Exceeding Strategic Targets Set for 2005

The Group's net profit increased up to HUF 245,4 bn (USD 1.228,8 mn), primarily reflecting the outstanding international operating performance. Operating profit increased by HUF 56,6 bn to HUF 305,5 bn (USD 1.529,8 mn). In 2005 EBITDA was HUF 426,0 bn (USD 2,1 bn), more than double of the strategic target set in 2002, i.e. USD 1 bn.

In 2005 EBITDA was HUF 426,0 bn (USD 2,1 bn), more than double of the strategic target set in 2002, i.e. USD 1 bn. Operating profit increased by HUF 56,6 bn to HUF 305,5 bn (USD 1.529,8 mn) supported by previous years’ investments in improving the quality of downstream assets, favourable product slate and higher product sales volumes, strong commodity prices and increased international crude oil production.  While profit earned in Hungary increased by 10%, our profit from international operations could grow by more than 40% reflecting the increasing role of our activities abroad. The Group’s net profit increased up to HUF 245,4 bn (USD 1.228,8 mn), primarily reflecting the outstanding international operating performance, which was partially compensated by higher financial expenses, dominantly due to effects of loss on foreign exchange denominated debt in 2005, compared to the foreign exchange gain in 2004.

Exploration-Production operating profit in 2005 increased by HUF 51,1 bn up to HUF 105,3 bn (USD 527,3 mn), as a strong increase in international crude production and higher transfer prices compensated for the lower domestic hydrocarbon production, increasing royalty charges on Hungarian and Russian operations and the impairment on certain domestic fields

Refining and Marketing contributed operating profit of HUF 178.4 bn (USD 893.3 mn), an increase of 12% (in USD terms 14%) over 2004, supported by higher sales volumes, higher motor fuel crack spreads, benefits from integrated Group operations and the positive effect of inventory holding.

The Petrochemical segment’s operating profit increased to HUF 19.1 bn (USD 95.6 mn) in 2005, compared to a HUF 18.9 bn (USD 93.3 mn) profit in 2004. Operational result was positively influenced by the higher sales from the new capacities and the efficiency improvement measures. However, these effects were negatively impacted by the unfavourable changes in the business environment in the second half of 2005

Natural gas storage and transmission segments could realise the regulated profit on assets, whereas the natural gas wholesale operating profit decreased by HUF 15.9 bn in 2004 to HUF 5.1 bn in 2005, as regulatory price increases did not compensate for a steep rise in import gas prices.