand.

Martti Ala-Härkönen: 2025, yes. The originals, where, well, we have had out a figure earlier and at CMD, it could be 4 million. But that 1 million ton for that includes also voluntary demand. At the moment, because of our experience from this year, we have become more cautious. This has been already our communication clearly during this autumn on the road show. So we are saying that the mandated and the opt-in demand in the U.S. on top of the European mandates, and some other European countries like UK, Switzerland and so forth could be up to 2.5 million tons. And then on top of that voluntary demand, which we don’t know today, and that is the issue. And we need to come back when we know more during next year, how things shape up on that front.

Heikki Malinen: Iiris, nice to meet you hear also. Thanks for the question on the investments. And you specifically asked about the Rotterdam new facility, the line number two, I’ve had a chance to go and visit. It’s going to be a fantastic world-class facility next to our existing line. It’s a very interesting and competitive facility and integrate overall. Teams are working very hard to build that and complete that project. And we’re going to do everything we can so that it will be ready then in 2026, and we will be within the budget. Obviously, building these types of investments post-COVID is not that easy always, but we have our best people on it and good partners, and we will do our utmost to make sure it’s finished on time. Nothing more to say at this stage. So.

Iiris Theman: Okay. Thank you.

Operator: The next question comes from Naish Cui from Barclays. Please go ahead.

Naish Cui: Hey, good afternoon. I have two questions, if that’s okay. The first one is on term sales. So just wonder, are RP sales margin was more than $100 per ton Q3 last year, and this put kind of mid-300s. I wonder how much premium can you lock in through term sales? Or like how should we think about in 2025, if margin is really low this year? Can you get really high next year, vice versa? And number two, I want to ask about your capital framework. Heikki, you said a lot of very nice things about CapEx discipline, about cost-cutting efficiency, stuff like that. But how should we balance on different days, if you could cut your CapEx, if you could improve your cash flow next year, that the main shareholder remuneration can be protected. Thank you.

Heikki Malinen: Do you want to comment on the term matter first?

Martti Ala-Härkönen: Yes. Thank you, Naish, for the question. I’m not sure if I exactly understood fully your question, but let me just conclude that like I said, in the challenging environment, we need to also think of new – potential new ways of looking at the term sales. We have been previously, like in RD, using a lot of diesel price as the quote and then on top of that, the customer premium and then the credits in the U.S. But of course, now when we have – also the spot prices have been on a lower level, so it comes also from our point of view, how much do we bind actually to the term sales? And should we look at some other ways of terming up. So should we instead use reference prices already to a certain extent as a contributor to the pricing. So this is something we are currently looking. I cannot say entirely, and this is, of course, a very strategic issue as well for us. So looking at different ways how to optimize our opportunities next year. I think that’s the key here.

Heikki Malinen: Thank you. And in terms of your question about the capital framework. So I just want to still hold the horses here. As I said, we’re doing the analysis now, and I will come back to you when we have formulated our total plan and we have a clear execution road map. So just be patient, we’ll come back to you on that one. But then in terms of CapEx, in general, yes, I’ve made a decision here that as we’ve announced today regarding the Porvoo electrolyzer. I think that’s – it’s kind of how should I say, a separate matter because, yes, we’re going to – our plan is to decarbonize Porvoo, yes. But at the same time, we need to make sure we do it in the most capital-effective manner. And the idea we now had isn’t going to be, in our view, based on what we know today, that right solution. So it’s prudent to wait a moment here and rethink the plan also given where we are on the leverage which you can see from the charts where the curve is. So those were the two factors on that. Now regarding the other investments, we are in a growth industry. We make these huge investments to take advantage of the long-term growth, which is coming. And we very much believe we know it will be coming there. But the thing here is that you make these investments for decades, and it’s impossible to time in a huge facility like Rotterdam too, to the exact perfect window. So we will complete those projects, we will get ready for the growth. And of course, if there are moments when the demand isn’t picking up as rapidly, we then need to optimize. But we are a market leader in this industry; we want to maintain our strong position globally. And like – I think we said in the beginning that we’re – in the clean tech industry, we’re a major player – we intend to do that in the future or maintain that position also in the future.

