Margins narrow on higher oil prices, financial losses push MOL into red

Hungarian oil and gas company MOL’s downstream business segment was hit hard by higher oil prices in the fourth quarter but growing financial losses pushed the company into the red, MOL’s IFRS report for the period published Friday shows.

MOL reported a loss of HUF 31.0 billion on its net income line, compared to profit of HUF 36.1 billion in the base period.

Analysts polled by Portfolio.hu had estimated the company had profit of HUF 27.3 billion during the period.

Earnings per share came to negative HUF 355 in Q4.

Total operating revenue was up 26% at HUF 1,491.8 billion, but cost of raw materials and consumables climbed at a faster rate, increasing 35% to HUF 1,177.2 billion. Total operating costs rose 33% to HUF 1,481.8 billion, causing operating profit to fall 84% to HUF 10.1 billion.

A HUF 53.9 billion financial loss - growing from a HUF 20.7 billion loss in the base period - pushed MOL into the red in Q4.

MOL’s downstream division had a HUF 19.9 billion loss on the EBITDA line in Q4 as the price of Ural crude climbed 27% and the price of Brent rose 26% from the base period.

The downstream division had revenue of HUF 1,299.9 billion during the period, up 17%.

MOL’s upstream division generated profit of HUF 130.2 billion on the EBITDA line, up 21%. Revenue of the division was 26% higher at HUF 228.9 billion.

EBITDA of the gas division rose 5% to HUF 18.8 billion. Revenue edged down 3% to HUF 148.5 billion.

For the full year, MOL booked net income of HUF 152.1 billion, up 46% from 2010. The rise in profit was supported by “stable operating performance and [an] improving financial line”, the company said.

Total operating revenue rose 24% to HUF 5,368.4 billion. Cost of raw materials and consumables climbed 31% to HUF 4,248.8 billion, but total operating costs were up just 25% at HUF 5,116.8 billion and operating profit edged up 2% to HUF 251.6 billion.

MOL booked a HUF 57.0 billion financial loss in 2011, narrowing one-third from the HUF 85.5 billion loss in the base period.

Lower corporate profit tax payments – down 48% at HUF 33.2 billion – also supported earnings.

MOL spent HUF 274 billion on investments in 2011, down 18% from the previous year. In the upstream segment, CAPEX focused on the CEE region, Russia and the Kurdistan Region of Iraq. Big projects included a renovation of a thermal power plant at MOL’s refinery in Bratislava and the finalization of the modernization of the company’s refinery in Rijeka.

In a segmental breakdown, MOL said revenue of the downstream division rose 16% to HUF 4,805.8 billion. EBITDA of the segment fell 44% to HUF 84.2 billion as Ural prices rose 39% and the price of Brent climbed 40%.

Revenue of the upstream division increased 12% to HUF 794.8 billion. EBITDA climbed 31% to HUF 476.8 billion.

MOL had total assets of 4,989.1 billion on December 31, 2011, 11% more than twelve months earlier. Net assets were up 13% at HUF 2,239.5 billion. Non-current liabilities edged down 3% to HUF 1,347.4 billion.