Mol Hungarian Oil & Gas Plc Class A · BET:MOL
Mol Hungarian Oil & Gas Plc Class A — MOL Group — Investor Day (February 2021)
53 slides from Mol Hungarian Oil & Gas Plc Class A's investor day presentation, Feb 24, 2021
Slide 1: MOL Group Capital Markets Day
MOL GROUP CAPITAL MARKETS DAY 24 February 2021
Slide 2: MOL 2030+ Strategy Update & Sustainability
MOL 2030+ STRATEGY UPDATE & SUSTAINABILITY
Slide 3: MOL has a transformation plan among the most explicit responses (WSJ)
„MOL HAS A TRANSFORMATION PLAN THAT IS AMONG THE MOST EXPLICIT RESPONSES…” (WSJ, NOVEMBER 28, 2016) 3
Slide 4: MOL 2030 – We set the right strategy in 2016
MOL 2030 – WE SET THE RIGHT STRATEGY IN 2016 MOL 2030+ We set the We delivered We need to right strategy on our interim speed up in 2016 promises transition 4
Slide 5: We set the right strategy in 2016
WE SET THE RIGHT STRATEGY IN 2016 TODAY TOMORROW Significantly reducing motor fuel yield FROM FUELS Becoming the leading CEE chemicals company TO CHEMICALS FROM FUEL Becoming a true consumer goods retailer TO CONSUMER RETAILING Leading the revolution of transport in CEE GOODS/MOBILITY TO 100% reserv
Slide 6: We delivered on our interim promises
WE DELIVERED ON OUR INTERIM PROMISES INTERIM TARGETS 2017-2020 STATUS DS2022 EFFICIENCY DELIVERED USD 110MN IN 2018, DOWNSTREAM EFFICIENCY ADDED USD 40MN IN 2019 ENTER NEW CHEMICAL POLYOL PROJECT REACHED 75% COMPLETION, PRODUCT LINE(S) COVID-RELATED DELAY IS UNAVOIDABLE FUEL-TO-PETCHEM PREPARATIONS
Slide 7: We need to speed up transition
„We always overestimate the change WE NEED TO SPEED UP TRANSITION that will occur in the next two years THE DIRECTION HAS NOT CHANGED, BUT THE STORY IS ACCELERATING and underestimate the change that will occur in the next ten.” (Bill Gates) Climate Challenge Climate change is a widely accepted chall
Slide 8: MOL 2030+: Unchanged direction, accelerated transition
MOL 2030+: UNCHANGED DIRECTION, ACCELERATED TRANSITION STRATEGY 2030+ We set the We delivered We need to right strategy on our interim speed up in 2016 promises transition KEY DIRECTIONS UNCHANGED… …WITH ADDITIONAL FOCUS ON Downstream transformation: Fuel-to-chemicals Accelerating the transformation
Slide 9: MOL 2030+: Profitably towards net-zero
MOL 2030+: PROFITABLY TOWARDS NET-ZERO ACCELERATED LOW-CARBON TRANSITION 9
Slide 10: ESG: Climate/CO2 in focus, but all stakeholders matter
ESG: CLIMATE/CO2 IN FOCUS, BUT ALL STAKEHOLDERS MATTER BOTTOM LINE AND SUSTAINABILITY ARE NOT MUTUALLY EXCLUSIVE CLIMATE/CO2 TARGETS OTHER STAKEHOLDER-RELATED TARGETS Reducing group-level Scope 1+2 emissions by 30% by 2030 CLIMATE & New waste management and water reservation ENVIRONMENT* strategy Do
Slide 11: Sector-leading ESG ratings
SECTOR-LEADING ESG RATINGS TOP POSITIONS ACROSS LEADING ESG RESEARCH, RATING AND INDEX HOUSES INDEXES AND RATINGS DISCLOSURE Leading ESG disclosure through Integrated Reporting using both SASB and GRI for several years Score of 72 (of 100): Top 10% Sole Emerging European company Integrated in 2020 A
Slide 12: Downstream
DOWNSTREAM SHAPE TOMORROW > MOLGROUP
Slide 13: Accelerated downstream transformation
ACCELERATED DOWNSTREAM TRANSFORMATION TO A HIGHLY EFFICIENT, SUSTAINABLE, CHEMICAL-FOCUSED LEADING INDUSTRY PLAYER 2030 directions still valid, sustainability and speed in focus Integrating circular economy technologies into core business, bio- and waste-based streams in production and scaling up re
