Neste Oyj — Interim / Quarterly Report 2011

Jul 28, 2011

NESTE OIL

28.7.2011

Interim Report for January-June 2011

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Neste Oil’s Interim Report for January-June 2011

• The second-quarter comparable operating profit was EUR 32 million (Q2/2010: 5 million, which was negatively impacted by a major maintenance turnaround at the Porvoo refinery)
• The refining market weakened towards the end of the quarter due to concerns over global economic developments
• Renewable Fuels is expected to remain loss-making throughout the year

Second quarter in brief:

• Comparable operating profit came in at EUR 32 million (Q2/2010: 5 million, which was negatively impacted by a major maintenance turnaround at the Porvoo refinery)
• IFRS operating profit was EUR 109 million (Q2/2010: -63 million)
• Total refining margin was USD 8.99/bbl (Q2/2010: 7.35)
• Net cash from operations was EUR -126 million (Q2/2010: 243 million)
• Investments totaled EUR 91 million (Q2/2010: 374 million), of which EUR 50 million was spent on Renewable Fuels
• Leverage ratio was 46.3% (31 Dec 2010: 42.6%)
• The renewable diesel plant in Rotterdam achieved mechanical completion
• New renewable feedstocks, such as soybean oil, camelina, and jatropha have been introduced

President & CEO Matti Lievonen:

"While the start of the second quarter continued to be quite good in oil refining, uncertainties over developments in the global economy saw margins weaken in mid-May. Going forward, I am confident, however, that complex refiners, such as Neste Oil, will be in a better position compared to many others. We believe that diesel margins will continue to outperform other product margins, thanks to seasonally good demand, and that the good base oil market will also support us in the second half of 2011.

Sales of renewable diesel were disappointing during the first half, but volumes are set to increase significantly in the third quarter, thanks to contracts with new customers in Europe and the availability of more ISCC-certified feedstocks. Our renewable diesel production network will be completed during the third quarter with the start-up of the Rotterdam plant. Progress on the implementation of biofuel legislation continues to be quite slow, however. We reached an important milestone in July when Lufthansa began regularly scheduled flights using Neste Oil's renewable aviation fuel. We are very proud of this development and believe that there will be a lot of potential for renewable aviation fuel in the future."

Further information:

Matti Lievonen, President & CEO, tel. +358 10 458 11

Ilkka Salonen, CFO, tel. +358 10 458 4490

Investor Relations, tel. +358 10 458 5132

News conference and conference call

A press conference in Finnish on the second-quarter results will be held today, 28 July 2011, at 11:30 am EET at the company's headquarters, Keilaranta 21, Espoo. www.nesteoil.com will feature English versions of the presentation materials. A conference call in English for investors and analysts will be held on the same day at 3:00 pm Finnish / 1:00 pm London / 8:00 am New York. The call-in numbers are as follows: Europe: +44 (0)20 7136 2051, US +1 212 444 0481 (access code: 2712947). The conference call can be followed at http://www.media-server.com/m/p/s6yec6um. An instant replay of the call will be available until 4 August 2011 at +44 (0)20 7111 1244 for Europe and +1 347 366 9565 for the US (access code: 2712947#).

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NESTE OIL FINANCIAL STATEMENTS, 1 JANUARY – 30 JUNE 2011

Quarterly figures are unaudited; full-year figures are audited

Figures in parentheses refer to the corresponding period for 2010, unless otherwise stated.

KEY FIGURES

EUR million (unless otherwise noted)

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010
Revenue	3,674	2,576	3,472	7,146	5,301	11,892
EBITDA	185	-1	244	429	154	582
Depreciation, amortization, and impairments	76	62	73	149	120	259
Operating profit	109	-63	171	280	34	323
Comparable operating profit *	32	5	44	76	93	240
Profit before income tax	98	-70	160	258	18	296
Earnings per share, EUR	0.25	-0.20	0.46	0.71	0.05	0.89
Investments	91	374	120	211	564	943
Net cash from operating activities	-126	243	58	-68	617	1,105
	30 June 2011	30 June 2010	31 Dec 2010
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Total equity	2,521	2,175	2,426
Interest-bearing net debt	2,176	1,926	1,801
Capital employed	4,838	4,159	4,607
Return on capital employed pre-tax (ROCE), %	12.2	1.9	7.7
Return on average capital employed after tax (ROACE)**, %	3.6	2.1	4.6
Return on equity (ROE), %	14.7	1.4	9.9
Equity per share, EUR	9.80	8.45	9.43
Cash flow per share, EUR	-0.27	2.41	4.32
Equity-to-assets ratio, %	36.7	36.1	36.5
Leverage (net debt to capital), %	46.3	47.0	42.6
Gearing, %	86.3	88.6	74.3

• Comparable operating profit is calculated by excluding inventory gains/losses, capital gains/losses, and unrealized changes in the fair value of oil and freight derivative contracts from the reported operating profit. Inventory gains/losses include changes in the fair value of all trading inventories.
  ** Rolling 12 months

The Group's second-quarter 2011 results

Neste Oil's revenue increased to EUR 3,674 million in the second quarter compared to EUR 2,576 million for the same period in 2010, as a result of higher oil prices and higher volumes. The Group's comparable operating profit totaled EUR 32 million (EUR 5 million, which included a negative impact of EUR 65 million resulting from a major maintenance turnaround at the Porvoo refinery). The comparable operating profit was negatively impacted by a weaker result at Renewable Fuels and a planned five-week maintenance turnaround on diesel production line 4 at Porvoo, which had an impact of EUR 30 million.

Oil Products' second-quarter comparable operating result was EUR 60 million (-3 million), Renewable Fuels' EUR -55 million (-23 million), and Oil Retail's EUR 13 million (13 million). The comparable operating profit of the Others

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segment totaled EUR 8 million (16 million). A profit of EUR 13 million (21 million) was booked in the Others segment on the basis of Neste Oil's share of the profit of its affiliate, Nynas AB.

The Group's IFRS operating profit was EUR 109 million (-63 million), which was impacted by inventory gains totaling EUR 63 million (-42 million). Pre-tax profit was EUR 98 million (-70 million), profit for the period EUR 64 million (-50 million), and earnings per share EUR 0.25 (-0.20).

The Group's January-June 2011 results

Neste Oil's revenue totaled EUR 7,146 million in the first six months compared to EUR 5,301 million for the same period in 2010, as a result of higher oil prices and higher volumes. The Group's six-month comparable operating profit totaled EUR 76 million. The corresponding figure for the same period in 2010 was EUR 93 million, which included a positive impact of EUR 47 million resulting from an insurance compensation payment and a negative impact of EUR 65 million from the maintenance turnaround at the Porvoo refinery. In the first half of 2011, the comparable operating profit was negatively impacted by a planned five-week maintenance turnaround on the diesel production line 4 at Porvoo, which had an impact of EUR 30 million, and a weaker result at Renewable Fuels.

