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Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

Scope performs periodic reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the periodic review.

Periodic reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each periodic review on its website.

Scope completed the periodic review for MOL Nyrt. and its financing subsidiary MOL Group Finance Zrt. (issuer ratings: BBB-/Positive; short-term debt ratings: S-2; senior unsecured debt ratings: BBB-) on 17 February 2025.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Business risk profile: BB+ (unchanged). MOL’s business risk profile reflects its integrated business model, its competitive downstream portfolio and exposure to the regulated gas transportation business (midstream). Challenges include its dominant exposure to volatile energy prices, refining and petrochemical margins, small upstream operations, moderate geographical diversification, significant dependence on Russian oil and gas supplies, potential changes in environmental regulation and demand patterns (ESG: credit-negative environmental and social risk factors), ongoing regulatory interventions as well as some uncertainty regarding its ownership of the oil and gas company INA-Industrija nafte d.d.

MOL is working on the diversification of oil supplies and made some progress in 2024. However, the pace of infrastructure upgrades remains slow, and the company now expects them to be completed in 2026. Scope also notes that in September 2024 MOL concluded agreements with crude oil suppliers and pipeline operators to secure the continuous transportation of crude oil on the Druzhba pipeline through Belarus and Ukraine, to Hungary and Slovakia.

MOL’s profitability remains solid overall. Despite further moderation in energy prices and still challenging petrochemical markets, the overall Scope-adjusted EBITDA* margin is likely to benefit from a gradual reversal of regulatory interventions and Scope expects it to stabilise around 12%-13%.

Financial risk profile: BBB+ (unchanged). MOL’s financial risk profile is supported by strong leverage and very strong interest cover and is constrained by a moderate cash flow cover.

Despite moderating commodity prices and margins, ongoing regulatory intervention, high income tax and dividend payments, MOL’s leverage as measured by Scope-adjusted debt/EBITDA is likely to remain below 2x in the next couple of years supported by a solid cash generation. Scope expects the interest cover to remain at a comfortable level of well above 10x, mainly due to a moderate level of interest-bearing debt with largely fixed interest rates. Free operating cash flow/debt, additionally affected by significant investment spending and working capital swings, is likely to remain below 20%.

Liquidity: adequate (unchanged). MOL’s liquidity remains adequate, supported by available cash and cash equivalents of around HUF 268bn as of September 2024, committed undrawn credit lines of around HUF 884bn (maturing over 2026-2028) and positive free operating cash flow.

Supplementary rating drivers: credit-neutral (unchanged). Scope has made no rating adjustments related to financial policy, governance and structure, parent support, or peer group considerations.

One or more key rating factors are considered an ESG factor.

Outlook and rating sensitivities

The Positive Outlook reflects Scope's expectation of robust operating performance despite some moderation in commodity prices, which are still seen as supportive to keeping debt/EBITDA below 2.0x over the next few years. The Outlook also reflects MOL's reduced exposure to energy supply disruptions from Russia and a gradual reversal of regulatory interventions.

The upside scenarios for the ratings and Outlook are (collectively):

1. if the vulnerability to energy supply cuts from Russia decreased substantially;
    
2. the company maintained its good credit metrics, with debt/EBITDA at around or below 2.0x on a sustained basis.

The downside scenario for the ratings and Outlook is:

1. deterioration in credit metrics, e.g. if expectations about a debt/EBITDA at or below 2.0x were not met on a sustained basis. This could be due to interrupted hydrocarbons supplies from Russia, weak commodity prices/margins for a prolonged period or material debt-financed M&A activities.

Debt ratings

The rated debt is issued by MOL Nyrt. and its financing subsidiary MOL Group Finance Zrt. Debt issued by the financing subsidiary benefits from an unconditional and irrevocable guarantee by MOL Nyrt.

Senior unsecured debt is rated BBB-, the same level as the issuer rating.

The short-term debt rating of S-2 reflects MOL’s underlying issuer rating of BBB-/Positive and is backed by the company’s solid short-term liquidity cover and conservative liquidity management. The rating is further supported by well-established banking relationships.

*All credit metrics refer to Scope-adjusted figures.

The methodologies applicable for the reviewed ratings and/or rating Outlooks (General Corporate Rating Methodology, 14 February 2025; Oil and Gas Rating Methodology, 19 December 2024) are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Marlen Shokhitbayev, Senior Director

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