Naish Cui: Understand. Thank you.

Operator: The next question comes from Matt Lofting from JPMorgan. Please go ahead.

Matt Lofting: Thanks for taking the questions and Heikki, thanks for sharing your remarks earlier. I think during them, you talked about the experience that you have in transformation across industrial sectors and business. I wondered if you could just share some initial perspectives on the extent to which you currently view Neste as a real underlying turnaround story versus being more a situation of better preparing and organizing the company for market recovery in the future, bearing in mind as you talked about the cyclical and regulated nature of the markets that Neste operates in. So thoughts around that would be appreciated. And then secondly, I just wanted to come back on SAF. I mean it does seem increasingly like the ramp of voluntary demand has proved through the last sort of six, 12 months to be substantially below the company’s prior expectations. What do you think was wrong with the prior expectations or what’s been the source of the undershoot. And when you look forward to 2025 plus, what does that imply in terms of the likelihood that ultimately, this industry does grow, but a scenario that it continues to grow slower than was previously hoped, even as mandates come in. Thank you.

Heikki Malinen: Yes. Matt, thank you. Sorry, I may be a little bit losing my voice. I’ve been speaking the whole day. So just bear with me if I – my voice is a little bit losing its pace here. I think it’s a very good question you asked about the transformation versus turnaround. I think this is very much a company which is very well positioned. It has huge strengths. It’s a formidable leader. I mean, in some ways – and I like to say to the Neste people, we’re the pioneer in this industry. And sometimes it’s a bit tough to be the pioneer. But the basis of this company is very sound. The long-term outlook of the industry is very good. It’s more sort of getting the most out of what we have and positioning the company in at – each moment in time of the cycle in the right way, having more focus, clock speed, we’re not a massive organization. We have thousands of people but we know it’s getting the resources we have, really focusing on the key things that matter. I think it’s more around that. Some of the industries where I worked, you had demand problems or industries have gone into a massive turmoil, that’s not the case here. So the long-term outlook in that respect is good, and it’s a different situation. Different situations require different, let’s say, approaches. And we will come up with a good plan. And I can tell you, as I met people here in Neste so far, I see a lot of energy and passion and people are super committed to make this a great company. And it ultimately starts from people and sort of the energy I see in the company gives me great belief that Neste can still do many, many great things. On the voluntary about the past, maybe I hand over to Martti to your question about the past assumptions.

Martti Ala-Härkönen: Yes. Thanks, Matt, for the great question here. First, I want to say, I think it’s too early to call. I mean the formation of the whole SAF business and the industry, if you may use that word is still at its infancy. I mean we don’t know how it will form out in the next year or in the next several years. What we’ve though seen is that, of course, if you look at airlines in general, I mean, there has been the COVID period. Then we had the energy crisis, high jet price, et cetera. So they have had years where they have had to struggle with their cost base. So we have seen a number of airlines who have partly at least been withdrawing from the former sustainability commitments. So then raises the question, how well airlines will be pushing forward a stronger agenda what they had perhaps given out earlier. I mean this is one of the things. And other things, I think, relates to emission rights and for example, EU member states. So air travel is within that scope. And it will go for individual countries that is it that they want to regulate just a mandated demand level or if they want to push based on the emission rights, how they want to abate looking from a national level related to emission rights, the greenhouse gas reductions in the whole country, though. So do they set separate incentive systems or higher levels of ambition and so forth. I want to also point out that one thing that has come out now already is UK, which is not anymore part of EU, which has a 2% mandate for next year and then up to 10% in 2030, so higher than the 6%. And there is a ladder how one grows up there. But of course, the refuel [ph] EU aviation doesn’t have a ladder built in that has to be then made by the individual member states. So how that all will go from 2% to 6%. That’s also an important question. So these kind of elements relate to the formation of the voluntary demand. As such, I think the whole industry is very committed to cut down their CO2 greenhouse gas reductions, but how it will all go, we’ll see.

