Hungarian oil and gas group MOL swung to a third-quarter net loss on weak refining and marketing operations, high one-off costs and heavy financial losses on its foreign currency denominated debt, the firm said.
MOL made a Q3 net loss of HUF 4.9 billion ($23.11 million), excluding special items, after earning a net profit of HUF 73.4 billion a year earlier, the firm said in a statement on Tuesday. The third-quarter figures come well below analysts’ expectation for net profit of HUF 11.2 billion in a recent Reuters poll, although the forecasts fell in an extremely wide range and seven of 11 analysts predicted a quarterly net loss.
In refining and marketing, usually the backbone of the firm, operating profit fell 90% as the fall in crude oil prices cost MOL Nyrt HUF 25.9 billion in inventory revaluation, the forint’s weakening resulted in HUF 15.7 billion in foreign exchange losses and a refinery maintenance shutdown cost HUF 3.5 billion.
MOL added that falling crude prices and narrowing margins since the end of the quarter continued to impact the company negatively into the Q4. But excluding one-off items, refining and marketing operating profit was down just 10% in the quarter, it said. Despite the operating profit drop, refinery throughput rose by 8% and total crude product sales grew 15%. In exploration and production, operating profit rose 63% as a slight drop in production volumes was more than offset by higher prices, especially for natural gas which follows oil prices developments with a lag.
MOL also suffered a HUF 41.7 billion net financial loss during the quarter, most of it in non-realized foreign exchange losses on its debt. Its share option deals with CEZ and Magnolia Finance Ltd. cost HUF 5.5 billion due to MOL’s stock drop. Besides operating difficulties, MOL also provisioned HUF 5.8 billion for a fine imposed by the European Commission for allegedly participating in a paraffin-sector cartel.
BUSINESS ENVIRONMENT DETEIORATED in Q4
MOL said its operating environment deteriorated further in the fourth quarter due to a drop in the price of crude and a weaker forint, CFO József Molnár said. Molnár said MOL’s petrol crack spread was down sharply, while naphtha spreads were negative. Molnár added that Europe’s looming recession was likely to cut into MOL’s sales volumes next year, and the firm expects petrol sales to fall as price drops cannot totally offset lower demand. MOL is basing its calculations for next year on crude oil at $60 a barrel and the euro/dollar exchange rate at 1.25 next year, Molnár said. (Reuters)