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2020-11-06 MOL Group 3rd quarter EBITDA bounced back despite the crisis, challenges ahead

  • Clean CCS EBITDA strongly rebounded from the Q2 lows and came in at USD 610mn in Q3 2020, only 12% lower than last year.
  • All segments continued to generate positive simplified free cash-flow in both Q3 and the year to date, despite the pandemic and economic crises.
  • Upstream EBITDA improved in Q3 compared to Q2, but decreased by 10% year-on-year at USD 212mn, due to depressed oil and gas prices, ACG contribution partly offset the negative effects.
  • Downstream Clean CCS EBITDA recovered from the Q2 lows to USD 202mn, but it was 26% under last year’s results, due to the very poor refinery margins.
  • Consumer Services returned to double-digit EBITDA growth in Q3, as EBITDA grew by 14% year-on-year to USD 183mn. This segment became the strongest free cash flow contributor of the Group in the first three quarters of 2020.
  • As the progression of the pandemic increases in severity within the core region, mobility restrictions and lockdowns are clouding the outlook.

Budapest, 06 November 2020 – Today, MOL Group announced its financial results for the third quarter of 2020. During the pandemic and economic crises, Clean CCS EBITDA strongly rebounded from the Q2 lows and came in at USD 610mn in Q3 2020, only 12% lower than in the same period last year. This result brought Q1-Q3 2020 EBITDA to USD 1.59bn, 14% lower year-on-year, implying full year 2020 EBITDA likely to be at the higher end of the guidance range,  around USD 1.9bn. Simplified free cash flow jumped in Q3 to USD 306mn on continued capex discipline, bringing year to date simplified free cash flow to USD 662mn, 42% higher than in the first three quarters of last year. Organic capital expenditure was down by 33% in the first three quarters, reflecting strong capex control as well as some COVID-19-related slowdown.

Chairman-CEO Zsolt Hernádi commented the results: “Earnings strongly rebounded in the third quarter from the Q2 lows, which will in all probability allow us to deliver full - year 2020 EBITDA at the higher end of our guidance range, around USD 1.9 bn. All business segments generated positive free cash flow so far this year despite the pandemic, clear evidence of the robustness and resilience of our operations. Consumer services stood out with new all-time high quarterly EBITDA in Q3, but other segments also did relatively well, despite depressed commodity prices and margins: Upstream benefited from the ACG acquisition, while Downstream improved on the back of outstanding asset availability and higher refinery throughput. Yet, we have to remain vigilant, as the pandemic is not yet over, and the coming months may well put all of us to the test again.”

Upstream production increased by 8% compared to the previous quarter to 126.9 thousand barrels/day and it was 18% higher than a year ago in the same quarter. The volumes were boosted by higher net entitlement allocation and a full quarter contribution of ACG. MOL’s net entitlement production in the Azeri asset was 29.8 thousand barrels/day in Q3 2020. Oil and gas prices recovered in Q3 but are still well below the year-ago level. Q1-Q3 Upstream EBITDA was clearly driven by the huge negative price impact on the back of the significantly lower oil (Brent fell 37% year-on-year to USD 41/bbl) and realized gas prices (-34% year-on-year).

Downstream segment Clean CCS EBITDA strongly rebounded and nearly doubled from the Q2 lows but remained 26% weaker than in 2019 due to depressed refinery margins and slightly weaker petchem margins. The polyol project exceeded 70% overall completion at the end of Q3, although progress is somewhat behind schedule as a result of the pandemic situation. Pandemic protocols have been introduced to mitigate the risk of infection within the construction community and to safeguard business continuity. In Q3, a new 20kt rubber bitumen plant, for recycling tire waste, has been completed in Hungary.

