MGYOY Mol Magyar Olay Es Gazipari Rt (PK)

By Margit Feher 

BUDAPEST--First-quarter earnings of central European integrated oil-and-gas company MOL Nyrt. beat analysts' forecast due to a lower-than-expected decline in upstream operations and high petrochemicals margins, putting the company on track to meet its over $2 billion full-year profitability goal.

Earnings before interest, tax, depreciation and amortization, an indicator of profitability in the oil industry that investors watch the closest, was 144.4 billion forints ($530.6 million) for the period, down from HUF151.5 billion in the previous quarter and 8% lower than HUF157.0 billion a year earlier. Still, it beat the analysts' expectations of HUF137.9 billion.

As a result of its first-quarter performance, MOL, Hungary's largest firm by revenue, is "well on track to deliver its over $2 billion clean Ebitda target for 2016," Chairman and Chief Executive Zsolt Hernadi said. Clean Ebitda is based on the current cost of supplies and excludes one-off items.

Downstream operations posted record-high first-quarter results, supported by the petrochemical business, offsetting a decline in upstream profits and "proving again the resilience of MOL's integrated business model," Mr. Hernadi added.

Downstream--or refining and marketing--clean Ebitda was HUF92.9 billion, up 22% from HUF76.2 billion a year earlier and slightly higher than analysts' forecast for HUF91.9 billion.

The clean Ebitda of the upstream--or exploration and production--segment was HUF42.2 billion, down by 30% from HUF60.4 billion a year earlier but exceeding analysts' expectation for HUF34.3 billion. Upstream operations delivered positive free cash flow in the first quarter of this year even at low oil prices, a result of the company's latest efficiency improvement program, MOL said. Upstream production increased further in the period--by 4% from the previous quarter and 9% from a year earlier to 112,100 barrels of oil equivalents per day, the highest level since the first quarter of 2012.

In the first quarter of this year, the company generated a net profit of HUF77.2 billion, more than doubling its net profit of HUF29.2 billion a year earlier. It translated to earnings of HUF819 a share, up from earnings of HUF299 a share a year ago.

Write to Margit Feher at margit.feher@wsj.com

(END) Dow Jones Newswires

May 05, 2016 19:08 ET (23:08 GMT)

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