Slide 14: 2050 Vision: Highly efficient, sustainable, chemical-focused
2050 VISION: HIGHLY EFFICIENT, SUSTAINABLE, CHEMICAL-FOCUSED WE HAVE A LONG-TERM VISION TO BECOME A SUSTAINABLE CHEMICALS COMPANY AND POWERING MOBILITY WITH AN AMBITION TO REDUCE CARBON FOOTPRINT AND STRIVING TO REACH NET ZERO EMISSION SUSTAINABLE CHEMICALS WE ARE THE (CENTRAL) EUROPEAN POWERING CHA
Slide 15: Integrating circular economy into our core business
INTEGRATING CIRCULAR ECONOMY INTO OUR CORE BUSINESS INTEGRATING BIO- AND WASTE-BASED STREAMS IN PRODUCTION AND SCALING UP RECYCLING In our feedstock… …in our operations… …in our product portfolio Refinery Sustainable Fuels Industry (e.g biofuels, hydrogen, biogas, electricity) Renewable Homes Electr
Slide 16: 2030 directions still valid, sustainability and speed in focus
2030 DIRECTIONS STILL VALID, SUSTAINABILITY AND SPEED IN FOCUS KEY PILLARS OF THE 2030 STRATEGY REMAIN INTACT 2030 Target Keep market share across the 2020s and harvest existing position EFFICIENCY & USD 1.2+bn Push for efficiency: to be among the most efficient refiners in Europe PROFITABILITY EBIT
Slide 17: Boosting efficiency to be among the best refiners in Europe
BOOSTING EFFICIENCY TO BE AMONG THE BEST REFINERS IN EUROPE FOSSIL FUELS WILL REMAIN PROFITABLE IN THE 2020S; MORE EFFICIENCY = ACCELERATED TRANSFORMATION Fossil fuels to be dominant and profitable across the 2020s 1st quartile in HARVEST MARKET Defend market share and profitability on our core mark
Slide 18: Two-waves plan to convert 1.8 mtpa fuels into chemicals
TWO-WAVES PLAN TO CONVERT 1.8 MPTA FUELS INTO CHEMICALS USING HIGHLY EFFICIENT TECHNOLOGIES AND TARGETING 2027 AND 2030 START-UPS Step 1 Select site & technology onstream USD 0.7-1.2 bn F2C 0.5-1.0 mtpa focus on gasoline conversion Screening of Shortlisted 25+ 3 Step 2 USD 1.0-1.5 bn technologies te
Slide 19: Reducing CO2 footprint by 20% and integrating waste
REDUCING CO2 FOOTPRINT BY 20% AND INTEGRATING WASTE FROM ADVANCED BIOFUEL PRODUCTION THROUGH WASTE-TO-CHEMICALS INTEGRATION TO CARBON CAPTURE 2030 Target Reducing CO2 emissions, striving for net zero by 2050 MINIMIZE -20% CCS1 solutions on core sites for up to 1.4 mtpa of CO2 in joint FOOTPRINT Scop
Slide 20: Beyond-Polyol: smaller value chain extension projects by 2030
BEYOND-POLYOL: SMALLER VALUE CHAIN EXTENSION PROJECTS BY 2030 CAPEX DISCIPLINE PROMPTED TO DEPRIORITIZE BIG TICKET DIVERSIFICATION INVESTMENTS FOR NOW 2030 Target Additional USD LARGE-SCALE Polyol: 75% completion, start-up planned for H2 2022, gradual ramp-up INVESTMENTS 150+ mn Other large-scale di
Slide 21: USD 4.5bn modular transformation – indicative roadmap
USD 4.5BN MODULAR TRANSFORMATION – INDICATIVE ROADMAP RETAINING A LEADING POSITION AND GENERATE ATTRACTIVE RETURN IN THE 2020S WHILE TRANSFORMING 2022 2024 2026 2027 2030 POLYOL PROJECT SOLVENT BASED METATHESIS 1ST STEP FUEL TRANSF. 2ND STEP FUEL TRANF. (220 KTPA) RECYCLING SCALE UP (100 KTPA) (0.5-
Slide 22: Increasing EBITDA to cover strategic capex in 2021-25
INCREASING EBITDA TO COVER STRATEGIC CAPEX IN 2021-25 DOWNSTREAM TO GENERATE POSITIVE SIMPLIFIED FCF IN 2021-25 AT CONSERVATIVE MID-CYCLE MACRO EBITDA, CAPEX AND FCF 2021-2025 (USD BN) COMMENTS Ref margin: Downstream to deliver significant EBITDA growth +1 USD/bbl +USD 0.9-1.0bn from USD 0.7-0.8bn t
Slide 23: Consumer Services