Consumer Services reached new all-time high quarterly result at USD 183mn, up by 14% year-on-year, supported by strong fuel performance. Lower OPEX also helped EBITDA due to the network-wide saving actions. Simplified free cash flow grew by 27% in Q3 year-on-year and by 14% in the first three quarter of 2020 to over USD 300 mn; this amount is already exceeding the full-year 2019 level. MOL’s flagship Fresh Corner branded non-fuel concept rollout continues across the network, the number of reconstructed sites with Fresh Corners rose to 910 in Q3 from 895 at the end of Q2 2020.

The Gas Midstream segment EBITDA grew by 59% year-on-year in Q3 2020 to USD 43mn, as increasing demand for cross-border capacity resulted in higher regulated revenues, while operating expenses were lower. Higher capacity bookings and lower OPEX boosted EBITDA in Q1-Q3, resulting in 37% higher performance than in the same period last year.

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 9 countries and exploration assets in 14 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 1940 service stations across 10 countries in Central & South Eastern Europe.

Press contact

@: internationalpress@mol.hu

Dóra Simonson

2020-08-07 MOL Group Q2 result was hit hard by the crisis, but free cash flow remained positive

  • Clean CCS EBITDA declined by 44% in Q2 2020 to USD 353mn, bringing H1 Clean CCS EBITDA to USD 975mn, 15% lower than last year’s result
  • Upstream EBITDA declined to USD 112mn in Q2, affected by the collapsing oil and gas prices, despite increased production volumes
  • Downstream Clean CCS EBITDA also fell materially to USD 110mn in Q2, as refinery margins turned negative from mid-May
  • Consumer Services EBITDA managed to remain around flat in local currency terms, -6% in USD-terms at USD 111mn in Q2
  • New 2020 EBITDA guidance of USD 1.7-1.9bn was established
  • All segments generated positive simplified free cash-flow in H1 2020.

Budapest, 7 August 2020 – Today MOL Group announced its financial results for H1 and Q2 2020. In the first six months MOL Group delivered USD 975mn EBITDA while Q2 EBITDA significantly declined compared to last year, due to the pandemic and economic crisis. The 2020 capex guidance of up to USD 1.5bn was confirmed, implying sustained simplified free cash-flow generation in 2020. Despite the challenges, simplified FCF remained positive in Q2 and was almost unchanged in the first six months year-on-year at USD 356mn, as sustain capex was cut back as a reaction to the pandemic and the subsequent economic crisis. A new 2020 EBITDA guidance of USD 1.7-1.9bn was established, reflecting challenging trading conditions likely prevailing in H2

Chairman-CEO Zsolt Hernádi commented the results: “MOL faced unprecedented challenges in the second quarter of 2020, from significant health and safety risks stemming from the pandemic to major operational issues in running our plants during the lockdown, whilst making sure we preserved our financial strength. While the virus has not been defeated yet, I am proud to say that we have so far successfully tackled these challenges. The bulk majority of our employees are safe and in good health, we ensured a reliable supply to our customers in all of our markets, even at the very depth of the crisis, and we managed to generate a small positive simplified FCF in the quarter. This is a testament to the quality of the people and the agility of our business model in MOL. And this also gives me confidence that we will continue to successfully navigate through even the most difficult periods and emerge as a stronger entity.”

Upstream EBITDA declined to USD 112mn in Q2 and USD 297mn in H1, affected by the collapsing oil and gas prices. Production increased by 6% quarter-on-quarter to 117 thousand boepd, as the contribution of ACG more than offset lower volumes in the UK and Pakistan; average daily hydrocarbon production reached 130 thousand barrels of oil equivalent per day in July. In Q2 2020, MOL as an operator, made a gas and condensate discovery in the TAL Block, Pakistan, where the Mamikhel South-1 exploratory well flowed gas and condensate at a rate of 6,516 boepd upon testing.

Downstream Clean CCS EBITDA declined materially to USD 110mn in Q2, as refinery margins turned negative from mid-May. A very strong Q1 was followed by major operational challenges in Q2 with unprecedented price and margin movements. H1 result looks better, Clean CCS EBITDA amounted to USD 405mn, 0.5 % higher year-on-year. Petchem contribution remained resilient, as both margins and volumes held up reasonably well during the pandemic. The polyol project reached 65% overall completion at the end of Q2. All major prefabricated equipment reached the site and the transportation of all oversize equipment via river/sea have been completed.