Oil Products' six-month comparable operating result was EUR 144 million (55 million), Renewable Fuels' EUR -91 million (-40 million), and Oil Retail's EUR 25 million (19 million). The comparable operating profit of the Others segment totaled EUR -8 million (59 million). A profit of EUR 5 million (13 million) was booked in the Others segment on the basis of Neste Oil's share of the profit of its affiliate, Nynas AB.

The Group's IFRS operating profit was EUR 280 million (34 million), which was impacted by inventory gains totaling EUR 203 million (-26 million). Pre-tax profit was EUR 258 million (18 million), profit for the period EUR 182 million (14 million), and earnings per share EUR 0.71 (0.05).

Given the capital-intensive nature of its business, Neste Oil uses return on average capital employed after tax (ROACE) as its primary financial target. ROACE figures are based on comparable results. As of the end of June, the rolling twelve-month ROACE was 3.6% (2010 financial year: 4.6%).

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010
COMPARABLE OPERATING PROFIT	32	5	44	76	93	240
- inventory gains/losses	63	-42	140	203	-26	121
- changes in the fair value of open oil derivatives	15	27	-14	1	20	24
- capital gains/losses	-1	-53	1	0	-53	-62
IFRS OPERATING PROFIT	109	-63	171	280	34	323

Cash flow, investments, and financing

Neste Oil Group's net cash from operating activities totaled EUR -68 million (617 million) between January and June. This change is largely attributable to an increase in working capital on the back of higher inventory levels.

Investments totaled EUR 211 million (564 million) during the first six months. Oil Products' capital expenditure totaled EUR 51 million (212 million), while Renewable Fuels invested EUR 146 million (278 million), Oil Retail EUR 10 million (15 million), and Others EUR 4 million (59 million).

Interest-bearing net debt was EUR 2,176 million as of the end of June, compared to EUR 1,801 million at the end of 2010. Net financial expenses between January and June were EUR 22 million (16 million). The average interest rate of borrowings at the end of June was 3.4%, and the average maturity 4.1 years.

The equity-to-assets ratio was 36.7% (31 Dec 2010: 36.5%), the leverage ratio 46.3% (31 Dec 2010: 42.6%), and the gearing ratio 86.3% (31 Dec 2010: 74.3%).

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The Group's cash and cash equivalents and committed, unutilized credit facilities amounted to EUR 1,465 million as of the end of June (31 Dec 2010: 1,745 million). There are no financial covenants in current loan agreements.

In accordance with its updated hedging policy, Neste Oil has hedged approximately 60% of its net foreign currency exposure for the next 12 months, mainly using forward contracts and currency options. The most important hedged currency is the US dollar.

Main events during the reporting period

On 7 June, Neste Oil announced that NExBTL renewable diesel is to be trialed in day-to-day use in Finland by a fleet of road tanker trucks from the beginning of June onwards. The trial will last around a year and will involve 23 Neste Oil branded vehicles. The vehicles will fill up with 100% NExBTL renewable diesel at the Neste Oil Truck station at the distribution terminal adjacent to the company's Porvoo refinery. The trial will monitor how NExBTL performs in trucks covering long distances and carrying heavy loads under a variety of climatic conditions.

Neste Oil took part in the Paris Air Show between 20 and 26 June to showcase its NExBTL renewable aviation fuel, which offers airlines an easy and highly effective solution for reducing their greenhouse gas emissions. NExBTL renewable aviation fuel meets the very stringent quality standards demanded for aviation use and is compatible with all existing aircraft engines. Using NExBTL renewable aviation fuel helps reduce greenhouse gas emissions significantly, as well as other pollutants, such as SOx. The international standards body, ASTM, voted in June to approve renewable aviation fuels produced by hydrotreating bio-based feedstocks for use in air traffic.

On 22 June, Neste Oil announced that its research into the potential for using algae oil as a feedstock for producing renewable diesel is continuing to progress. The company will take part in two research projects starting in summer 2011 to test various methods for growing algae in outdoor conditions. The goal of the projects in the Netherlands and Australia will be to build up experience on the suitability of different types of algae for use in industrial-scale production under a variety of conditions.

On 23 June, Neste Oil announced that it has invested EUR 5 million in GreenStream's Climate Opportunity Fund, which finances projects aimed at reducing CO₂ emissions in developing countries. The investment is part of Neste Oil's worldwide greenhouse gas balance management program and will give the company access to emission allowances under the EU emissions trading scheme for the trading period beginning in 2013. The investment is a continuation of Neste Oil's cooperation with GreenStream that began during the current emissions trading period.

Strategy implementation

Neste Oil will continue to implement its clean fuel strategy during 2011. The company's on-going capital projects cover one plant designed to increase production of renewable diesel and another to add high-quality base oil capacity.

Strategic projects

The new 800,000 t/a renewable diesel plant in Rotterdam is now mechanically complete, and start-up is expected during the third quarter. The plant is expected to come in close to its EUR 670 million budget.

Neste Oil has a 45% stake in a joint venture that is building a 400,000 t/a base oil plant in Bahrain. Although the project has suffered some delays due to unrest in the region, completion is still scheduled for 2011. Neste Oil's share of the investment cost is EUR 130 million.

Neste Oil's base oil sales volumes will increase further as a result of a new partnership with Abu Dhabi National Oil Company (ADNOC). This is designed to bring 600,000 t/a of NEXBASE® base oil onto the market at the end of 2013. Neste Oil will be responsible for selling and marketing these volumes. There will be no investment costs for Neste Oil related to this activity.

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Market overview

Crude oil prices rose in April, as a result of political unrest in some oil-producing countries and a weaker US dollar. Brent Dated peaked above USD 125/bbl, ending a 10-month rising trend. Prices collapsed soon after in May as part of a widespread commodity sell-off. High US inventories, disappointing economic news, and a slowdown in demand in the US and Asia, together with a stronger US dollar resulting from debt problems in Europe, also depressed crude prices. They recovered in June on expectations of higher demand, particularly in China, but fell again after the announcement by the International Energy Agency that it would release strategic oil reserves to compensate for lost Libyan volumes. Brent Dated stood at USD 110/bbl at the end of the quarter.

The price differential between heavier and lighter crude oil widened further at the beginning of the second quarter due to the absence of light, sweet Libyan crude from the market. The differential narrowed in mid-April as refiners, particularly in Europe and Asia, focused on cheaper heavier and sourer grades in preference to light crude.

