Mol Sees Growing Dividends as Reliance on Motor Fuels Declines

  • Board approves corporate long-term strategy through 2030
  • Mol to boost share of non-fuel products, petchem investments

Mol Nyrt. expects to steadily increase payouts to shareholders as part of a long-term strategy that sees the Hungarian refiner focusing more on chemicals and less on motor fuels than in the past.

While the Budapest-based company still aims to augment its fuel market share in central and eastern Europe, it also plans to boost the ratio of non-motor fuel products. Investment in petrochemicals will also rise in the next decade and a half, according to the strategy published on the website of the Budapest Stock Exchange on Friday.

Hungary’s second-largest listed company, which owns more than 2,000 filling stations in central and eastern Europe, scaled back investment plans and cut operating costs earlier this year after a slide in oil prices. The new strategy envisages Mol gradually investing in new business directions that will generate about 10 percent of the group’s earnings before interest, taxes, depreciation and amortization by 2030.

"We will further diversify and expand our petrochemicals portfolio with the aim to become a leading chemical group," Chairman Zsolt Hernadi said. "Likewise, we will not simply sell fuel through our retail network."

Petchem Expansion

The company, which expects to operate sustainably even at oil prices below $50 per barrel, aims to "steadily" increase its annual nominal dividends and also supports a higher liquidity and free float of its shares, it said.

"Investors will probably focus on the positive dividend plans from the complex strategy and will take the news well," analysts at Budapest-based brokerage Equilor wrote in an e-mailed report.

Mol paid 567 forint per share in dividend after 2015 earnings, compared with 485 forint in the previous year. The shares rose 0.3 percent to 17,540 forint by 11:10 a.m. in Budapest, extending this year’s advance to 23 percent. That compares with an 18 percent gain in the benchmark BUX index in the same period.

As part of its refining diversification drive, Mol plans to boost the share of non-motor fuel products to above 50 percent by 2030 from below 30 percent. Mol wants to spend about $1.5 billion every five years until 2030 to expand in petrochemicals and chemicals as it targets a petrochemical feedstock intake of 3 million metric tons and plans to enter new product groups.

The strategy targets increasing Mol’s share in the fuels market in the broader CEE region to as much as 30 percent by 2030 from just over 20 percent currently, while transforming its retail business into a “consumer goods and services” platform to ensure that the segment contributes one-third of the group’s EBITDA by 2030.

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