Consumer Services were resilient to the crisis, EBITDA remained around flat in local currency terms (-6% in USD-terms at USD 111mn in Q2), despite the total sales volumes declined by nearly 22% year-on-year in Q2 as a result of the region-wide lockdown during the COVID-19 pandemic. Cost savings almost fully compensated the pandemic-related fallout of fuel and non-fuel margins. After the April bottom, fuel consumption was gradually recovering within the quarter and grocery sales even increased compared to the same period last year. The first six months EBITDA resulted in USD 199mn, just couple of percent less than a year ago.

The Gas Midstream segment’s EBITDA almost doubled year-on-year in Q2 to USD 45mn, and reached USD 116mn in the first half-year, due to higher capacity bookings and lower operational expenditure.

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 9 countries and exploration assets in 13 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 1,933 service stations across 10 countries in Central & South Eastern Europe.

Press contact:

@: internationalpress@mol.hu

2020-05-07 MOL Group reported USD 152mn net loss in Q1

  • USD 152mn net loss reported for Q1 on the back of large foreign exchange losses and inventory losses caused by weaker HUF and the plunging oil prices
  • Underlying operations were running strong until mid-March, when the pandemic-related lockdown started to seriously affect all business lines
  • Upstream EBITDA declined by 35% to USD 185mn in Q1 reflecting much lower oil and gas prices
  • Downstream Clean CCS EBITDA rose to USD 295mn in Q1 from a low base, supported by doubling refinery margins
  • Consumer Services EBITDA remained flat at USD 88mn in Q1, as lockdowns in March wiped out earlier growth
  • April brought much increased challenges and difficulties in all segments, showing the real and full-blown effects of the pandemic and economic crisis

Budapest, 07 May 2020 – Today, MOL Group announced its financial results for Q1 2020. Large inventory and foregin exchange losses resulted in MOL reporting a USD 152mn net loss for Q1, the first sign of the pandemic-related crisis. Underlying operations were running strong until mid-March, as reflected by the USD 622mn Clean CCS EBITDA, however, the pandemic had already started to severely affect all business lines in the last 2-3 weeks of March and the situation further deteriorated in April. Due to the unpredictable external environment, 2020 EBITDA guidance was withdrawn and organic capital expenditure guidance was cut by more than 25%.

Chairman-CEO Zsolt Hernádi commented on the results: “Covid-19 shapes and rules the world and the energy industry. The pandemic situation and economic crisis that follows will cast a long shadow on our overall performance in 2020. Individuals as well as companies entered a period of uncertainty we have probably never even imagined before. While we are fighting the pandemic and doing our best to protect our people, our customers and partners, we are also working hard to make sure MOL can continue to operate even under extreme scenarios and can eventually emerge even stronger from this crisis. Our dedicated people, high quality assets, strong balance sheet and our resilient, integrated business model shall help us navigating through these unchartered waters. We have already made a series of difficult decisions that will help us to achieve cash neutrality, to maintain our liquidity and financial flexibility and to grab opportunities which may arise on the way towards normalization.”  

  • Upstream Q1: Due to the extremely low oil prices from the beginning of March, Upstream EBITDA decreased to USD 185mn in Q1. Oil & gas production volumes were 110.6 mboepd, 4% lower than a year ago, due to the natural decline in CEE. In Q1, MOL, as an operator, made an oil and gas discovery offshore Norway with a preliminary estimate of recoverable resources between 12-71 million barrels.

