MOL Earnings Fall Amid Supply Issues

First-quarter net income of Hungarian oil and gas company MOL fell 75% year-on-year to HUF 38.8 billion as supply issues weighed, an earnings report released this week.

MOL's total revenue fell 8% to HUF 2,024 billion as the company's downstream business faced a "perfect storm", starting with the disruption of deliveries through the Druzhba pipeline, MOL's main source of Urals crude from Russia, on January 27. Government-mandated price caps rolled out to mitigate the impact on markets of the Iranian conflict and the closure of the Strait of Hormuz also weighed on margins.

Chairman-CEO Zsolt Hernádi said that "the conflict in Iran, the outage of the Druzhba pipeline, and price regulations all over the region have tested our resilience." He added that, in spite of the challenges, MOL would stick to its full-year guidance and was "on track to meet all our targets."

Earnings per share came to HUF 52 for the period.

Net sale revenue of MOL's downstream business fell 6% to HUF 1,677 billion. At the operating level, the segment had a loss of HUF 16.8 billion, compared to operating profit of HUF 61.1 billion in the base period.

Upstream revenue slipped 5% to HUF 175.6 billion and operating profit of the segment declined 18% to HUF 69.1 billion.

Revenue of MOL's consumer services business edged down 2% to HUF 786.5 billion, but its operating profit rose 8% to HUF 40.5 billion.

MOL said the attainability of its full-year guidance was conditional on the stabilization of crude supply and the return of market-based coordination in fuel markets.

Group EBIDTA, at current cost of supply and adjusted for one-offs, was USD 626 million in the Q1, compared to full-year guidance of around USD 3.0 billion.