MOL Q4 profit rise modest, but beats expectations

Telco

Fourth-quarter net income of Hungarian oil and gas company MOL edged up 2% year-on-year to HUF 78 billion, an earnings report released early Friday shows, according to a report by state news wire MTI.

MOL chairman-CEO Zsolt Hernádi

Net income was well over the HUF 46.7 bln consensus of analysts polled by Portfolio.hu.

Earnings were hit by inventory loss and impairment, but helped by deferred taxes, MOL said in a presentation published with the report.

Revenue was up 25% at HUF 1,404.8 bln. But raw material and consumable costs rose at a faster rate, increasing 31% to HUF 1,074.3 bln. Depreciation, depletion, amortization and impairment climbed 39% to HUF 143 bln. MOL also booked a HUF 26.7 bln change in inventory of finished goods and works in progress.

Operating profit fell 30% to HUF 43.4 bln. However, a HUF 28 bln gain on the income tax expense line lifted the bottom line.

Earnings per share came to HUF 112 for the period.

Upstream EBITDA soars

In a breakdown by business segment, MOL said upstream revenue climbed 33% to HUF 146.8 bln on strong production and EBITDA jumped 87% to HUF 108.6 bln on higher oil and gas prices.

Downstream revenue increased 26% to HUF 1,247.3 bln, but EBITDA of the business dropped 40% to HUF 48 bln on narrower margins.

Revenue of MOLʼs consumer services business rose 42% to HUF 408.3 bln and EBITDA of the segment climbed 18% to HUF 23.8 bln. 

Full-year net income more than HUF 301 bln

MOLʼs net income for the full year inched down 2% to HUF 301.2 bln. Revenue was up 25% at HUF 5,210.6 bln. Raw material and consumable costs climbed 31% to HUF 4,044.8 bln. Total operating costs increased 28% to HUF 4,857.8 bln. Operating profit was practically flat at HUF 352.9 bln.

A higher net financial loss - HUF 36.5 bln, compared to HUF 6.7 bln in the base period - weighed on the bottom line, but income tax expenses were down 48% at HUF 25.7 bln.

MOL noted that its EBITDA in dollars, at current cost of supplies and adjusted for one-off effects, reached USD 2.69 bln, up 10% year-on-year and well over guidance for clean CSS EBITDA of around USD 2.4 bln.

Guidance for 2019 clean CSS EBITDA USD 2.3 bln

"We expect to deliver around USD 2.3 bln EBITDA this year based on our mid-term base macro framework, assuming a more conservative downstream environment and a Brent crude price at around USD 60/bbl," chairman-CEO Zsolt Hernádi said in the report.

MOL puts organic CAPEX at USD 1.9 bln-2.1 bln, including USD 0.8 bln-0.9 bln to be spent on transformational projects. It sees upstream production of about 110,000 barrels of oil equivalent per day.

"We have very strong foundations - a robust balance sheet on the back of several years of strong free cash flow generation, a resilient, integrated business model and a talented and dedicated workforce - to look into 2019 with optimism," Hernádi said.

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