WOOD Flash – MOL: updated strategy for 2030E

MOL has updated its strategy for 2025-30E, with a strong focus on reducing its carbon footprint and continuing the shift to more sustainable businesses. Over the period, MOL expects to invest USD 11.6bn, of which USD 6.5bn for business continuity (sustain) investments and USD 5.1bn for strategic (growth) investments. Downstream continues to be the largest area of investment, with upstream and consumer services in second and third place, respectively. Even at very conservative estimates for the macro conditions, MOL expects to meet its investment and dividend needs from its free cash flow, and forecasts a base dividend per share of about HUF 160 per year. This is a worst-case scenario, and we would expect special dividends to be paid on top, depending on the macro conditions. At what we regard as mid-cycle average assumptions, we forecast about HUF 200/share above this, on average, throughout the period. Upstream production is to be maintained at 90,000 boe/day and provide cash flow to the other businesses. Downstream is focusing on decarbonisation and increasing the circularity in petrochemicals. At mid-cycle margins, management expects USD 1.2bn in CCS EBITDA per annum. By 2030E, management expects USD 1.0bn in EBITDA from the consumer services segment, and 10m active loyalty programme customers. By 2030E, MOL expects to be using 1.5 mtpa of waste from its waste management business, as feedstock for recycling, biofuels, or waste to energy. Low carbon businesses, including geothermal and lithium production, will begin operations during the period, albeit on a very small scale. MOL targets a 25% decline in scope 1 and 2 emissions by 2030E, compared to the base year of 2019. The strategy update only fine tunes what we knew already, but the financial projections are positive. Effectively framed as a worst-case scenario, they show how MOL can continue investing in transforming its business and reliably distributing cash to shareholders, under all likely conditions, without the need to add debt to the balance sheet.