Mol Drops to 4 1/2-Year Low as Output Target Cut: Budapest Mover

Mol Nyrt. slumped to a 4 1/2-year low as Hungary’s biggest refiner cut its long term oil-output target after fourth-quarter profit unexpectedly fell.

The stock dropped as much as 4.3 percent before closing 3.6 percent lower at 13,100 forint in Budapest, the lowest level since July 2009. The volume of shares traded was almost three times the three-month daily average. Hungary’s 12-member BUX Index fell 2.6 percent, led by Mol.

The company cut its output estimate to 125,000 barrels of oil per day at peak production in 2018 from as much as 180,000 barrels, it said on its website today. Mol’s shares have plunged 25 percent over the past 12 months as narrowing margins among European refiners and a dispute over management rights in its Croatian unit weighs on profitability. That compares with a drop of 5.7 percent in the BUX.

Mol’s “wells are drying up” and this may be reflected in the company’s assessment, Attila Vago, an analyst at Concorde Securities, Hungary’s largest broker, said by phone. The refiner has halved its Kurdistan output estimate, which has a “grave impact on valuation as Kurdistan has been the upside,” he said.

Net income in the fourth quarter declined to 4.9 billion forint ($21.8 million) from 9.5 billion forint a year earlier, Mol said today. Profit was forecast to rise to 13.4 billion forint, according to a Bloomberg survey.

The earnings and production outlook are “a big negative,” Concordes’s Vago said, adding he may review the overweight recommendation he has on Mol’s shares.

Seven analysts recommend buying Mol’s shares, three have a sell rating and five say hold, data compiled by Bloomberg show.

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