Highlights of the challenges of 2009 and our responses
In 2009 the oil and petrochemical sectors faced an extremely challenging external environment characterized by weak margins and depressed demand. Thanks to our early answer to the crisis, our well-recognized efficiency leadership and integrated business model we managed to keep our strong financial position.
We were among those companies which reacted immediately following the first signs of the crisis and adjusted our operational activities to cope with the increasingly difficult environment. We implemented a range of cost reduction measures to extend our leadership in efficiency, the benefits of which were reflected in 2009 results.
FY 2009 EBITDA, excluding special items, increased by 11% to HUF 384.9 bn despite the deteriorating diesel crack spreads, petrochemical margins and the 31% lower average hydrocarbon prices. Upstream segment improved by 32%, Gas & Power was extremely strong (up by 54%), more than offsetting weaker Downstream and Petrochemical results.
In 2009, we remained disciplined to our reduced CAPEX plan, and financed it through the operating cash flow, which rose compared to the previous year, proving MOL’s strong cash producing ability. Even with the full consolidation of INA, our gearing ratio decreased further at the end of 2009 compared to the end of the previous year, as we managed to preserve our strong balance sheet.
In addition, we created a strong basis for further growth by gaining management control and full consolidation of INA as of 30 June 2009. MOL’s Upstream portfolio became more extended, diversified and balanced with practically doubling its SPE 2P reserve base as of the end of 2009 and significantly increasing its production. The operational control over INA since 2009 brought two refineries to MOL’s refinery pool, and so total capacity increased to 23.5 mtpa. The five refineries operated under joint supply-chain optimisation on adjacent markets provide outstanding further growth opportunity.
Our main goal for the coming years is to keep our financial stability, improve the efficiency and maximise the value of our existing portfolio. Regarding Upstream business the focus will be on completing high return/early cash generative appraisal and development projects in Syria, CEE, Pakistan, Kurdistan and Russia to increase production levels, contributing significantly to Group-level EBITDA. At the same time, we intend to extend MOL’s outstanding efficiency to the whole Upstream portfolio. Finally, we are carrying out extensive and intensifying exploration activity to further increase our reserve base and create the basis for further production growth beyond 2013.
Regarding the Downstream business MOL Group’s main goal is to become the premium refinery group in Europe by 2012. The Group is committed to elevate newly consolidated assets to MOL standard with investments targeting product quality and yield improvement. MOL is focusing on joint optimisation of 5 refineries and 2 petrochemical units and is committed to extend its outstanding operational excellence to the whole Group.