April update: MOL successfully closed the acquisition of Chevron’s non-operated interests in Azerbaijan, purchased 9.57% stake in the ACG oil field and an 8.9% stake in the Baku-Tbilisi-Ceyhan pipeline. The newly implemented opex and capex measures swiftly brought down portfolio level cash break-even to around USD25/barrel oil price. In Pakistan, TAL block is currently producing at around 50% of capacity given the refinery shutdowns caused by the demand drop during the COVID-19 crisis. Brent Dated oil price averaged at around USD 18,5/bbl in April, less than half of the Q1 level, and natural gas prices fell further, implying materially weaker outlook for Q2.

  • Downstream Q1: Clean CCS EBITDA doubled and increased to USD 295mn in Q1 from a low base, supported by doubling refinery margins. The polyol project reached 60% completion at the end of Q1. The pandemic affects the project’s supply chain and makes workforce mobilization increasingly difficult. Its full impact on the project schedule is not yet possible to assess, but delays are expected.
  •  

April update: Refineries were running at 70-75%, steam crackers at 90% capacity in April. Refinery margin was USD 9/bbl in April, but declined materially recently; petchem margin has been at EUR 500-600/t since mid-March. All main logistics routes and systems are operational.

  • Consumer Services Q1: EBITDA grew by 4% in local currency terms (flat in USD-terms at USD 88mn), but the lockdown and the severe trading conditions in the last 2-3 weeks of March wiped out much of the strong growth experienced earlier in Q1 both in fuel and non-fuel margins.

April update: Fuel volumes were down in April by around 35-40% across the network, sales have started to slowly improve recently. Non-fuel sales and margin initially declined, but grocery sales improved in the last few weeks and sortiment was widened. Recent non-fuel performance is only 10-20% below last year’s level.

  • Gas Midstream Q1: EBITDA grew by 9% compared to last year’s first quarter results to USD 71mn, driven by higher volumes and lower operating expenses. Domestic transmission volumes were flat while export transmission volumes increased by 39% in Q1. OPEX decreased on lower gas consumption cost, in line with lower gas purchase prices.

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 8 countries and exploration assets in 13 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 1,900 service stations across 10 countries in Central & South Eastern Europe.

Press contact

@: internationalpress@mol.hu

2020-04-08 MOL Group ensures continuous supply security with optimized operational and financial measures

  • MOL Group implements health, safety, operational and financial measures in response to the COVID-19 pandemic and economic situation
  • MOL withdraws its EBITDA guidance for 2020, lowers both CAPEX and OPEX levels
  • Operations and production continue uninterrupted, with optimized operations schedule and volumes wherever necessary

Budapest, 8 April 2020 – MOL Group implements measures not only to mitigate the impact of the current situation on the Group, but also to allow MOL to emerge from the crisis stronger. The company is focusing on protecting the health and safety of its employees, adjusting operations to minimize the spread of COVID-19 and adapting its production volumes to the altered market demand. Operational and capital expenditures will be reduced materially to preserve cash and to allow MOL to manage through challenging times even in the case of a longer lasting crisis.

Constantly adapting to the ever-changing situation, MOL has implemented different actions and created new solutions in the past few weeks to reduce the likelihood of infection among employees and customers. These preventive and precautionary measures affect retail, downstream and upstream sites as they support social distancing, increase hygienic awareness and include the provision of protective equipment to our colleagues, the changing of shift patterns throughout the Group’s plants and exploration sites, the implementation of testing in key operational areas and the switch to home office wherever possible.

COVID-19 emergency measures by governments in MOL’s countries of operations have resulted in partial or full lockdown, significantly slowing down economic activity in the company’s core CEE countries. In order to remain resilient, MOL Group has updated its financial and operational guidance.

Due to the uncertainty about the duration and impact of the coronavirus pandemic, the extreme volatility of the external environment, and the unpredictability of demand across the businesses, MOL is

  • withdrawing its EBITDA guidance for 2020;
  • lowering capital spending by at least 25%to below USD 1.5bn in 2020, following a project-by-project review to delay non-essential investment;
  • completing a comprehensive reviewof operational expenditureto preserve cash
  • maintaining ample liquidityeven after closing the ACG transaction, with around USD 2.0-2.5bn on hand, to weather a potentially longer-lasting crisis and grab opportunities once normalization begins; and
  • retaining after-tax profits from 2019 fully until the situation normalizes, when they might be paid out as dividends, should shareholders so decide.

