Mol Nyrt, Hungary's largest energy company, said quarterly profit more than doubled, driven by rising demand for fuels and a gain on foreign exchange.
Net income for the quarter ended September 30 rose to Ft 119.5 billion (€458 million), or Ft 1,148 a share, from a restated Ft 54.6 billion, or 552 a share a year earlier, the company said in a statement. The median estimate of eight analysts surveyed by Bloomberg News was for profit of Ft 73.3 billion. Budapest-based Mol was helped by demand for refined products in Eastern Europe, where the company has spent more than $1 billion (€776 million)
buying refineries and filling stations as economic growth outpaces Western Europe. Higher sales helped negate the effect of weaker refining margins, while the revaluation of some of the company's assets provided a financial gain. „The double-digit growth of fuel demand in Hungary and Slovakia prove the correctness of our business strategy in refining and marketing,” Mol Chairman and Chief Executive Zsolt Hernádi said in the earnings report. On November 9, PKN Orlen SA, Poland's largest oil refiner and retailer, surprised analysts who had expected profit to fall 31% because of narrower refining margins and a revaluation of reserves after crude oil prices dropped about 15% in the quarter. Earnings before interest and tax in Orlen's retail segment more than tripled, helping push net income up 4%. Mol's profit has been dogged by exchange-rate losses in previous quarters, Ft 12.9 billion in the second quarter and Ft 4.3 billion in the Q3 of 2005. Interest rate expenses also lowered earnings by Ft 3.7 billion in the year ago period. Magnolia Finance Ltd. is an investment vehicle based in the Channel Islands that in April sold securities exchangeable for Mol shares from 2011 to 2016, with a value of €610 million ($784 million). Mol also sold shares to Magnolia to circumvent a Hungarian law that prevents it from holding more than 10% of its own stock at a time. Mol shares gained 15% in a year, increasing the value of that holding. Sales in the Q3 were Ft 762.3 billion, compared with Ft 585.8 billion a year earlier. The median estimate of analysts was Ft 756.1 billion. The price of Brent crude averaged $70.65 a barrel in the quarter, compared with $63.16 in the year-ago period, Bloomberg data show. Mol is shifting its focus to crude oil and gas production after spending more than $1 billion in six years buying refineries and filling stations from Slovakia to Croatia and Romania. The company bought out a Russian partner from a site in western Siberia, started to develop a Croatian-Hungarian gas field, entered talks with the Indian government about drilling in the Asian country and signed an agreement to expand its production operation in Pakistan. Mol's exploration and production unit had operating profit of Ft 34.9 billion in the Q3, compared with Ft 32.9 billion a year earlier. The refining and marketing division posted operating profit of 58.7 billion, from 50.8 in the Q3 of 2005. The petrochemicals unit, which includes Hungary's largest chemicals producer TVK Nyrt, had operating profit of Ft 5.5 billion, up from Ft 200 million a year go. Mol's gas transport business had operating profit of Ft 5.4 billion in the quarter, up from Ft 4.8 billion in 2005. (Bloomberg)