Refining margins in North-West Europe weakened on average during the quarter. Gains in crude oil prices largely outpaced product prices, except in early May when crude prices plunged. Product margins improved on the back of higher demand and lower stocks towards the end of June. Gasoline margins were strong in April and early May due to reduced refinery runs and increased demand in the US, but fell as a result of worries about economic growth in the US and Europe. Middle distillate margins weakened, with product prices lagging behind higher crude prices, but recovered in May. An improvement in the diesel market also supported prices. Fuel oil margins, particularly for low-sulfur fuel, strengthened, thanks to solid Asian demand.

The market for high-performance base oils continued to be strong on the back of healthy demand.

Renewable diesel margins increased during the second quarter, as price differentials between biofeedstocks widened. No significant progress was made on biofuel legislation during the period, however.

Normal seasonality had a positive impact on the demand for transport fuels on the oil retail market.

Key drivers

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010	July 11	July 10
Reference refining margin, USD/bbl	4.46	5.14	4.46	4.46	4.61	4.35	4.27	3.63
Neste Oil total refining margin, USD/bbl	8.99	7.35	8.92	8.96	7.58	8.14	n.a.	n.a.
Urals-Brent price differential, USD/bbl	-2.91	-1.80	-2.87	-2.89	-1.58	-1.40	-1.27	-1.11
NWE Gasoline margin, USD/bbl	10.41	11.11	5.88	8.15	11.43	9.70	10.4	8.7
NWE Diesel margin, USD/bbl	15.77	14.79	17.86	16.82	13.02	13.97	16.8	12.8
NWE Heavy fuel oil margin, USD/bbl	-19.45	-10.46	-17.98	-18.72	-8.68	-10.32	-16.2	-10.3
Brent Dated crude oil, USD/bbl	117.34	78.31	104.97	111.15	77.27	79.47	116.82	75.23
USD/EUR, market rate	1.44	1.27	1.37	1.40	1.33	1.32	1.43	1.27
USD/EUR, hedged	1.33	1.38	1.34	1.33	1.36	1.37	n.a.	n.a.
Crude freights, WS points (TD7)	103	119	102	111	121	113	103	106

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Production and sales

Neste Oil's total production in the second quarter totaled 3.5 million tons (2.3 million), of which NExBTL renewable diesel accounted for 0.1 million tons (0.1 million).

Neste Oil's production, by plant (1,000 t)

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010
Porvoo refinery	2,780	1,499	2,949	5,729	4,399	10,594
Naantali refinery	542	632	566	1,108	1,203	2,410
Beringen polyalfaolefin plant	14	11	8	22	22	45
Edmonton iso-octane plant (Neste Oil's share)	53	60	48	101	108	214
NExBTL plants	114	50	122	236	120	337

The Porvoo refinery operated at an average capacity utilization rate of 81% (51%) during the quarter; output was down in April and May as a result of maintenance work carried out on diesel production line 4. The utilization rate at the Naantali refinery was 84% (86%). Russian Export Blend accounted for 64% (70%) of total refinery output. Refinery production costs totaled USD 5.3/bbl (5.7).

The company's renewable diesel plants were run at limited utilization mainly due to lower than planned sales volumes.

Sales were clearly higher than in the corresponding quarter in 2010, when they were limited by the major maintenance turnaround at Porvoo, but slightly lower than in the first quarter of 2011. Diesel sales decreased due to lower production. Gasoline sales were higher, mainly on the back of increased exports to Canada, while growing air traffic in Finland resulted in higher jet fuel sales.

Neste Oil's sales from in-house production, by product category (1,000 t)

	4-6/11	%	4-6/10	%	1-3/11	%	1-6/11	%	1-6/10	%	2010	%
Motor gasolines	1,122	32	747	27	944	26	2,066	29	1,827	28	4,111	28
Gasoline components	55	2	74	3	60	2	115	2	120	2	229	2
Diesel fuel	1,208	34	1,043	37	1,517	41	2,725	39	2,551	40	5,655	39
Jet fuel	247	7	83	3	165	5	412	6	223	3	640	4
Base oils	87	2	76	3	87	2	174	2	153	2	307	2
Heating oil	28	1	134	5	60	2	88	1	401	6	691	5
Heavy fuel oil	218	6	166	6	232	6	451	6	378	6	908	6
LPG	64	2	51	2	106	3	171	2	143	2	273	2
NExBTL renewable diesel	80	3	72	3	87	2	167	2	112	2	270	2
Other products	400	11	339	11	396	11	796	11	609	9	1,401	10
TOTAL	3,510	100	2,785	100	3,655	100	7,164	100	6,516	100	14,485	100

Neste Oil's sales from in-house production, by market area (1,000 t)

	4-6/11	%	4-6/10	%	1-3/11	%	1-6/11	%	1-6/10	%	2010	%
Finland	1,830	52	1,628	59	2,016	55	3,801	53	3,645	56	7,881	54
Other Nordic countries	679	19	568	20	597	16	1,277	18	1,142	18	2,685	19
Other Europe	504	15	402	14	670	19	1,174	17	1,326	20	2,659	19
US & Canada	388	11	178	6	328	9	716	10	349	5	1,081	7
Other countries	109	3	9	1	43	1	197	2	54	1	179	1
TOTAL	3,510	100	2,785	100	3,655	100	7,164	100	6,516	100	14,485	100

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SEGMENT REVIEWS

Neste Oil's businesses are grouped into four reporting segments: Oil Products, Renewable Fuels, Oil Retail, and Others.

Oil Products

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010
Revenue, MEUR	3,070	2,064	2,870	5,940	4,336	9,789
Comparable EBITDA, MEUR	108	44	131	239	144	395
Comparable operating profit, MEUR	60	-3	84	144	55	208
IFRS operating profit, MEUR	136	-18	178	314	47	333
Total refining margin, USD/bbl	8.99	7.35	8.92	8.96	7.58	8.05
Net assets, MEUR	2,480	2,617	2,323	2,480	2,617	2,260
Comparable return on net assets*, %	12.1	2.2	9.3	12.1	2.2	7.9

• rolling 12 months

Oil Products reported a second-quarter comparable operating profit of EUR 60 million (-3 million). A maintenance turnaround on diesel production line 4 at Porvoo had a negative impact of EUR 30 million in the second quarter; this compares to a negative impact of EUR 65 million in the same period in 2010 resulting from a refinery-wide maintenance turnaround at Porvoo. Total refining margin averaged USD 8.99 /bbl during the quarter, compared to USD 7.35 /bbl in Q2 2010, which was affected by the major turnaround.

Base Oils continued to perform well, thanks to good demand and margins. Gasoline components had a seasonally strong quarter and marine chartering reported a slightly better result compared to the same period in 2010.

Oil Products' six-month comparable operating profit totaled EUR 144 million, compared to EUR 55 million in the first half of 2010. The increase resulted largely from higher refining margin and higher volumes, as a major maintenance turnaround was carried out at the Porvoo refinery in the spring of 2010.

