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Company makes 3rd cut to renewables business outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel costs

(Adds expert, background, detail in paragraphs 2-3, 9-11)

By Elviira Luoma and Essi Lehto

HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel company for the third time this year due to falling costs and also decreased its anticipated sales volumes, sending the business's share price down 10%.

Neste said a drop in the cost of regular diesel had actually impacted what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock high.

A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has developed a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent market.

Neste in a declaration slashed the expected average similar sales margin of its renewables system to in between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well below the $600-$800 seen in February.

The business now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted given that the start of the year, it included.

A part of the volume cut originated from the production of sustainable aviation fuel, of which it is now anticipated to offer between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen previously, Neste stated.

"Renewable items' prices have actually been negatively impacted by a considerable decline in (the) diesel rate throughout the 3rd quarter," Neste stated in a statement.

"At the exact same time, waste and residue feedstock rates have not reduced and sustainable item market value premiums have actually remained weak," the company included.

Industry executives and analysts have said quickly broadening Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly growth strategies in Europe.

While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel rate was to be expected, Inderes analyst Petri Gostowski stated.

Neste's share cost had reversed some losses by 1037 GMT but remained down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki; Editing by Terje Solsvik and Jan Harvey)