Hungary's major oil firm MOL Group announced Friday what it described as "strong operational results" for 2011 despite a continuing challenging environment. The firm reported an EBITDA profit of $3 billion (HUF 644 billion), representing an improvement of 6 percent year-on-year, while its operating profit of $1.55 billion (HUF 335 billion) matched that reported for 2010.
With a $1.53 billion (HUF 330 billion) contribution, MOL's Upstream operations remained the main driver of the operating profit. This segment's results were boosted by higher realized hydrocarbon prices and elevated hydrocarbon production from international operation.
Royalty payment in Hungary of $473 million (HUF 102 billion) was 14 percent higher due to increased royalty rate and hydrocarbon prices.
The firm's Downstream result, excluding special items, slipped into the negative territory – $9.3 million (HUF 2 billion) loss – due to a depressed external environment and refinery stoppages in Croatia. While the ‘Clean’ CCS-based operating result of the Refining & Marketing segment was negative $97 million (HUF 21 billion), excluding INA it achieved $232 million (HUF 50 billion) profit emphasizing the strength of our complex assets.
Operating profit of Gas Midstream increased year-on-year. The group paid almost $134 million (HUF 29 billion) as its contribution to Hungary's 'crisis tax'.
The group's net profit reached $705 million (HUF 152 billion) in 2011 after a $482 million (HUF 104 billion) net profit in 2010. While operating profit level was maintained despite external and internal challenges, implementation of net investment hedge accounting led to a significant improvement on the financial line, said MOL.
Operating cash flow before movements in working capital increased by 19 percent and amounted to $2.8 billion (HUF 611 billion). Despite high working capital need, in line with the higher price levels, $1.7 billion (HUF 372 billion) operating cash inflow was reached in 2011. Decreased net debt position and further improvement of gearing ratio (28 percent) at the end of the period was derived from the firm's strong operational results.
"Despite the unexpectedly tough business circumstances in downstream operation, challenging macro and regulatory environment and well-known Syrian developments we were able to grow further on the back of our diversified international upstream portfolio," said MOL CEO Zsolt Hernádi. "In order to ensure future growth in upstream as well, we are aiming to accelerate our investment programs and focus more on Russia, Kazakhstan and Kurdistan Region of Iraq. Moreover, we continue our work program in our core CEE countries, exploiting our decades-long experience. In 2011, we booked more than 100 Mmboe of reserves which provides solid basis for our mid-term production growth targets."
Hernádi continued: "Downstream delivered weak performance. However, we are expecting improvement and are planning some selected investments as we did in the past. Our financial position improved further over 2011 ensuring a solid basis for our organic growth plans, moreover, we are continuously evaluating potential inorganic steps as well. For these plans our diversified credit facilities, the maturity of which were extended, ensures financial flexibility and we do not have any additional external financing need in 2012."
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