Renewable Fuels

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010
Revenue, MEUR	144	60	193	337	96	328
Comparable EBITDA, MEUR	-39	-18	-21	-60	-30	-38
Comparable operating profit, MEUR	-55	-23	-36	-91	-40	-65
IFRS operating profit, MEUR	-53	-19	-4	-57	-34	-39
Net assets, MEUR	1,940	1,268	1,826	1,940	1,268	1,703
Comparable return on net assets*, %	-7.1	-6.1	-5.7	-7.1	-6.1	-5.1

• rolling 12 months

Renewable Fuels comparable operating result came in at EUR -55 million in the second quarter, down from EUR -23 million reported in the same quarter in 2010. Sales volumes were insufficient to compensate for higher production costs. Renewable diesel margins increased year-on-year due to wider differentials between different feedstocks. New biofeedstocks, such as soybean oil, camelina, and jatropha were successfully introduced during the quarter, and new contracts were signed with customers in Europe. Exports to the US market, however, were somewhat delayed due to legislative issues.

Renewable Fuels' six-month comparable operating result was EUR -91 million (-40 million). Low volumes resulted in high unit costs, while margins were somewhat better year-on-year.

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Oil Retail

	4-6/11	4-6/10	1-3/11	1-6/11	1-6/10	2010
Revenue, MEUR	1,058	884	1,021	2,079	1,733	3,654
Comparable EBITDA, MEUR	21	21	20	41	35	94
Comparable operating profit, MEUR	13	13	12	25	19	60
IFRS operating profit, MEUR	13	14	12	25	20	61
Net assets, MEUR	319	310	326	319	310	315
Comparable return on net assets*, %	20.8	14.1	21.0	20.8	14.1	19.3
Total sales volume**, 1,000 m3	963	973	978	1,941	2,006	4,150
- gasoline station sales, 1,000 m3	333	341	290	623	636	1,328
- diesel station sales, 1,000 m3	364	347	355	719	679	1,423
- heating oil, 1,000 m3	141	143	190	331	363	749
- heavy fuel oil, 1,000 m3	59	70	75	133	173	347

• rolling 12 months
  ** includes both station and terminal sales

Oil Retail's second-quarter comparable operating profit was flat at EUR 13 million (13 million). Demand for diesel continued to increase, while gasoline demand was lower.

Oil Retail's six-month comparable operating profit totaled EUR 25 million (19 million), as a result of higher margins and a stronger market in North-West Russia.

Shares, share trading, and ownership

Neste Oil's shares are traded on NASDAQ OMX Helsinki Ltd. The share price closed the quarter at EUR 10.81, down by 25.7% compared to the end of the first quarter. At its highest during the quarter, the share price reached EUR 14.70, while at its lowest the price stood at EUR 10.26. Market capitalization was EUR 2.8 billion as of 30 June 2011. An average of 882,000 shares were traded daily, representing 0.3% of the company's shares.

Neste Oil's share capital registered with the Company Register as of 30 June 2011 totaled EUR 40 million, and the total number of shares outstanding is 256,403,686. The company does not hold any of its own shares, and the Board of Directors has no authorization to buy back company shares or issue convertible bonds, share options, or new shares.

As of the end of June, the Finnish State owned 50.1% (50.1%) of outstanding shares, foreign institutions 20.6% (16.7%), Finnish institutions 17.4% (20.3%), and Finnish households 11.9% (12.9%).

Annual General Meeting

Neste Oil's Annual General Meeting (AGM) was held on 14 April in Helsinki. The AGM adopted the company's financial statements and consolidated financial statements for 2010 and discharged the Supervisory Board, Board of Directors, and management from liability for 2010. The AGM also approved the Board of Directors' proposal regarding the distribution of the company's profit for 2010, sanctioning payment of a dividend of EUR 0.35 per share. Payment was made on 28 April 2011. In accordance with the proposal made by the AGM Nomination Committee, the AGM confirmed the membership of the Board of Directors at eight members, and the following were re-elected to serve until the end of the next AGM: Mr Timo Peltola, Mr Michiel Boersma, Ms Maija-Liisa Friman, Ms Nina Linander, Mr Hannu Ryöppönen, and Mr Markku Tapio. Mr Jorma Eloranta and Ms Laura Raitio were elected as new members. Mr Eloranta was also elected as Vice Chairman. Mr Timo Peltola will continue as Chairman. The AGM decided to keep the remuneration paid to the Board unchanged as follows: Chairman EUR 66,000 a year, Vice Chairman EUR 49,200 a year, and members EUR 35,400 a year. In addition, those participating at Board meetings and meetings convened by the Board's committees will receive a payment of EUR 600 per meeting, together with their travelling costs, in accordance with the company's travel policy. A payment of double this, EUR 1,200 per meeting, will be made to Board members living outside Finland.

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In accordance with a proposal by the State of Finland and the Finnish Shareholders Association, the Supervisory Board was abolished. The AGM decided that the Company's Articles of Association will be amended to reflect this, removing Section 4 and Items 3, 8, and 10 of Subsection 2 of Section 12 in their entirety and removing or amending those parts of Items 6 and 7 and Section 6 relating or referring to the Supervisory Board, and renumbering the Articles of Association accordingly. In accordance with a proposal by the Board of Directors, Ernst & Young Oy, Authorized Public Accountants, were appointed as the company's Auditor, with Authorized Public Accountant Anna-Maija Simola as Senior Auditor, until the end of the next AGM. Payment for their services shall be made in accordance with their invoice.

Following a proposal by the Prime Minister's Office, representing the Finnish State, the AGM decided to establish an AGM Nomination Board to prepare proposals covering the members of the Board of Directors and their remuneration for consideration by the next AGM. The Nomination Board comprises representatives of the Company's three largest shareholders and shall also include, as an expert member, the Chairman of the Board. The right to appoint the shareholder representatives on this Nomination Board will lie with the three shareholders holding the largest number of votes associated with all the company's shares on 1 November preceding the AGM. The Chairman of the Board of Directors will be responsible for convening the Nomination Board, and the Nomination Board's members will appoint a Chairman from among themselves. The Nomination Board will present their proposal to the Board of Directors by 1 February prior to the AGM at the latest.

Personnel

Neste Oil employed an average of 4,929 (5,093) employees in the first half, of which 1,434 (1,457) were based outside Finland. As of the end of June, the company had 5,117 employees (5,183), of which 1,437 (1,469) were located outside Finland.

Health, safety, and the environment

The main indicator for safety performance used by Neste Oil – total recordable injury frequency (TRIF, number of cases per million hours worked) for all work done for the company, combining the company's own personnel and contractors – stood at 2.5 (4.7) at the end of June 2011. The target for 2011 as a whole is below 2.5.

