SINGAPORE — Finnish energy company Neste is seeing a so-called “K-shape recovery” from the coronavirus pandemic, with different segments of its business going in opposite trajectories, CEO Peter Vanacker said on Tuesday.
“If I look at the recovery right now, people refer to (it) as V-shape, W-shape, L-shape, I’ve heard yesterday on the summit, K-shape,” he told CNBC’s Capital Connection as an attendee of the Singapore Summit, which is being held virtually this year.
That’s what Vanacker said he’s seeing in his business right now.
“The recovery in renewables, that was extremely fast,” he said. “But then on the other hand side, everything that has to do with, for example, oil and oil refineries, is actually not recovering.”
Neste is the world’s leading producer of renewable diesel. It used to be a classic oil-refining company but later developed sustainable fuel.
Vanacker said there’s a “big difference” between these two sides of the business at this point. There was a “quick recovery” for what is sustainable and renewable, while oil-based products are still “suffering” and not recovering.
He said that could continue into 2021 and 2022. The circumstances are “extremely challenging” for oil refineries that are not selling as much as they can produce, and may need to restructure.
“There have not been a lot of refinery rationalizations this year,” he said. “We would expect there should be some next year and the year afterwards, because the situation currently is just not sustainable.”
Neste on Monday announced plans to restructure two refineries in Finland to focus on non-oil operations. The firm’s expansion project at a refinery in Singapore has also experienced delays because of coronavirus-related lockdowns.