Despite the tough economic environment (almost halved average crack spread, narrowed Brent- Ural spread, plummeted integrated petrochemical margin), the company has managed to maintain stable sales volumes and increase MOL EBITDA in HUF-terms by 6% year-on-year. Furthermore, the operating cash-flow turned positive versus the loss in the same period of last year.
MOL’s upstream segment was especially strong and the Gas and Power segment benefited from a 26% increase in operating profit, which partially offset the weak Downstream and Petrochemical performance. Operating profit, excluding special items, decreased by 39% year-on-year in $terms to $236 million in first quarter of 2009.
The HUF depreciated dramatically vs. the USD and EUR in first quarter of 2009. The weak HUF supported MOL operating profit, excluding special items, decreased by 21% in HUF-terms in first quarter of 2009.
However, the weak HUF caused a considerable unrealized net foreign exchange loss of HUF140 billion in first quarter of 2009 vs. a net foreign exchange gain of HUF4 billion in first quarter of (Q1 2008). In addition, the loss from associates was HUF12 billion, of which the loss from discontinued INA operations (gas trading) amounted to HUF6 billion in first quarter of 2009. As a consequence, a net loss of HUF125 billion was reported, excluding special items.
Exploration & Production operating profit was at $203 million in first quarter of 2009, representing a 47% increase versus Q1 2008 excluding non-recurring profit from the sale of the Szireg-1 field. Operating profit in HUF terms (excluding this one-off item) almost doubled year-on-year to HUF46 billion, as a weakening HUF and lower mining tax payments more than offset a 21% decrease (in USD-terms) in the average realized hydrocarbon price.
— Refining & Marketing reported an operating profit of $21 million (HUF4.7 billion ) in first quarter of 2009 versus $232 million (HUF40.1 billion ) in Q1 2008, due to a deteriorating external environment, including a 45% decrease in average crack spreads and a narrowed Brent-Ural differential. CCS-based operating losses, excluding one-off items were $26.5 million in first quarter of 2009
— The Petrochemical segment reported a $16 million operating loss in first quarter of 2009 (HUF3.7 billion loss) due to a dramatic decline in the integrated petrochemical margin. However, despite this unfavorable external environment, EBITDA remained positive.
— The Gas and Power segment operating profit, excluding special items, increased by 26% to $82 million in first quarter of 2009. FGSZ Ltd. operating profit (with a revalued asset value) improved by 6% to $57 million in first quarter of 2009 (up 39% in HUF terms to HUF12.9 billion) due to a favorable external business environment, while the gas crisis in January 2009 was neutral on transmission operating profit. The gas and power division contributed $17 million operating profit in first quarter of 2009
— A net financial expense of HUF147.1 billion was recorded in first quarter of 2009 (compared to a net financial gain of HUF1.3 billion in Q1 2008). Financial expenses included HUF6.3 billion interest paid, HUF2 billion interest received, a non-realized net foreign exchange loss of HUF139.8 billion, unchanged fair valuation of the conversion option embedded in the capital security (Magnolia Finance Ltd.) and a non-cash expense of HUF1.3 billion on the repurchase option on shares owned by CEZ
— CAPEX spending remained unchanged in HUF-terms year-on-year at HUF52.2 billion in first quarter of 2009, in line with the reduced CAPEX target of HUF220 billion for 2009, a level that can be financed through operating cash flow. However, first quarter of 2009 CAPEX of $231 million represented a 23% decline in USD-terms year-on-year
— Net debt position increased to HUF888 billion, mainly as a consequence of the weakening HUF vs. The EUR and USD, resulting in a gearing ratio of 40.9% at the end of March 2009, compared to a gearing ratio of 38.7% at the end of March 2008
— Operating cash inflow in first quarter of 2009 was HUF25.3 billion, compared to HUF41.7 billion loss in Q1 2008. Operating cash flow before movements in working capital decreased by 16% year-on-year
Zsolt Hernadi, chairman-chief executive officer of said that: “In the first quarter of 2009, the global recession became more severe, with weakened refining and petrochemical margins and volatile forex movements. However, the measures implemented by management at the first signs of the crisis have positioned MOL to endure a recession as well as any in our peer group. This was reflected in stable sales volumes year-on-year as well as improved cash-flow generation.”
“The advantages of our geographically diverse and well-balanced integrated business model are reflected in our first quarter of 2009 operating profit. Divisionally, our upstream segment was extremely strong and the quarter saw a considerable increase in operating profit within the Gas and Power segment, which partially offset the weaker Downstream and Petrochemical performance.
“MOL’s sustained effort to improve efficiency is a key differentiator and we are highly committed to extend our efficiency leadership to INA. MOL intends to take every possible measure for the Group to navigate the current climate by maintaining a strong financial position. Our medium-term objective is to establish an even stronger financial position for the Group, in order to prepare for the opportunities presented by the global economic recovery.”