Safety performance improved compared to the first quarter. A total of 14 injuries were reported (TRIF: 4.7) between January and March while there were only 3 between April and June (TRIF: 0.9). The company recorded a 62-day period without injuries in the second quarter. Preparations for a new Safety Roadmap, a five-year development plan, were started during the second quarter.

An environmental impact assessment for a biofuel production plant to be operated by NSE Biofuels Oy, a joint venture between Neste Oil and Stora Enso, was completed. Public consultation hearings were held as part of the assessment at both localities where the plant could be located, Porvoo and Imatra. The Ministry of Employment and the Economy announced on 5 May that it would forward Neste Oil's and Stora Enso's request for funding for the plant to the European Commission for consideration.

Neste Oil received the European Commission's evaluation of its voluntary scheme developed under the auspices of the Renewable Energy Directive (RED) and provided the Commission with an updated overview.

Events after the reporting period

On 14 July, Neste Oil announced that it will expand the raw material base used to produce NExBTL renewable fuel with jatropha and camelina oil. By introducing these new raw materials, the company will increase its use of non-food materials and raw materials that can be grown on land less suited for food production.

On 15 July, Lufthansa began commercial flights using Neste Oil's NExBTL renewable aviation fuel flying an Airbus A321 on its Hamburg-Frankfurt route four times a day. One of the engines of the aircraft operating these regularly scheduled services will use a blend of 50% NExBTL renewable aviation fuel and 50% fossil fuel; the other will run on regular fossil-based jet fuel. NExBTL renewable aviation fuel is fully compatible with all current aircraft engines and no

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aircraft-related investments or modifications are needed before it can be used. Neste Oil is currently one of the only companies in the world capable of producing renewable aviation fuel on a commercial scale.

Potential short-term and long-term risks

The oil market has been and is expected to continue to be very volatile. Oil refiners are exposed to a variety of political and economic trends and events, as well as natural phenomena that affect the short- and long-term supply of and demand for the products that they produce and sell.

Uncertainty over the short term continues to be focused on the pace of the recovery of the world economy, which is likely to have a material impact on the demand for petroleum products generally and diesel fuel in particular.

Sudden and unplanned outages at Neste Oil's production units or facilities continue to represent a short-term operational risk.

Rapid and large changes in feedstock and product prices may lead to significant inventory gains or losses, or changes in working capital. These may have a material impact on the company's IFRS operating profit and net cash from operations.

The implementation of biofuel legislation in the EU and other key market areas may influence the speed at which the demand for these fuels develops. Risks also include any problems or delays in completing the company's new NExBTL renewable diesel plants or failure to capture the anticipated benefits from its renewable diesel investments. Over the longer term, failure to protect Neste Oil's proprietary technology or the introduction and implementation of competing renewable fuel technologies or hybrid and electric vehicles may have a negative impact on the company's results.

Over the longer term, access to funding and rising capital costs, as well as challenges in procuring and developing new competitive and reasonably priced raw materials, may impact the company's results.

The key market drivers for Neste Oil's financial performance are international refining margins, the price differential between Russian Export Blend (REB) and Brent crude, and the USD/EUR exchange rate.

For more detailed information on Neste Oil's risks and risk management, please refer to the company's Annual Report and Financial Statements.

Outlook

The fundamentals of the oil refining market continue to benefit producers with complex refineries, such as Neste Oil. In particular, the diesel market is expected to strengthen on the back of seasonally increasing demand. The discount of Urals crude to Brent Dated is expected to average around USD 2.50-3.00 /bbl for the year as a whole, which is more than in 2010, but less than the USD 3.00-3.50 /bbl projected in the previous outlook published in April. Concerns about global economic developments have increased somewhat during the summer, and continued negative sentiment in respect of economic growth could impact the demand for petroleum products and refining margins. The base oil market is expected to remain strong throughout 2011, which is likely to support Neste Oil's total refining margin. Neste Oil's base oil plant in Bahrain is anticipated to start up before the end of the year. Oil Products' full-year 2011 comparable operating profit is expected to be stronger than in 2010. Another four-week maintenance shutdown is scheduled for diesel production line 4 at the Porvoo refinery in October to secure safe, uninterrupted operations during the following twelve months.

The Renewable Fuels business will continue to be in ramp-up mode during 2011, and, as stated previously, is expected to report a comparable operating loss throughout 2011. Sales volumes are expected to grow significantly in the second half of 2011, approximately doubling in the third quarter compared to the second quarter. However, Renewable Fuels' third-quarter result is expected to be weaker compared to the second quarter, as higher sales volumes and the better availability of ISCC-certified feedstocks in the third quarter are unlikely to be sufficient to compensate for the high unit costs and the start-up costs associated with the new Rotterdam plant. Exports to

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Northern and Southern Europe will increase during the second half of the year, and towards the end of the year exports to the US market are also expected to grow despite the delays experienced so far.

Oil Retail's full-year performance is likely to be broadly similar to that seen in 2010.

The Group's fixed costs are estimated to be approximately EUR 650 million in 2011, compared to EUR 575 million in 2010, largely due to higher maintenance and personnel costs at new plants.

The Group's cash investments are expected to be approximately EUR 300 million (892 million), of which maintenance investments are estimated to account for EUR 176 million (245 million), strategic investments EUR 113 million (633 million), and productivity investments EUR 11 million (14 million).

Reporting date for the company's third-quarter 2011 results

Neste Oil will publish its third-quarter results on 25 October 2011 at approximately 9:00 a.m. EET.

Espoo, 27 July 2011

Neste Oil Corporation
Board of Directors

The preceding information contains, or may be deemed to contain, "forward-looking statements". These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures, future cash sources and requirements, liquidity and cost savings that involve known and unknown risks, uncertainties, and other factors that may cause Neste Oil Corporation's or its businesses' actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," or "continue," or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the forward-looking statements, possibly to a material degree. All forward-looking statements made in this report are based on information presently available to management and Neste Oil Corporation assumes no obligation to update any forward-looking statements. Nothing in this report constitutes investment advice and this report shall not constitute an offer to sell or the solicitation of an offer to buy any securities or otherwise to engage in any investment activity.

