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Finland's Neste Q3 profits miss forecast as volatility persists

OSLO (Reuters) - Finnish refiner Neste on Thursday posted weaker-than-expected third-quarter operating results, hit by write-offs and hedging losses, and said it expected volatility in the oil products and renewable feedstock markets to remain high.

Following the news, Neste's shares fell 7.8% by 0706 GMT.

The maker of renewable and oil-based fuels reported a July-September operating profit of 289 million euros ($291.2 million), down from 579 million a year ago, lagging a 692 million euro forecast by nine analysts polled by Refinitiv.

Profits were lowered by a 420 million euro loss following an assessment of inventory values and took a further 101 million euro hit from margin-hedging on commodity prices and currencies, Neste said.

"The war in Ukraine continued to have a significant impact on international energy markets, leading to high, albeit volatile oil product and natural gas prices in Europe," Chief Executive Matti Lehmus said in a statement.

Excluding the inventory write-offs and hedging losses, Neste posted comparable earnings before interest, tax, depreciation and amortisation (EBITDA) of 979 million euros, up from 524 million a year ago and beating a forecast of 855 million.

Neste's comparable sales margin for renewable products rose by 11% year-on-year to $756 per tonne, while its oil products refining margin stood at $28 per barrel, up from $9.4 in the third quarter of 2021.

The renewables sales margin is expected to stay in the $700-$800 per tonne range in the fourth quarter, but forecasting "remains challenging due to high market volatility," Neste said.

Fixed costs in renewables will rise by 55 million euros in the fourth quarter as the company prepares for the start-up next year of a long-planned Singapore expansion, it said.

($1 = 0.9924 euros)

(Reporting by Terje Solsvik, editing by Stine Jacobsen and Barbara Lewis)