Hungarian oil and gas company MOL Nyrt. (MOL.BU) said Thursday that its unadjusted net result swung into a profit in the first quarter of this year from a significant loss a year earlier as a result of a dramatic shrinkage in its net financial loss.

MOL's bottom line swung to an unadjusted profit of 19.01 billion forints ($84.7 million) in the first quarter of this year, from a loss of HUF114.82 billion a year earlier, in line with the median profit forecast of HUF20 billion given in a portfolio.hu poll.

Diluted, unadjusted earnings were HUF267 per share, versus a loss of HUF1,395 per share in the same period of 2009, and down from HUF443 in the previous quarter.

The net loss on financial operations shrank to HUF23.47 billion in the first three months of the year, from HUF147.13 billion a year earlier, as currency revaluation-related losses fell sharply.

The unadjusted operating profit fell to HUF59.48 billion from HUF67.41 billion a year earlier while the consolidation of Croatian subsidiary INA from the second half of last year onward boosted operational results of this year's first quarter significantly.

At the same time, the operating profit, excluding special items, more than doubled from the previous quarter, and rose 12% from a year earlier, to HUF59.7 billion, as a result of the slightly improving external environment and increasing efficiency. The profitability increased in all businesses from the previous quarter: the Upstream segment's operating profit improved by 36% on increasing hydrocarbon prices and more favorable production mix, while Gas & Power segment's operating profit increased by 51% when also including the contribution of the gas storage and power business.

Downstream operations almost broke even despite the record-high retail prices, while loss of petrochemical also decreased, MOL added.

"We continued the efficiency improvement in the whole group, whose results have been already reflected in the strong profit," MOL's chairman and chief executive officer, Zsolt Hernadi, said in the earnings release. "We remained committed to keep our strong financial position and the value maximization of our existing portfolio."

Earnings before interest, tax, depreciation and amortization, excluding special items, totaled HUF130.4 billion in the first quarter, up 30% from the previous quarter and 39% from a year earlier.

Excluding INA, Ebitda remained stable, while the operating profit slightly decreased as the improvement in Downstream, Gas & Power and Petrochemical only partly offset the lower Upstream result, MOL said.

Operating cash flow before movements in working capital increased by 35% year-on-year. Operating cash flow, however, turned negative in the first quarter, as a change in working capital decreased funds by HUF204.9 billion as a result of an increase in inventories, trade receivables and other payables, reflecting MOL partly settling INA's overdue tax and other liabilities. Meanwhile, MOL kept its strong financial position with a 36.4% gearing ratio at the end of March 2010, it added.

-By Margit Feher, Dow Jones Newswires; +36-20-925-2364; margit.feher@dowjones.com
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