MOL Group’s Chairman-CEO Zsolt Hernádi commented:

“The world is facing an unprecedented challenge. Our life has changed completely in the last few weeks. The energy industry, while better positioned to weather the economic hardships than some others, enters a period of uncertainty it has probably never faced before, with scenarios ranging to extremes, which were impossible to imagine even a few weeks ago.

MOL has proven its adaptability many times before; we have seen and overcome several shocks in the past. We have shown that we are able to operate successfully in a highly volatile external environment, thanks in no small part to our high-quality assets, our resilient, integrated business model and most importantly to our dedicated, highly-skilled workforce. MOL enters this difficult period in a good shape – and I am sure it will emerge from it even stronger, and certainly with important lessons learnt.

At the end of the day, it all comes down to our investments into human capital – to the dedicated work of almost 25,000 of my colleagues. We have many assets in many countries, but it is our people, who are the key to our resilience. We have done and will continue to do everything to protect their health, especially those who need to be physically present at our sites to ensure both business continuity and supply security.

I am extremely proud of my colleagues who came up with the idea of switching a lubricants production line to manufacture sanitizers. While in normal times this may also have been a good business proposition, today it is our responsibility and obligation to come up with innovative ideas and solutions to help to contain the virus, protect our employees and fight side by side with the governments, public authorities and communities in our countries of operations. I personally believe that the way a company behaves in a crisis will show its real character and strength. MOL is determined to be a source of stability in a world plagued by uncertainty and will prove once again that it has a place in the “champions league” of energy companies.”

Operational update on the key businesses:

  • InUpstream, production was around 110 mboepd in Q1, in line with earlier guidance. Lower demand for fuels, full storage capacities and reduced refinery runs may however lead to temporary production curtailment in some of our international assets, potentially offset by more entitlement barrels due to the low oil price. In light of the uncertain macroeconomic environment, we are changing production guidance to 115-120 mboepd from 120 mboepd (assuming a 6-month contribution from ACG). We have put in place a set of actions to adjust expenditures and reduce our portfolio breakeven towards USD 25/boe.
  • Downstream. Lockdowns in core countries of operations have resulted in a significant drop in demand of 20-40% for key product groups. While this has created operational challenges and a need for continuous optimization across our high-quality downstream assets, we are also making use of currently attractive margins by keeping all refineries running, even if at reduced rates. MOL will continue to provide a safe and steady supply of oil and chemical products in all core countries.
  • Consumer Services. After a strong operational and financial performance in Q1, MOL Group has experienced declining sales as borders have been closed and social activities restricted. As a result, MOL Group has refocused operations to provide reliable and safe supply across our network and remain cash flow positive. Targets and guidance set for 2020 are being withdrawn here as well, given the unknown duration of measures restricting non-essential travel.

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 8 countries and exploration assets in 13 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of about 1900 service stations across 10 countries in Central & South Eastern Europe.

Press contact: internationalpress@mol.hu

2020-04-30 The Board of Directors of MOL Group approved the postponement of the payment of dividends in an extraordinary meeting

  • The Board of Directors of MOL Group approved consolidated financial statements of MOL Group for 2019
  • The members of the Board approved the postponement of the payment of dividends
  • Appointments made to the Board of Directors, Supervisory Board and Audit Committee
  • MOL Group Annual Report 2019 can be accessed at info/annualreport2019

Budapest, 30 April 2020 - Due to the epidemic situation caused by the worldwide corona virus, MOL Group held an extraordinary general meeting instead of the Annual General Meeting, where the Board of the Directors decided on all proposals and proposed resolutions in the agenda items of the AGM instead of the Shareholders. The members of the Board of Directors approved the crisis management proposal regarding dividends, according to which the company will retain after-tax profits from 2019 fully until the situation normalizes, when they might be paid out as dividends, should shareholders so decide. The Board of Directors also approved the financial report and consolidated financial statements for the year 2019.

