Strong HUF and low tax rate boosted profit BUT EBITDA missed consensus

MOL significantly beat consensus on profit level by 94% thanks to lower tax rate
and better financial expenses (low quality beat), but missed the consensus on CCS
EBITDA (-8%) on slowing CEE macro. CCS EBITDA of Downstream and Upstream arrived
lower than anticipated by 16% (- 55m USD) and 12% (-40m USD), while consumer service
and midstream were better than consensus by 25% (+25m USD) and 53% (+27m USD).
o We think it is a low quality beat on profit, and market will focus on the weaker
macro fueled lower EBITDA.

o Key positives:
1. MOL’s net debt level came lower, the company has barely any net debt.
Gearing stood at 6.3%, and net debt to EBITDA 0.16x. A few more quarter and
MOL will be in a net cash position!
2. Thanks to the boost in net financials and lower than expected tax rate (18% vs.
expected 27%) Q1 EPS was very strong (HUF 203 vs. cons. Of HUF 112)
3. Despite the weaker macro simplified FCF was flat y-o-y and q-o-q at USD
517m on lower CAPEX
o Key negatives:
1. Motor fuel demand contracted by 14% in Hungary YoY during the Q1 period
since the price cap boosted consumption in the base period
2. Refining margin further deteriorated in April to 3.4 USD/bbl from 9.9 USD/bbl in
Q1
3. No news on ex-div date

MOL delivered worse than expected CCS EBITDA (-8%) and higher profit because
of favorable tax and net financial components which led to very strong EPS (HUF 203). We
think that the weak HU macro (fuel sales in HU -14% y-o-y; total group fuel sales – 6% yo-y) should dominate Q1 related headlines not the non-recurring tailwind from below EBIT
components.