MOL Magyar Olaj es Gázipari Nyilvánosan Muködo Reszvenytársaság : Group 3rd quarter EBITDA bounced back despite the crisis, challenges ahead

06 Nov 2020

MOL Group 3rd quarter EBITDA bounced back despite the crisis, challenges ahead

• Clean CCS EBITDA strongly rebounded from the Q2 lows and came in at USD 610mn in Q3 2020, only 12% lower than last year.
• All segments continued to generate positive simplified free cash-flow in both Q3 and the year to date, despite the pandemic and economic crises.
• Upstream EBITDA improved in Q3 compared to Q2, but decreased by 10% year-on-year at USD 212mn, due to depressed oil and gas prices, ACG contribution partly offset the negative effects.
• Downstream Clean CCS EBITDA recovered from the Q2 lows to USD 202mn, but it was 26% under last year's results, due to the very poor refinery margins.
• Consumer Services returned to double-digit EBITDA growth in Q3, as EBITDA grew by 14% year-on-year to USD 183mn. This segment became the strongest free cash flow contributor of the Group in the first three quarters of 2020.
• As the progression of the pandemic increases in severity within the core region, mobility restrictions and lockdowns are clouding the outlook.

Budapest, 06November 2020 - Today, MOL Group announced its financial results for the third quarter of 2020. During the pandemic and economic crises, Clean CCS EBITDA strongly rebounded from the Q2 lows and came in at USD 610mn in Q3 2020, only 12% lower than in the same period last year. This result brought Q1-Q3 2020 EBITDA to USD 1.59bn, 14% lower year-on-year, implying full year 2020 EBITDA likely to be at the higher end of the guidance range, around USD 1.9bn. Simplified free cash flow jumped in Q3 to USD 306mn on continued capex discipline, bringing year to date simplified free cash flow to USD 662mn, 42% higher than in the first three quarters of last year. Organic capital expenditure was down by 33% in the first three quarters, reflecting strong capex control as well as some COVID-19-related slowdown.

Chairman-CEO Zsolt Hernádi commented the results: 'Earnings strongly rebounded in the third quarter from the Q2 lows, which will in all probability allow us to deliver full - year 2020 EBITDA at the higher end of our guidance range, around USD 1.9 bn. All business segments generated positive free cash flow so far this year despite the pandemic, clear evidence of the robustness and resilience of our operations. Consumer services stood out with new all-time high quarterly EBITDA in Q3, but other segments also did relatively well, despite depressed commodity prices and margins: Upstream benefited from the ACG acquisition, while Downstream improved on the back of outstanding asset availability and higher refinery throughput. Yet, we have to remain vigilant, as the pandemic is not yet over, and the coming months may well put all of us to the test again.'

Upstream production increased by 8% compared to the previous quarter to 126.9 thousand barrels/day and it was 18% higher than a year ago in the same quarter. The volumes were boosted by higher net entitlement allocation and a full quarter contribution of ACG. MOL's net entitlement production in the Azeri asset was 29.8 thousand barrels/day in Q3 2020. Oil and gas prices recovered in Q3 but are still well below the year-ago level. Q1-Q3 Upstream EBITDA was clearly driven by the huge negative price impact on the back of the significantly lower oil (Brent fell 37% year-on-year to USD 41/bbl) and realized gas prices (-34% year-on-year).

Downstream segment Clean CCS EBITDA strongly rebounded and nearly doubled from the Q2 lows but remained 26% weaker than in 2019 due to depressed refinery margins and slightly weaker petchem margins. The polyol project exceeded 70% overall completion at the end of Q3, although progress is somewhat behind schedule as a result of the pandemic situation. Pandemic protocols have been introduced to mitigate the risk of infection within the construction community and to safeguard business continuity. In Q3, a new 20kt rubber bitumen plant, for recycling tire waste, has been completed in Hungary.

Consumer Services reached new all-time high quarterly result at USD 183mn, up by 14% year-on-year, supported by strong fuel performance. Lower OPEX also helped EBITDA due to the network-wide saving actions. Simplified free cash flow grew by 27% in Q3 year-on-year and by 14% in the first three quarter of 2020 to over USD 300 mn; this amount is already exceeding the full-year 2019 level. MOL's flagship Fresh Corner branded non-fuel concept rollout continues across the network, the number of reconstructed sites with Fresh Corners rose to 910 in Q3 from 895 at the end of Q2 2020.

The Gas Midstream segment EBITDA grew by 59% year-on-year in Q3 2020 to USD 43mn, as increasing demand for cross-border capacity resulted in higher regulated revenues, while operating expenses were lower. Higher capacity bookings and lower OPEX boosted EBITDA in Q1-Q3, resulting in 37% higher performance than in the same period last year.

About MOL Group

MOL Group is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 25,000 people and a track record of more than 100 years in the industry. MOL's exploration and production activities are supported by more than 75 years' experience in the hydrocarbon field. At the moment, there are production activities in 9 countries and exploration assets in 14 countries. MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 1940 service stations across 10 countries in Central & South Eastern Europe.

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Dóra Simonson