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CONSOLIDATED INCOME STATEMENT

MEUR	Note	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Revenue	3	3,674	2,576	7,146	5,301	11,892	13,737
Other income		6	11	14	64	81	31
Share of profit (loss) of associates and joint ventures	3	13	20	11	12	15	14
Materials and services		-3,263	-2,349	-6,271	-4,734	-10,493	-12,030
Employee benefit costs		-90	-145	-165	-226	-392	-331
Depreciation, amortization and impairments	3	-76	-62	-149	-120	-259	-288
Other expenses		-155	-114	-306	-263	-521	-564
Operating profit		109	-63	280	34	323	569
Financial income and expenses
Financial income		1	2	2	4	4	2
Financial expenses		-17	-10	-29	-22	-34	-41
Exchange rate and fair value gains and losses		5	1	5	2	3	6
Total financial income and expenses		-11	-7	-22	-16	-27	-33
Profit before income taxes		98	-70	258	18	296	536
Income tax expense		-34	20	-76	-4	-65	-137
Profit for the period		64	-50	182	14	231	399
Profit attributable to:
Owners of the parent		63	-51	181	13	229	397
Non-controlling interests		1	1	1	1	2	2
		64	-50	182	14	231	399
Earnings per share from profit attributable to the owners of the parent basic and diluted (in euro per share)		0.25	-0.20	0.71	0.05	0.89	1.55

STATEMENT OF COMPREHENSIVE INCOME

MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Profit for the period	64	-50	182	14	231	399
Other comprehensive income for the period, net of tax:
Translation differences	-5	18	-11	44	43	-12
Cash flow hedges
recorded in equity	16	-31	36	-44	-18	62
transferred to income statement	-20	12	-24	8	19	-13
Net investment hedges	0	-1	0	-2	-3	-1
Hedging reserves in associates and joint ventures	1	1	1	1	1	1
Other comprehensive income for the period, net of tax	-8	-1	2	7	42	37
Total comprehensive income for the period	56	-51	184	21	273	436
Total comprehensive income attributable to:
Owners of the parent	55	-52	183	20	271	434
Non-controlling interests	1	1	1	1	2	2
	56	-51	184	21	273	436

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CONSOLIDATED BALANCE SHEET

MEUR	Note	30 June 2011	30 June 2010	31 Dec 2010
ASSETS
Non-current assets
Intangible assets	4	51	47	43
Property, plant and equipment	4	4,030	3,658	3,979
Investments in associates and joint ventures		221	280	214
Non-current receivables		12	5	8
Pension assets		0	1	0
Deferred tax assets		31	26	31
Derivative financial instruments	5	9	21	18
Available-for-sale financial assets		4	4	4
Total non-current assets		4,358	4,042	4,297
Current assets
Inventories		1,341	1,064	1,079
Trade and other receivables		986	828	866
Derivative financial instruments	5	60	39	42
Cash and cash equivalents		140	58	380
Total current assets		2,527	1,989	2,367
Total assets		6,885	6,031	6,664
EQUITY
Capital and reserves attributable to the owners of the parent
Share capital		40	40	40
Other equity	2	2,468	2,123	2,374
Total		2,508	2,163	2,414
Non-controlling interest		13	12	12
Total equity		2,521	2,175	2,426
LIABILITIES
Non-current liabilities
Interest-bearing liabilities		1,904	1,735	1,882
Deferred tax liabilities		358	326	347
Provisions		17	19	20
Pension liabilities		48	36	47
Derivative financial instruments	5	15	20	23
Other non-current liabilities		8	1	1
Total non-current liabilities		2,350	2,137	2,320
Current liabilities
Interest-bearing liabilities		413	249	299
Current tax liabilities		65	4	38
Derivative financial instruments	5	40	144	34
Trade and other payables		1,496	1,322	1,547
Total current liabilities		2,014	1,719	1,918
Total liabilities		4,364	3,856	4,238
Total equity and liabilities		6,885	6,031	6,664

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

MEUR	Attributable to owners of the parent
	Share capital	Reserve fund	Fair value and other reserves	Translation differences	Retained earnings	Non-controlling interests	Total equity
Total equity at 1 January 2010	40	11	9	-45	2,195	12	2,222
Dividend paid					-64	-1	-65
Share-based compensation					-3		-3
Transfer from retained earnings		2	-5		3		0
Changes in non-controlling interests						0	0
Total comprehensive income for the period			-35	42	13	1	21
Total equity at 30 June 2010	40	13	-31	-3	2,144	12	2,175
	Share capital	Reserve fund	Fair value and other reserves	Translation differences	Retained earnings	Non-controlling interests	Total equity
MEUR
Total equity at 1 January 2011	40	13	6	-6	2,361	12	2,426
Dividend paid					-90	0	-90
Share-based compensation					1		1
Transfer from retained earnings		2			-2		0
Total comprehensive income for the period			13	-11	181	1	184
Total equity at 30 June 2011	40	15	19	-17	2,451	13	2,521

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CONDENSED CONSOLIDATED CASH FLOW STATEMENT

MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010
Cash flow from operating activities
Profit before taxes	98	-70	258	18	296
Adjustments, total	49	147	158	233	395
Change in working capital	-237	150	-431	337	486
Cash generated from operations	-90	227	-15	588	1,177
Finance cost, net	-1	19	-13	33	-39
Income taxes paid	-35	-3	-40	-4	-33
Net cash generated from operating activities	-126	243	-68	617	1,105
Capital expenditure	-91	-349	-211	-522	-932
Acquisition of shares in subsidiaries	-	-8	-	-8	-8
Acquisition of associates and joint ventures	-	-17	-	-31	0
Acquisition of other shares	0	-	0	-3	-3
Proceeds from sales of shares in subsidiaries	-	6	-	6	6
Proceeds from sales of fixed assets	0	-	2	1	4
Change in other investments	25	30	-14	22	19
Cash flow before financing activities	-192	-95	-291	82	191
Net change in loans and other financing activities	260	160	142	-80	136
Dividends paid to the owners of the parent	-90	-64	-90	-64	-64
Dividends paid to non-controlling interests	-	-	-	-	-2
Net increase (+)/decrease (-) in cash and cash equivalents	-22	1	-239	-62	261

KEY FINANCIAL INDICATORS

	30 June 2011	30 June 2010	31 Dec 2010	Last 12 months
Capital employed, MEUR	4,838	4,159	4,607	4,838
Interest-bearing net debt, MEUR	2,176	1,926	1,801	-
Capital expenditure and investment in shares, MEUR	211	564	943	590
Return on average capital employed, after tax, ROACE %	-	-	4.6	3.6
Return on capital employed, pre-tax, ROCE %	12.2	1.9	7.7	12.8
Return on equity, %	14.7	1.4	9.9	17.0
Equity per share, EUR	9.80	8.45	9.43	-
Cash flow per share, EUR	-0.27	2.41	4.32	1.64
Equity-to-assets ratio, %	36.7	36.1	36.5	-
Leverage ratio, %	46.3	47.0	42.6	-
Gearing, %	86.3	88.6	74.3	-
Average number of shares	255,918,686	255,913,686	255,913,809	255,916,289
Number of shares at the end of the period	255,918,686	255,913,686	255,918,686	255,918,686
Average number of personnel	4,929	5,093	5,030	-

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by EU. The accounting policies adopted are consistent with those of the Group's annual financial statements for the year ended 31 December 2010, with the exception of the following changes due to the adoption of the new and revised IFRS standards and IFRIC interpretations.

