Hungarian oil and gas firm MOL expects a slight improvement in retail sales in the second quarter but the global economic crisis will keep a pressure on refining margins.
MOL, which suffered a bigger-than-expected first-quarter loss, said this would be more than halved if figures were recalculated with current exchange rates as losses were inflated by non-realized financial losses on foreign currency debt, finance director József Molnár told Reuters
Zoltán Áldott, MOL's managing director for exploration and production, said the company would need to invest $50 million - $70 million this year in Pearl Petroleum Co for its exploration work in the Kurdistan region of Iraq.
“Overall, we don't think retail sales will fall and all in all, we actually expect some improvement in the second quarter due to seasonal factors,” Molnár said. “Broadly speaking, we expect a similar trend as in the first quarter.”
But sharply lower refining margins, which dragged MOL's refining operating profit down 88% in the first quarter, were not expected to improve.
“We're not calculating (on) worse refining margins than in the first quarter but the margin's composition is going to be volatile,” Molnár said. “This is the clear result of the global economic crisis.”
MOL, Hungary's biggest company by revenues, made a first-quarter net loss of HUF 114.8 billion.
“If the forint stayed at 280 (to the euro) where it is right now, that would cut this loss by HUF 80 billion and reduce our debt by this amount,” Molnár said. “Since we keep capital expenditure to a level that is covered by our cash flow, that alone would lower our gearing to 35%-36% (versus 40.9% in the first quarter),” Molnár said.
A new element in MOL's capital expenditure portfolio will be investment in Iraq after the company announced over the weekend that it bought a 10% stake in Pearl.
“We've committed to financing this company and keep on recapitalizing it,” Áldott said. “This amount is not significant this year, it's around $50 million - $70 million.” (Reuters)