Matt Lofting: Great. Thanks gents.

Operator: The next question comes from Henri Patricot from UBS. Please go ahead.

Henri Patricot: Yes. Everyone, thank you for the update and then thank you for the introduction. I have two questions. Please just the first one, I wanted to comment to, come back to some of the comments you made earlier about, I think quite a focus on revenue generation, customer excellence. I was wondering if you can expand on any area, any market within SAF, where you think you could be doing more? Or is there a particular geography that you see – where you see more potential? And then secondly, just on the – come back to the feedstock prices, which you mentioned have been held up very well this year despite the more challenging environment for renewable fuel producers. Is that something that has surprised you? Any comments you can make on how you see feedstock prices moving among the next few months? Thank you.

Heikki Malinen: So if I can just – maybe you could comment on the feedstock. I think on the revenue and the commercial standpoint, I mean, this is a growth industry. I think there are sort of three elements that we need to work with. Obviously, we need to stay very close to our customers. Airlines and others to understand what their needs are, and find ways how we can bring our product to market in the most efficient and cost-effective manner. So that’s, I think, being just in front of the customers and expanding the customer reach globally as much as we can. Second is really advocacy. So we’re still in an early industry, and I think some markets like EU are kind of ahead of the curve, and many other countries are still coming back maybe three, four, five years behind EU in terms of the regulatory framework. So we need to be a strong advocate to create that demand pull. And so that’s why we have resources doing that. And I think the third is I think maybe just a bit of my own sentiment that we are here to win and maintain sort of a good positive spirit in terms of growing the business. So yes, I think those are some of the elements. But on the more detailed side, I’ll have to come back then next year.

Martti Ala-Härkönen: Yes. And on the feedstock, I mean, this is an element that has a big impact to our comparable sales margin in Renewable Products. So maybe two issues I’d like to mention that what we’re seeing is regional differences as we’ve commented before. And this is an advantage for Neste, we think because we are sourcing globally, about 60 countries, more than 500 vendors, so forth, like we have said. If I look today into, again, into the external quotes that are – they are not necessarily our prices, but in the U.S., UK, it’s around about $1,000 per ton. In the EU, it’s been somewhere north of $900, maybe $920. But then you are north of $800 in China. So there are – between these three regions, quite sizable differences. Overall, we’re seeing relatively flat movement now in the beginning of the fourth quarter in the feedstock. Some feedstocks is a little bit downwards, but the big trend flat.

Henri Patricot: Thank you.

Martti Ala-Härkönen: And I think we have been coming out of our time. So we have to stop the – yes, sorry.

Heikki Malinen: So anyway, if I may just say a few final closing remarks, I usually always like to wrap up these sessions with a couple of points. So first of all, thank you very much for your great questions, and nice to have this conversation with you and look forward to meeting you also then going forward. I’ll leave you with a couple of points of summary. As I said before, I think Neste is a great company. We have fantastic foundation to build our business going forward, and we are in a growth industry. Yes, I think I’m not happy with the results of the third quarter. No one in Neste is pleased with that. But I know we can and we intend to do better. We’ve made a decision. I’ve made a decision hereafter of eight days to take a new look at that Porvoo investment in hydrogen. I think it’s a prudent decision at the moment to take, and that’s how we go forward. And then finally, as I said, we’ve now started to work on the full potential analysis. My intention is to do it professionally, comprehensively and then come up with a robust realistic, but ambitious plan, and we will then discuss that in the new year. So that’s all we have for today. I hope you found this helpful in your own work, and we look forward then to seeing you again in the New Year. Take care.