MOL Group Announces Q1 2016 Results

MOL Group delivered a robust clean CCS EBITDA of HUF 144bn (USD 510mn) in Q1 2016, despite oil prices averaging only USD 33.9 per barrel in the first quarter - 37% lower than in the same period last year. The results imply that MOL is well on track to deliver on its annual guidance to generate at least USD 2bn clean CCS EBITDA.

The Downstream segment delivered yet again record-high clean CCS EBITDA for the first quarter of HUF 93bn (USD 328mn). This represented a material, 22% increase year-on-year driven primarily by an outstanding, nearly doubling petrochemical contribution on the back of the very supportive external environment. Retail EBITDA also grew by a remarkable 31% year-on-year, driven by higher sales volumes (+10% year-on-year), somewhat higher fuel margins and stronger non-fuel contribution. Motor fuel demand growth (2%) in the core CEE markets continues to support the Downstream business.

Upstream EBITDA, excluding special items, amounted to HUF 42bn (USD 150 mn) in Q1 2016, whilst CAPEX and investments reached HUF 33bn (USD 118mn). This means that the Upstream business is on the right track to deliver the targets of the New Upstream Program and achieve self-funding operations in 2016 through production optimization efforts and substantial cost side adjustments.

As a result of MOL Group’s production optimization efforts, onshore production grew in CEE by 3.3 thousand boepd (+5%) year-on-year, with oil production up by 13%. With additional production growth in the UK, overall, MOL Group’s average daily hydrocarbon production rose by 9 thousand boepd year-on-year to 112 thousand boepd in Q1 2016, which is the highest level since Q4 2012. OPEX and CAPEX adjustments are in progress to sustain self-funding operations and direct production cost decreased further to 6.3 USD/boe.

Gas Midstream delivered HUF 19bn (USD 68 mn) EBITDA in Q1 2016, 6% higher year-on-year.

Chairman-CEO Zsolt Herná‡di commented the results: "As the final steps to conclude the year 2015, MOL Group’s annual general meeting in April approved a 10% increase in dividends - fully funded by last year’s cash flows - which is expected to result in 17% higher dividend per share, as well as a 2% share cancellation. MOL also successfully issued EUR 750mn 7-year Eurobond at the lowest coupon and yield in its history, which together with the settlement of the Magnolia transaction allows us to save approximately USD 20mn annually in funding cost. The overwhelming interest from investors demonstrated the trust and confidence of capital markets in MOL’s operational and financial strength. I am likewise happy to report that MOL Group is well on track to deliver on its USD 2bn+ Clean CCS EBITDA target for 2016. Downstream posted record high first quarter results supported by an outstanding petrochemical contribution, offsetting the decline in Upstream profits, again proving the resilience of MOL’s integrated business model. Upstream delivered positive free cash flow in Q1 2016, highlighting that the New Upstream Program, which targets material efficiency improvements and self-funding operations even at low oil prices, is already on track."