• IAS 32 (amendment) Financial Instruments: Classification of rights issues
• IFRIC 14 IAS 19 (amendment) The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
• Annual amendments to the IFRSs (Annual Improvements)

The above mentioned amendments do not have a material impact on the reported income statement, balance sheet or notes.

2. TREASURY SHARES

In 2007 Neste Oil entered into an agreement with a third party service provider concerning the administration of the share-based management share performance arrangement for key management personnel. As part of the agreement, the service provider purchased a total of 500,000 Neste Oil shares in February 2007 in order to hedge part of Neste Oil's cash flow risk in relation to the possible future payment of the rewards, which will take place partly in Neste Oil shares and partly in cash during 2013. Despite the legal form of the hedging arrangement, it has been accounted for as if the share purchases had been conducted directly by Neste Oil, as required by IFRS 2, Share based payments and SIC-12, Consolidation - Special purpose entities.

The consolidated balance sheet and the consolidated changes in total equity reflect the substance of the arrangement with a deduction amounting to EUR 12 million in equity. This amount represents the consideration paid for the shares by the third party service provider. As at 30 June 2011 there were 485,000 shares accounted for as treasury shares.

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3. SEGMENT INFORMATION

Neste Oil's operations are grouped into four reporting segments: Oil Products, Renewable Fuels, Oil Retail and Others.

Others segment consists of Group administration, shared service functions, Research and Technology, Neste Jacobs and Nynas AB. NSE Biofuels Oy is also included in the Others segment as of Q2/2010. The comparative figures have been adjusted accordingly.

REVENUE
MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Oil Products	3,070	2,064	5,940	4,336	9,789	11,393
Renewable Fuels	144	60	337	96	328	569
Oil Retail	1,058	884	2,079	1,733	3,654	4,000
Others	47	45	91	94	169	166
Eliminations	-645	-477	-1,301	-958	-2,048	-2,391
Total	3,674	2,576	7,146	5,301	11,892	13,737
OPERATING PROFIT
MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Oil Products	136	-18	314	47	333	600
Renewable Fuels	-53	-19	-57	-34	-39	-62
Oil Retail	13	14	25	20	61	66
Others	7	-42	-8	1	-24	-33
Eliminations	6	2	6	0	-8	-2
Total	109	-63	280	34	323	569
COMPARABLE OPERATING PROFIT
MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Oil Products	60	-3	144	55	208	297
Renewable Fuels	-55	-23	-91	-40	-65	-116
Oil Retail	13	13	25	19	60	66
Others	8	16	-8	59	45	-22
Eliminations	6	2	6	0	-8	-2
Total	32	5	76	93	240	223
DEPRECIATION, AMORTIZATION AND IMPAIRMENTS
MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Oil Products	48	47	95	89	187	193
Renewable Fuels	16	5	31	10	27	48
Oil Retail	8	8	16	16	34	34
Others	4	2	7	5	11	13
Total	76	62	149	120	259	288
CAPITAL EXPENDITURE AND INVESTMENTS IN SHARES
MEUR	4-6/2011	4-6/2010	1-6/2011	1-6/2010	1-12/2010	Last 12 months
Oil Products	32	158	51	212	269	108
Renewable Fuels	50	149	146	278	578	446
Oil Retail	6	13	10	15	33	28
Others	3	54	4	59	63	8
Total	91	374	211	564	943	590
TOTAL ASSETS
				30 June	30 June	31 Dec
MEUR				2011	2010	2010
Oil Products				3,796	3,734	3,621
Renewable Fuels				2,047	1,389	1,814
Oil Retail				595	562	596
Others				405	371	369
Unallocated assets				283	174	506
Eliminations				-241	-199	-242
Total				6,885	6,031	6,664

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NET ASSETS		30 June	30 June	31 Dec
MEUR		2011	2010	2010
Oil Products		2,480	2,617	2,260
Renewable Fuels		1,940	1,268	1,703
Oil Retail		319	310	315
Others		302	281	276
Eliminations		-2	1	-10
Total		5,039	4,477	4,544
RETURN ON NET ASSETS, %		30 June	30 June	31 Dec
		2011	2010	2010
Oil Products		26.7	3.4	12.6
Renewable Fuels		-6.3	-6.3	-3.0
Oil Retail		15.6	13.0	19.6
COMPARABLE RETURN ON NET ASSETS, %		30 June	30 June	31 Dec
		2011	2010	2010
Oil Products		12.2	4.0	7.9
Renewable Fuels		-10.0	-7.4	-5.1
Oil Retail		15.6	12.4	19.3

QUARTERLY SEGMENT INFORMATION

QUARTERLY REVENUE
MEUR	4-6/2011	1-3/2011	10-12/2010	7-9/2010	4-6/2010	1-3/2010
Oil Products	3,070	2,870	2,962	2,491	2,064	2,272
Renewable Fuels	144	193	112	120	60	36
Oil Retail	1,058	1,021	1,004	917	884	849
Others	47	44	37	38	45	49
Eliminations	-645	-656	-589	-501	-477	-481
Total	3,674	3,472	3,526	3,065	2,576	2,725
QUARTERLY OPERATING PROFIT
---	---	---	---	---	---	---
MEUR	4-6/2011	1-3/2011	10-12/2010	7-9/2010	4-6/2010	1-3/2010
Oil Products	136	178	170	116	-18	65
Renewable Fuels	-53	-4	-7	2	-19	-15
Oil Retail	13	12	17	24	14	6
Others	7	-15	-27	2	-42	43
Eliminations	6	0	-7	-1	2	-2
Total	109	171	146	143	-63	97
QUARTERLY COMPARABLE OPERATING PROFIT
---	---	---	---	---	---	---
MEUR	4-6/2011	1-3/2011	10-12/2010	7-9/2010	4-6/2010	1-3/2010
Oil Products	60	84	108	45	-3	58
Renewable Fuels	-55	-36	-13	-12	-23	-17
Oil Retail	13	12	18	23	13	6
Others	8	-16	-16	2	16	43
Eliminations	6	0	-7	-1	2	-2
Total	32	44	90	57	5	88
QUARTERLY DEPRECIATION, AMORTIZATION AND IMPAIRMENTS
---	---	---	---	---	---	---
MEUR	4-6/2011	1-3/2011	10-12/2010	7-9/2010	4-6/2010	1-3/2010
Oil Products	48	47	50	48	47	42
Renewable Fuels	16	15	12	5	5	5
Oil Retail	8	8	10	8	8	8
Others	4	3	3	3	2	3
Total	76	73	75	64	62	58
QUARTERLY CAPITAL EXPENDITURE AND INVESTMENTS IN SHARES
---	---	---	---	---	---	---
MEUR	4-6/2011	1-3/2011	10-12/2010	7-9/2010	4-6/2010	1-3/2010
Oil Products	32	19	34	23	158	54
Renewable Fuels	50	96	143	157	149	129
Oil Retail	6	4	10	8	13	2
Others	3	1	2	2	54	5
Total	91	120	189	190	374	190

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1. CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT AND CAPITAL COMMITMENTS

CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
MEUR	30 June 2011	30 June 2010	31 Dec 2010
Opening balance	4,022	3,283	3,283
Depreciation, amortization and impairments	-149	-120	-259
Capital expenditure	211	523	932
Disposals	-2	-1	-14
Reclassifications	-	-	63
Increases through business combinations	-	6	7
Translation differences	-1	14	10
Closing balance	4,081	3,705	4,022

The Accounting treatment of Bahrain Lube Base Oil Company B.S.C (Closed) has been changed in 2010 from joint venture to jointly controlled assets. Accordingly the assets have been reclassified from investments in joint ventures to property, plant and equipment.