COVID-19 emergency measures by governments in MOL’s countries of operations have resulted in partial or full lockdown, significantly slowing down economic activity in the company’s core CEE countries. Due to the uncertainty about the duration and impact of the coronavirus pandemic, the extreme volatility of the external environment, and the unpredictability of demand across the businesses, MOL Group is focusing on business continuity and cash preserve. The Board of Directors decided to retain after-tax profits from 2019 fully until the situation normalizes, when they might be paid out as dividends, should shareholders so decide.

At the extraordinary meeting, the Board of Directors approved the re-election of Dr. László Parragh, Zsigmond Járai and Dr. Martin Roman to the Board of Directors. In addition, Dr. Péter Gottfried was elected a member of the Supervisory Board.

Zsolt Hernádi, Chairman-CEO of MOL Group, said at the extraordinary meeting: “Today is a bittersweet day, as 2019 was a financially strong year for us, but recently, in the shadow of COVID-19, circumstances have changed rapidly and dramatically. The pandemic posed unprecedented challenges to the entire world, including Europe, Hungary and MOL. Until now, our company has operated safely, without any disruption. Nevertheless, we have introduced a number of measures to minimize the effects of the economic and coronavirus crises affecting the Group. The aim of our measures is to emerge from the crisis stronger than we were before and to continue to provide competitive return for our shareholders.”

MOL Group generated USD 2,44bn Clean CCS EBITDA in 2019, above the yearly guidance. Furthermore, the company also achieved important milestones along its 2030 transformation journey, acquired major upstream assets in Azerbaijan, reached 50% completion at its flagship polyol project, while Consumer Services business had another record-breaking year.

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 8 countries and exploration assets in 13 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of about 1900 service stations across 10 countries in Central & South Eastern Europe.

Press contact:
@: internationalpress@mol.hu

2020-03-18 MOL Norge discovers oil and gas in the North Sea

BUDAPEST, 18 March 2020 - MOL Group’s wholly owned subsidiary MOL Norge AS and its joint venture partners have discovered oil and gas in an offshore field located about 200km west of Stavanger in the Norwegian part of the North Sea.

The exploration well in the 820S licence area was drilled to a maximum depth of 2,652 meters below sea level and oil and gas were found in a number of formations and were successfully tested for about 3,463 barrels of oil equivalent per day. The potential resources discovered in the main formation are between 12 and 71 million barrels of oil and gas equivalent.

The commerciality of the discovery will be determined later, following additional technical work.

MOL Norge AS with 40% working interest is the operator of the 820S license on behalf of partners Lundin Norway AS (40%), Wintershall Dea Norge AS (10%) and Pandion Energy AS (10%).

MOL Group entered Norway in 2015, through the acquisition of 100 percent ownership of Ithaca Petroleum Norge. The drilling program began in 2018, after the operator achieved readiness in record time without any setbacks in a highly regulated environment.

MOL Group’s exploration portfolio in Norway is aimed at supporting delivery of organic reserve replacement for the Group.

About MOL Group
MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 8 countries and exploration assets in 13 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of about 1900 service stations across 10 countries in Central & South Eastern Europe.

