Falling energy prices hit MOL’s Q1 figures

Sharply falling energy prices are good news for the population and almost all market segments and the population alike, but large energy companies can be less happy, Hungarian business website Portfolio reported.

The explains the price falls as due to an “exceptionally mild” winter and European’s successful decoupling from Russian energy.

The last few months have been and continue to be about sharply falling energy prices, and it is in this environment that the Hungarian energy giant MOL just published its first quarterly report of the year, Portfolio’s analyst wrote.

The oil company fell short of analysts’ expectations and produced numbers much lower than the record values ​​seen last year.

MOL’s Ebitda falls by over one-third

The company’s group-level Ebitda fell 34% from the previous quarter due to the drop in energy prices. “On a year-on-year basis, we can talk about a 14% decrease, meanwhile, Ebitda was 11% below the previous year’s value. However, the net result of the company group has now become positive, MOL recorded a profit of USD 458mn in the quarter just ended,” Portfolio wrote.

“At the moment, we are very far from when the price of natural gas rose to many times what it used to be due to the outbreak of the Russian-Ukrainian war and the give-and-take in the energy market.

Nord Stream attack inflated gas prices

However in July 2022, in the wake of the Nord Stream incident, the price of natural gas per kilowatt-hour was EUR 300. Today prices are almost one-tenth of that, at “only” EUR 36. This level is still much higher than the average over many years, Portfolio wrote adding that the benchmark price of Brent crude oil is currently below USD 73 per barrel.

“In the first quarter of 2023, according to our calculations, the average oil price was already in double digits and was close to USD 82.2 – down 16.6% year-on-year.

“At present, therefore, we cannot complain about unbearably high energy prices, but the price of oil and gas, which jumped significantly even from an extremely high base at the beginning of 2022, undeniably caused a serious budget problem, especially for countries, like Hungary, that significantly rely on energy exports.

“It is no exaggeration to say almost all market segments suffered in Europe in 2022”, Portfolio wrote, adding with emphasis: “keyword: almost”.

Large companies in the energy sector naturally took advantage of the drop in prices, and despite the extra-profit taxes that were imposed, we could see quite impressive figures for the giants, including MOL

All-time profit booked last year

In terms of profit, despite the loss in the last quarter, the Hungarian oil company achieved a historic record in 2022, Portfolio adds.

Of course, the result was not at all surprising, since in the second and third quarters we had figures that required our graphs to be rescaled twice both times.

However, 2023 – fortunately – will start much more quietly and calmly on the energy market than last year, in this environment of falling energy prices described above, MOL has now published its first quarterly quick report of this year.

A significant part of last year’s income tax expenses was accounted for in the fourth quarter of the company, which is mainly why Q4 was unprofitable – now in this regard, a much smaller amount was booked in the first quarter.