Taxes and Lower Prices Burdened MOL’s Results in the Second Quarter

The Hungarian oil and gas group MOL reported on Friday a significant decline in profit and revenue in the second quarter, highlighting the drop in energy prices on global markets and taxes in its home country of Hungary.

The group’s total operating income fell by 19 percent in the second quarter, to 1.99 trillion forints (5.11 billion euros).

Net profit before interest, taxes, depreciation, and amortization, adjusted for changes in inventory values (clean CCS EBITDA) plummeted by 70 percent, to 411 million dollars, MOL reported, emphasizing an extraordinary tax expense of about 600 million dollars.

The Hungarian government introduced an extraordinary profit tax last year, and from April 1, an income tax, which, according to MOL’s report, accounted for approximately half of the extraordinary tax expense in the second quarter.

The amount of 315 million dollars settled MOL’s obligation for the entire year of 2023, they noted.

The company concluded the second quarter with a net profit of 78.46 billion forints, down 74 percent compared to the same period last year.

In the refining and sales segment, clean EBITDA, adjusted for changes in inventory values, fell by 88 percent, to 102 million dollars. Adjusted EBITDA in the exploration and production segment also decreased by nearly the same percentage, sliding to 99 million dollars.

MOL produced 87.3 thousand barrels of oil equivalent per day in the second quarter, slightly below the targeted 90 thousand barrels per day.

In the first half of the year, organic capital expenditures were down by a quarter compared to the same period last year, sliding to 473 million dollars. The group has set a target for organic investments of 1.7 billion dollars for the entire year.

– The macro environment was not good enough to neutralize the negative effects of government interventions in the Central and Eastern European region, which undoubtedly left a mark on our results in the first half of the year, especially in the second quarter of 2023, – explains CEO Zsolt Hernádi.

Governments have limited fuel price increases to curb inflation. If extraordinary measures are not gradually lifted in the near future, this will negatively impact MOL’s competitiveness and burden the cash flow needed for investment plans, Hernádi emphasized.

The group has set a target for clean CCS EBITDA of 2.5 billion dollars for the entire year, which is approximately half of last year’s figure.