Finnish oil refiner Neste Oil reported a stronger-than-expected rise in quarterly profit yesterday, as years of investment in its renewable fuels business paid off.

Neste shares rose nearly 15 per cent in early trade after the company said fourth-quarter comparable operating profit rose to 164 million euros ($222 million) from 77 million euros a year earlier, beating an average forecast of 136 million euros in a Reuters poll.

State-controlled Neste has focused on its biofuels business, which makes renewable diesel from sources such as palm oil and animal fats, as a way of differentiating itself from bigger competitors.

The biofuels business, which Neste says produces enough renewable diesel from waste and residues to power more than one million cars a year, turned profitable in early 2013 for the first time since its launch in 2008.

The business made a full-year comparable operating profit of 273 million euros compared with a loss of 56 million in 2012. The company's overall comparable operating profit for 2013 was 604 million.

Neste uses around 70 per cent of its 40 million euro annual research and development budget for investigating feedstocks to produce renewable fuel.

Neste forecast full-year 2014 comparable operating profit of 500 million euros, in line with market expectations.