Press contact:
@: internationalpress@mol.hu

2020-02-21 MOL Group 2019 results: robust EBITDA beat the upgraded guidance

  • Full-year 2019 EBITDA reached USD 2.44bn, above the upgraded guidance, despite most macro drivers turning negative in Q4, but decreasing 9% compared to last year
  • Upstream production increased in Q4 and full-year production reached 111mboepd, exceeding our 110mboepd guidance level for 2019; EBITDA was 17% lower than in 2018, primarily due to the weaker external price environment
  • Downstream CCS EBITDA decreased by 13% to USD 866mn, reflecting lower refining and petchem margins
  • Consumer Services EBITDA rose by 30% in local currency terms and by 24% in USD in Q4 2019, and increased 18% in 2019
  • Assuming 6 months contribution from the ACG assets in Azerbaijan, MOL Group expects to generate around USD 2.5bn Clean CCS EBITDA in 2020

Budapest, 21 February 2020 – Today, MOL Group announced its financial results for 2019. Despite the much challenging and volatile external environment at the end of the year, MOL Group generated USD 598mn Clean CCS EBITDA in Q4, bringing full-year Clean CCS EBITDA to USD 2.44bn, above the recently upgraded guidance. Simplified free cash flow declined compared to 2018 as the company is pushing forward with its strategic transformational projects, but remained positive in 2019 at USD 356mn.

Upstream production increased sequentially in Q4 and remained broadly unchanged in full-year 2019 at 111 mboepd, slightly above the guidance level. Due to the lower oil and gas prices, this volume generated 17% lower EBITDA compared to the 2018 results. Exploration and Production remained the key cash generator of MOL Group, providing a massive, nearly USD 700mn simplified free cash flow in 2019. In Upstream, MOL’s target for 2020 is twofold: to successfully complete the acquisition and to integrate the ACG assets that will add about 20,000 bpd to production; at the same time, the segment will continue to maximise value and cash flow generation of the existing assets through an efficient operation.

Downstream full year 2019 Clean CCS EBITDA dropped by 13% to USD 866mn, fully reflecting the weaker macro environment. In Q4 Clean CCS EBITDA declined to USD 191mn 21% lower compared to the last year’s fourth quarter as both refining and petchem margins were weaker at the end of last year, however refining margins were recovering in January-February 2020. Motor fuel demand growth remained very strong in the region in 2019, meaning a 3.4% increase that supported the Downstream segment.

The polyol project is on schedule and on budget; major construction site works boosted up in 2019 and the overall project completion is now at around 50%.
A final investment decision was made for the Rijeka Refinery Residue Upgrade project, aiming at turning INA’s Downstream into a sustainable and profitable business. The project includes the construction of a delayed coker with an expected commissioning in 2023.

Consumer Services was the “star performer” in 2019, EBITDA of the segment increased by 30% in Q4 2019 year-on- year in local currency terms (24% in USD), capped another strong year with double-digit earnings growth. The segment achieved several important milestones, including the non-fuel margin generation reaching 30% of the total margin by the end of the year. Accelerated non-fuel concept rollout continued: the number of reconstructed sites with Fresh Corners rose to 877 from 687 a year ago.

The Gas Midstream segment reached USD 71mn EBITDA in Q4, 48% higher than a year ago, as capacity demand rose significantly due to the uncertainty of Russia-Ukraine transit agreement. Operating expenses declined by more than 10% as fuel gas consumption and network loss decreased and so did the price of natural gas.

Chairman-CEO Zsolt Hernádi commented the results:

“We delivered robust financial results in 2019, even slightly ahead of our upgraded EBITDA guidance despite a weaker external environment.

We also achieved important milestones along our 2030 transformation journey. We agreed to acquire major upstream assets in Azerbaijan, we have reached 50% completion at our flagship polyol project, while our Consumer Services business had another record-breaking year.

With our strong foundations and despite increasing global uncertainties, we look forward to 2020 with optimism. With the help of the new assets, we expect to grow our EBITDA to around USD 2.5bn, based on our mid-term base macro framework with a Brent crude price of around USD 60/bbl and assuming a more conservative petchem outlook. This shall again provide us enough cash flow to cover our investments into our strategic projects.”

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field. At the moment, there are production activities in 8 countries and exploration assets in 13 countries. MOL Group operates four refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 2,000 service stations across 10 countries in Central & South Eastern Europe.

Press contact

@: internationalpress@mol.hu

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