CONSUMER SERVICES SHAPE TOMORROW > MOLGROUP
Slide 24: Become a digitally-driven consumer goods retailer and mobility provider by 2030
BECOME A DIGITALLY-DRIVEN CONSUMER GOODS RETAILER AND INTEGRATED, COMPLEX MOBILITY SERVICE PROVIDER BY 2030 Regional leader in fuel Continuous improvement Diversification of and convenience retailing of operational efficiency sales channels Organic expansion of the network Strong standardization and
Slide 25: Consumer Services will reach USD 700+ mn EBITDA by 2025
CONSUMER SERVICES WILL REACH USD 700+ MN EBITDA BY 2025 TOTAL GROSS MARGIN TO GROW AGAIN BY AROUND 50% IN THE NEXT FIVE YEARS FUEL AND NON-FUEL MARGIN CONTRIBUTION (USD MN) 2016 2020 2025 ~50% EBITDA (USD) 307mn 508mn 700+mn ~1,450 ~200mn CAPEX (USD) 220mn ~130mn (5-year avg.) 33% FCFF (USD) 49% - ~
Slide 26: Strengthening CEE leadership in fossil fuel retailing
STRENGTHENING CEE LEADERSHIP IN FOSSIL FUEL RETAILING THROUGH INCREASING MARKET SHARE AND UPGRADED PORTFOLIO FUEL VOLUMES (BN LITERS) STRENGTHENING LEADING POSITION IN CEE CAGR CAGR 4% -10% 6% Strengthened regional market-leading position, ~7,300 increasing the market share by 1ppt annually 5,548 5,
Slide 27: Expanding the alternative fuel portfolio
EXPANDING THE ALTERNATIVE FUEL PORTFOLIO TO COMPENSATE THE SHRINKING OPPORTUNITIES IN FOSSIL FUELS BEYOND 2025 2016-2020 2021-2025 Beyond Foundations Accelerating 2025 in EV- growth and Step charging pilots change Capability and knowledge building Build additional presence in the Significant investm
Slide 28: Further development in food and convenience offerings
FURTHER DEVELOPMENT IN FOOD AND CONVENIENCE OFFERINGS BY BUILDING ON OUR OWN FMCG CAPABILITIES NON-FUEL SALES (USD MN) IMPROVING FMCG CAPABILITIES CAGR Increase gross margin contribution of consumer +10% ~1 900 goods to 35% and improve unit margin to reach 25% by 2025 driven by finalizing the Fresh
Slide 29: Diversification of sales channels
DIVERSIFICATION OF SALES CHANNELS THROUGH DIGITAL TRANSFORMATION AND FRANCHISE OPERATION 2016-2020 2021-2025 Beyond Digital and 2025 Synergies & data-driven platform Step operation building change Supporting traditional loyalty Start personalizing retail customers’ Integrate retail and mobility to s
Slide 30: Mobility services to grow further
MOBILITY SERVICES TO GROW FURTHER AND EXPLOIT SYNERGIES THROUGH DIGITAL PLATFORMS 2016-2020 2021-2025 Beyond Start and 2025 Synergies & capability platform Step building building change Capabilities built in B2C and B2B Mobility as a Service: Offering seamless, digitally customer brands Explore the
Slide 31: Sustainability goals
SUSTAINABILITY GOALS Carbon neutrality by 2030: renewable energy c to cover the consumption of the service station network, including the EV chargers Carbon offsetting initiatives Conscious waste management Extensive use of recyclable materials (e.g. coffee cups) at Service Stations 31
Slide 32: ~USD 2.3bn simplified FCF in 2021-25
~USD 2.3BN SIMPLIFIED FCF IN 2021-25 RISING EBITDA TO YIELD HIGHER SIMPLIFIED FREE CASH FLOW IN 2021-2025 2016-2020 STRATEGIC ACTIONS EBITDA AND FCF IN 2021-2025 (MN USD) DRIVERS 3,300 100 100 Increasing gross margin 200 contribution of consumer goods 700 from 27% in 2020 to ~33% by 2025 Expansion o
Slide 33: Exploration & Production
EXPLORATION & PRODUCTION TOMORROW > MOLGROUP
Slide 34: Strong cash generation and investing in CCUS