CAPITAL COMMITMENTS	30 June	30 June	31 Dec
MEUR	2011	2010	2010
Commitments to purchase property, plant and equipment	45	331	76
Total	45	331	76

1. DERIVATIVE FINANCIAL INSTRUMENTS

	30 June 2011		30 June 2010		31 Dec 2010
Interest rate and currency derivative contracts and share forward contracts	Nominal value	Net fair value	Nominal value	Net fair value	Nominal value	Net fair value
Interest rate swaps	780	-8	577	0	723	-9
Forward foreign exchange contracts	901	13	1,747	-102	1,474	10
Currency options
Purchased	155	1	79	-3	43	0
Written	136	2	69	-5	36	1
Commodity derivative contracts	Volume million bbl	Net fair value Meur	Volume million bbl	Net fair value Meur	Volume million bbl	Net fair value Meur
---	---	---	---	---	---	---
Sales contracts	27	16	17	4	19	-4
Purchase contracts	23	-9	7	1	12	5
Purchased options	1	0	2	-12	1	-1
Written options	1	0	2	13	1	1

Commodity derivative contracts include oil, freight and palmoil derivative contracts.

The fair values of derivative financial instruments subject to public trading are based on market prices as of the balance sheet date. The fair values of other derivative financial instruments are based on the present value of cash flows resulting from the contracts, and, in respect of options, on evaluation models. The amounts also include unsettled closed positions. Derivative financial instruments are mainly used to manage the Group's currency, interest rate and price risk.

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6. RELATED PARTY TRANSACTIONS

The group has a related party relationship with its subsidiaries, associates, joint ventures and with the members of the Board of Directors, the President and CEO and other members of the Neste Executive Board (key management persons), close members of the families of the mentioned key management persons and entities controlled or jointly controlled by the mentioned key management persons or close members of those persons' families. The group has also related party relationship with its pension fund.

Transactions carried out with related parties	1-6/2011	1-6/2010	1-12/2010
Sales of goods and services	45	35	93
Purchases of goods and services	39	22	63
Receivables	17	32	5
Financial income and expenses	0	0	0
Liabilities	7	6	2

7. CONTINGENT LIABILITIES

MEUR	30 June 2011	30 June 2010	31 Dec 2010
Contingent liabilities
On own behalf for commitments
Real estate mortgages	26	26	26
Pledged assets	2	2	2
Other contingent liabilities	23	40	43
Total	51	68	71
On behalf of associates and joint ventures
Guarantees	3	4	3
Other contingent liabilities	0	4	-
Total	3	8	3
On behalf of others
Guarantees	14	14	14
Total	14	14	14
Total	68	90	88
	30 June 2011	30 June 2010	31 Dec 2010
Operating lease liabilities
Due within one year	66	72	76
Due between one and five years	141	158	164
Due later than five years	91	118	108
Total	298	348	348

The Group's operating lease commitments primarily relate to time charter vessels, land and office space.

Other contingent liabilities

Neste Oil Corporation has a collective contingent liability with Fortum Heat and Gas Oy of the demerged Fortum Oil and Gas Oy's liabilities based on the Finnish Companies Act's Chapter 17 Paragraph 16.6.

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Calculation of key financial indicators

Calculation of key financial indicators

Operating profit	=	Operating profit includes the revenue from the sale of goods and services, other income such as gain from sale of shares or non-financial assets, share of profit (loss) of associates and joint ventures, less losses from sale of shares or non-financial assets, as well as expenses related to production, marketing and selling activities, administration, depreciation, amortization, and impairment charges. Realized and unrealized gains or losses on oil and freight derivative contracts together with realized gains and losses from foreign currency and oil derivative contracts hedging cash flows of commercial sales and purchases that have been recycled in the income statement, are also included in operating profit.
Comparable operating profit	=	Operating profit -/+ inventory gains/losses -/+ gains/losses from sale of shares and non-financial assets - unrealized change in fair value of oil and freight derivative contracts. Inventory gains/losses include the change in fair value of all trading inventories.
Return on equity, (ROE)%	= 100 x	Profit before taxes - taxes
		Total equity average
Return on capital employed, pre-tax (ROCE) %	= 100 x	Profit before taxes + interest and other financial expenses
		Capital employed average
Return on average capital employed, after-tax (ROACE) %	= 100 x	Profit for the period (adjusted for inventory gains/losses, gains/losses from sale of shares and non-financial assets and unrealized gains/losses on oil and freight derivative contracts, net of tax) + non-controlling interests + interest expenses and other financial expenses related to interest-bearing liabilities (net of tax)
		Capital employed average
Capital employed	=	Total assets - interest-free liabilities - deferred tax liabilities - provisions
Interest-bearing net debt	=	Interest-bearing liabilities - cash and cash equivalents
Leverage ratio, %	= 100 x	Interest-bearing net debt
		Interest bearing net debt + total equity
Gearing, %	= 100 x	Interest-bearing net debt
		Total equity
Equity-to-assets ratio, %	= 100 x	Total equity
		Total assets - advances received
Return on net assets, %	= 100 x	Segment operating profit
		Average segment net assets
Comparable return on net assets, %	= 100 x	Segment comparable operating profit
		Average segment net assets
Segment net assets	=	Property, plant and equipment, intangible assets, investment in associates and joint ventures including shareholder loans, pension assets, inventories and interest-free receivables and liabilities allocated to the business segment, provisions and pension liabilities

Calculation of share-related indicators

| Earnings per share (EPS) | = | Profit for the period attributable to the equity holders of the company
Adjusted average number of shares during the period |
| --- | --- | --- |
| Equity per share | = | Shareholder's equity attributable to the equity holders of the company
Adjusted average number of shares at the end of the period |
| Cash flow per share | = | Net cash generated from operating activities
Adjusted average number of shares during the period |

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refining the future
NESTE OIL

NESTE OIL