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Company makes third cut to renewables business outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel costs

(Adds analyst, 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 business for the 3rd time this year due to falling costs and also decreased its expected sales volumes, sending the company's share price down 10%.

Neste stated a drop in the cost of routine diesel had impacted what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock remained high.

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

Neste in a statement slashed the anticipated typical equivalent sales margin of its renewables unit to in between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well below the $600-$800 seen in February.

The company now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually anticipated considering that the start of the year, it included.

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

"Renewable items' sales rates have actually been adversely impacted by a significant reduction in (the) diesel cost during the third quarter," Neste said in a statement.

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

Industry executives and experts have actually said rapidly broadening Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are pausing expansion strategies in Europe.

While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel rate was to be expected, Inderes analyst Petri Gostowski said.

Neste's share price had reversed some losses by 1037 GMT but stayed 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)