STRONG CASH GENERATION AND INVESTING IN CCUS Managed decline in CEE Opportunistic and active management of the international portfolio Become net carbon neutral on Scope 1 and 2 by 2030 on a portfolio level Look for Carbon Capture, Utilization and Storage (CCUS) opportunities to leverage geological
Slide 35: We delivered our 2017-2021 SFCF guidance in just 4 years
WE DELIVERED OUR 2017-2021 SFCF GUIDANCE IN JUST 4 YEARS STATUS ON DELIVERY OF 2017-2021 SFCF GUIDANCE PRICE REALIZATION, EBITDA, SIMPLIFIED FCF* 2030 STRATEGY ASPIRATIONS VS ACTUAL (USD BN) (USD/BOE) 71 Strong delivery of 64 2021 Plan production performance ~2.2 – 2.4 and cash cost discipline 54 42
Slide 36: E&P 2030 vision
E&P VISION: NET ZERO BY 2030, OPPORTUNISTIC APPROACH IN INTERNATIONAL E&P AND MANAGED DECLINE IN CEE CLIMATE STRATEGY Net-zero until 2030 (Scope 1 and Scope 2) EOR opportunities and CCUS pilot project E&P 2030 CEE VISION Transform the largest Pannonian oil and gas producer into the largest Pannonian
Slide 37: Keeping unit OPEX in the range of USD ~6-8/boe
KEEPING UNIT OPEX IN THE RANGE OF USD ~6-8/BOE UNIT DIRECT PRODUCTION COST (USD/BOE) 2015-2016 2017-2019 2020 2021-2025 10 Keep unit direct production 9 cost in competitively low range 8 Further efficiency Guidance: 7 USD ~6-8/boe measures in mature assets 6 Keep continuous cost 5 control over inter
Slide 38: Production guidance is ~90-110 mboepd for 2021-2025
PRODUCTION GUIDANCE IS ~90-110 MBOEPD FOR 2021-2025 2021-2025 PRODUCTION GUIDANCE (MBOEPD) CEE – WE HAVE TO RUN FAST TO STAND STILL Production Optimization and efficiency to mitigate baseline 120 ~90-110 decline ~10 mboepd 18 Potential addition Surface facility simplification from PL820 ~15-20 (Norw
Slide 39: USD ~1.8bn SFCF to be delivered in 2021-2025
USD ~1.8BN SFCF TO BE DELIVERED IN 2021-2025 EBITDA, CAPEX AND FCF* (USD BN) KEY MESSAGES Sensitivity: USD 10/bbl change in oil price USD 1.8bn pre-tax and USD 1.3bn post- resulting in USD ~0.8bn effect on EBITDA tax FCF to be delivered by E&P in 2021- (cumulative 2021-25) 2025 3.9 Strong cost contr
Slide 40: USD ~1.9bn capex to be spent in 2021-2025
USD ~1.9BN CAPEX TO BE SPENT IN 2021-2025 2021-2025 CAPEX SPENDING* CEE Brownfield developments in Hungary USD ~1.9bn Ramp-up of Croatian offshore campaign Sustain & Shallow gas and offshore exploration in Hungary and Croatia 14% Other Other 28% International INTERNATIONAL ACG/ACE will be the single
Slide 41: We target net zero Scope 1 and 2 emission by 2030
WE TARGET NET ZERO SCOPE 1 AND 2 EMISSION BY 2030 2019 CO2 EMISSION WHERE ARE WE? MOL E&P has 30+ years experience in Hungary and 10+ years in Croatia 0.9MT CO2E in CO2 storage; established regulatory framework and valuable operational experience (Scope 1 + Scope 2) MOL follows internationally recog
Slide 42: Financial Framework
FINANCIAL FRAMEWORK SHAPE TOMORROW > MOLGROUP
Slide 43: A conservative mid-term base macro framework
A CONSERVATIVE MID-TERM BASE MACRO FRAMEWORK AND RISING CARBON PRICE ASSUMPTION KEY MACRO ASSUMPTIONS CCS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity Est. Clean CCS EBITDA % of Group 2018 2019 2020 9Y AVG 2021-25E impact (USD mn) EBITDA 2021E Brent crude 40-60 +/- 10 USD/bbl 71 64 42 72 ~
Slide 44: MOL carbon footprint and ETS emissions
