Page 4 - Euroil Week 31 2019

EurOil COMMENTARY EurOil
MOL Q2 report beats estimates as downstream unit outperforms
MOL’s performance beat analysts’ estimates, with the company on track to reach or beat its full-year clean ebitda guidance
HUNGARY
WHAT:
MOL’s pro ts rose 7% year on year in the second quarter.
WHY:
The company’s downstream performed better than anticipated, while higher output offset lower oil and gas prices.
WHAT NEXT:
MOL is on track to reach its full-year guidance of $2.3bn for clean Ebitda.
HUNGARY’S oil and gas company MOL reported a net pro t of HUF77.8bn (€237mn) in Q2, up 7% year on year, beating analysts’ esti- mates, li ed by a better than expected showing of the downstream unit and smaller nancial losses. e company reported a rst-half pro t of HUF126.5bn.
MOL’s bottom line was lifted by a smaller financial loss: HUF2bn, compared with HUF24.3bn in the base period. It also booked HUF12.6bn in corporate pro t tax, down from HUF20.8bn in Q2 2018.
MOL’s revenues edged up 1% y/y to HUF1.34 trillion in Q2 and by 6% to HUF2.48 trillion over in H1. MOL reported Clean CSS Ebidta of HUF182.5bn in the April-June period, above the HUF172.6bn consensus among analysts and up 2% y/y and by 27% from the previous quarter. H1 Clean CSS Ebidta reached HUF325bn, down from HUF364bn a year earlier. Operating pro t dropped 25% y/y to HUF89.4bn in Q2 and by 22% to HUF146bn in H1. Operating cash ow before working capital changes decreased by 6% in H1 2019 to HUF332bn.
Despite a weaker environment and deteri- orating re ning margins, growth in the down- stream unit beat expectations as Q2 clean Ebidta rose to HUF76.2bn, up 4% y/y and by 97% from Q1.
Lower oil and gas prices were o set by higher production in the upstream segment, which gen- erated HUF77.4bn in Ebidta, falling by 11% on an annual basis. Production averaged at 113.6mn boepd in 2019 year to date, up 4% y/y, comfort- ably above the 110mn boepd guidance. Motor fuel demand continued to expand by around 3% in the relevant CEE region.
Sales of the consumer services business
continued to report dynamic growth with Ebidta of HUF33bn, up 14% y/y. e segment has been a major contributor to MOL’s pro t. e number of Fresh Corner shops set up at petrol stations rose to 765 from 555 a year earlier.
Midstream Ebidta fell to HUF6.6bn, down 19% y/y, which was a negative surprise, but the segment has a small weight in the group’s activi- ties, analysts said.
MOL had total equity and liabilities of HUF4.7 trillion at the end of June, up 5% from twelve months earlier. Total equity climbed 7% to HUF2.3 trillion. Current liabilities were up 12% at HUF1.1 trillion and net debt increased to HUF536bn in H1. MOL’s net gearing ratio rose to 19% from 15% during the period.
In the rst six months, investments reached HUF226bn, a two-fold increase from 2018. Half of that included spending on transformational projects, with the largest ones being the new polyol plant, the propylene splitter and invest- ments in alternative crude processing.
Sustaining capex also rose by 40% y/y from a low base thanks to boosted upgrade in the Rijeka re nery and by higher exploration and develop- ment spending in upstream.
MOL is on track to reach or beat its full- year guidance for clean Ebidta of $2.3bn and its guidance for investments is unchanged at $1.9-2.1bn, chairman-CEO Zsolt Hernadi said evaluating the report. Compliance with the IMO 2020 regulations will further help MOL’s re n- ing unit, which has been on an ascending path, said an Erste Bank analyst, adding that down- stream will continue to post strong growth in the second half. Massive demand for motor fuel is also boosting sales in Hungary and in the CEE region, he added. ™
P4
w w w . N E W S B A S E . c o m Week 31 08•August•2019