Investors surprised at extra tax on Hungary's MOL: bank

18 June 2013 16:38  [Source: ICIS news]

LONDON (ICIS)--Hungarian oil, gas and petrochemicals group MOL faces a forint (Ft) 10bn ($46m, €34m) blow to its profitability in 2013 because of an increased royalty on its activities to be extracted by the country's government, a bank said on Tuesday.

“The Ft10bn annual fallout is around 1.7% of MOL's EBITDA [earnings before interest, tax, depreciation and amortisation],” said Robert Rethy, an analyst at WOOD & Company.

MOL will lose the extra proportion of its earnings to the state through an austerity measure that raises the state's mining royalty to 16% from 12%.

“We believe that all these measures are now likely to remain in place indefinitely versus the previously communicated 'temporary' status of some taxes,” added Rethy.

The austerity measure aimed at MOL – one of a number of revenue-generating moves targeted at big companies suddenly announced by Hungary's Viktor Orban government – took investors by surprise, the bank said.

With the European Commission having just recommended that Hungary be allowed out of the EU's excessive deficit procedure (EDP), investors had thought that the government had brought forward enough austerity measures already, it added.

($1 = €0.75, $1 = Ft219, €1 = Ft292)

By: Will Conroy
+44 20 8652 3214

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