Downstream

MOL Group’s Downstream division is made up of different business activities that are part of an integrated value chain. This value chain turns crude oil into a range of refined products, which are moved and marketed for household, industrial and transport use. The products include, among others, gasoline, diesel, heating oil, aviation fuel, lubricants, bitumen, sulphur and liquefied petroleum gas (LPG). In addition, it produces and sells petrochemicals worldwide and holds a leading position in the petrochemical sector in the Central Eastern Europe region.

WHAT HAVE BEEN THE MOST IMPORTANT TASKS FOR MOL GROUP DOWNSTREAM RECENTLY?

“One year ago, we formulated our vision how we imagine the future in 2030, and we created an answer for the challenge in the form of the Enter Tomorrow Strategy. With DS2022 Program we make the first big step toward our Strategy. The successful delivery of New and Next DS Programs provide us a strong basis and credit, however DS2022 is not just another efficiency program. While New and NxDSPs targeted mainly a more efficient and extended operation of our Core activity, DS2022 is a transformational program: both the large investments and the enabler actions (incl. Cultural Development and how to value People) target a new operation of our activities. I firmly believe that all the DS2022 goals are equally important and transforming us into a company, where we are the leaders in employee’s engagement, customer satisfaction as well as operational and financial performance.” (Ferenc Horváth – Executive Vice President, Downstream)

2017 HIGHLIGHTS

  • In 2017 Downstream generated HUF 324bn (USD 1.18bn) Clean CCS EBITDA, slightly above last year’s performance, primary due to the exceptionally strong refining macro (the complex margin averaged at USD 7.1 USD/bbl). Organic CAPEX spending came in at USD 478mn as a result the Downstream business delivered a cash-pile of USD 700mn representing 50% of the total group cash-flow.
  • Next Downstream Program, the three-year efficiency program was completed and delivered USD 440mn improvement in the 2015-2017 time horizon.
    • Efficiency actions were executed according to our expectations in the amount of USD 350mn.
    • The fulfillment of Strategic Projects was somewhat lagging behind initial targets.
  • In November 2017 DS2022, a five-year transformational program has been announced, which is the first milestone of the long-term “MOL Group 2030 Enter Tomorrow” strategy.
  • Significant milestones were achieved in the Polyol project: key contracts of technology licenses were signed with Evonik and thyssenkrupp during 2017. Additionally the European Commission endorsed a EUR 131mn regional investment aid for the project that is to be built adjacent to MOL Petrochemical’s existing facilities in Tiszaújváros.
  • Development of organizational culture started in 2017 as part of the Culture2030 Program Roadmap

OUTLOOK FOR 2018–2022

  • DS2022 represents a major milestone towards achieving MOL’s 2030 Strategy. The program aims at enhancing the cashflow generation ability of the business (‘Cash Engine’) and supports the gradual “fuel to chemicals transformation” (‘Rise of Chemicals’). DS2022 is aiming to transform not only our business but also the culture and the way we operate to become the best choice of customers, employees and investors.
  • The DS2022 Program aims to add a total of USD 500mn to Downstream EBITDA by 2022, the program rests on three pillars:
    • “Efficiency gains” mainly intend to improve asset availability and market position improvement with a USD 180mn EBITDA increment target.
    • “Strategic projects”: USD 180mn EBITDA is expected to be added from large capex projects.
    • “Growth”: the polyol project shall deliver a further USD 140mn EBITDA gain.
  • In DS2022 soft and enabler actions are as important as the ones that bring a measurable financial benefit.

KEY FACTS

Segment IFRS results (HUF bn) FY 2017 FY 2016 Restated Ch %
EBITDA 326.5 348.0 (6)
EBITDA excl. spec. items 331.2 348.0 (5)
Clean CCS-based EBITDA 324.3 323.5 0
o/w Petrochemicals 126.8 144.3 (12)
Operating profit/(loss) reported 226.8 247.6 (8)
Operating profit/(loss) excl. spec. items 231.6 252.0 (8)
Clean CCS-based operating profit/(loss) 224.7 227.5 (1)
CAPEX 128.9 110.3 17
o/w organic 128.9 110.3 17
Refinery margin FY 2017 FY 2016 Ch%
Total MOL Group refinery margin (USD/bbl) 6.5 5.7 14
Complex refinery margin (MOL+Slovnaft) (USD/bbl) 7.1 6.3 13
NEW MOL Group petrochemicals margin (EUR/t) 504 543 (7)
External refined product and petrochemical sales by country (kt) FY 2017 FY 2016 Ch %
Hungary 4,660 4,532 3
Slovakia 1,756 1,809 (3)
Croatia 1,956 1,923 2
Italy 1,928 1,931 0
Other markets 9,153 8,861 3
Total 19,453 19,056 2
External refined and petrochemical product sales by product (kt) FY 2017 FY 2016 Ch %
Total refined products 18,040 17,811 1
o/w Motor gasoline 3,820 3,816 0
o/w Diesel 10,044 9,724 3
o/w Fuel oil 581 509 14
o/w Bitumen 468 541 (13)
Total petrochemicals products 1,413 1,245 13
o/w Olefin products 210 190 11
o/w Polymer products 1,122 1,001 12
o/w Butadiene products 81 54 50
Total refined and petrochemicals products 19,453 19,056 2