MOL CARBON FOOTPRINT AND ETS EMISSIONS CARBON FOOTPRINT (MN TONS) SCOPE 1 UNDER ETS (MN TONS) COMMENTS 71 Scope 3: accounts for 90% of the total 69 CO2 footprint of MOL Sold fuel is responsible for 90% of 67 total Scope 3 62 Around 90% of Scope 1 emissions falls Scope 3 61 under the ETS 59 62 Downst
Slide 45: Higher carbon prices: how it may matter
HIGHER CARBON PRICES: HOW IT MAY MATTER EUROPE MAY SEE A POTENTIALLY COMPLETELY REVAMPED CARBON PRICING REGIME SOON ETS, CARBON PRICING, BORDER TAX ADJUSTMENT EU27 GHG EMISSIONS BY SECTOR (CO2E)* MOL’s 2030 carbon price assumption is EUR 100/t – all investment Total: ~4,400mn tons decisions will be
Slide 46: EBITDA to increase to around USD 2.6bn by 2025
EBITDA TO INCREASE TO AROUND USD 2.6BN BY 2025 DRIVEN BY DOWNSTREAM PROJECTS AND CONSUMER SERVICES GROWTH EBITDA GUIDANCE CLEAN CCS EBITDA (USD BN) COMMENTS FOR 2021-25E (USD BN) EBITDA will gradually increase in the next 5 years to around/above USD 2.7 ~2.6 2.6bn by 2025, driven by 2.4 2.4 ~2.3 con
Slide 47: EBITDA bridge: from 2020 through 2021E to 2025E
EBITDA BRIDGE: FROM 2020 THROUGH 2021E TO 2025E EBITDA EVOLUTION: EXTERNAL AND INTERNAL DRIVERS (USD MN) COMMENTS 100 -250 EBITDA from 2020 to 2021 200 driven primarily by macro assumptions ~2,600 250 (recovery) internal factors broadly 80 -50 offset each other 100 ~2,300 120 2,048 EBITDA from 2021
Slide 48: Sustain capex to be kept around USD 1.1bn in 2021-25
„SUSTAIN” CAPEX TO BE KEPT AROUND USD 1.1BN IN 2021-25 SUSTAIN CAPEX (USD BN) COMMENTS 1.3 2020 is not a „normalized” year, as sustain capex declined materially in 2020, as a 1.1 ~1.1 0.4 response to the crisis (delayed projects, 1.0 lower maintenance) 1.0 0.9 0.3 ACG added around USD 100-200mn anna
Slide 49: At least USD 3.5bn strategic capex in 2021-25
AT LEAST USD 3.5BN STRATEGIC CAPEX IN 2021-25 TO FUND THE DOWNSTREAM TRANSFORMATION AND NEW, LOW-CARBON BUSINESSES STRATEGIC/TRANSFORMATIONAL CAPEX IN 2021-25 COMMENTS USD 3.5bn Even with a conservative mid-term macro set, in the 2021-25 period at least USD 3.5bn capex (around USD 700mn annually) wi
Slide 50: Fully funded transformation and base dividends in 2021-25
FULLY FUNDED TRANSFORMATION AND BASE DIVIDENDS IN 2021-25 EVEN AT CONSERVATIVE MACRO ASSUMPTIONS FINANCIAL FRAMEWORK PROJECTIONS FOR 2021-25 (USD BN)1 COMMENTS Even with conservative macro 12.0 assumptions sufficient cash (~USD 12bn) will be generated in the next 5 years to fund -5.5 „sustain” capex
Slide 51: Dividend has a placeholder in the 2021-25 financial frame
DIVIDEND HAS A PLACEHOLDER IN THE 2021-25 FINANCIAL FRAME PROVIDING A FAIR RETURN TO SHAREHOLDERS IS AN INTEGRAL PART OF THE TRANSITION STORY DIVIDEND PER SHARE1 (HUF) 3.5% 3.0% 2.9% Up to Dividend 3.3% 3.0% +2% +1.5% +1.5% 5% yield2 Special dividend 48 Regular dividend 43 95 An up to 5% share 78 85
Slide 52: Robust balance sheet with ample financial headroom
ROBUST BALANCE SHEET WITH AMPLE FINANCIAL HEADROOM RETAINING FINANCIAL STRENGTH AND FLEXIBILITY IS A PRIORITY NET DEBT TO EBITDA (X) COMMENTS An overriding principle of financial management is to 2.5 ensure operations remain cash positive even under stress, at the bottom of the cycle (as in 2020) 2.
Slide 53: Disclaimer
DISCLAIMER "THIS PRESENTATION AND THE ASSOCIATED SLIDES AND DISCUSSION CONTAIN FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NATURALLY SUBJECT TO UNCERTAINTY AND CHANGES IN CIRCUMSTANCES. THOSE FORWARD-LOOKING STATEMENTS MAY INCLUDE, BUT ARE NOT LIMITED TO, THOSE REGARDING CAPITAL EMPLOYED, CAPIT