MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság (MOL) Q2 FY2025 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to MOL's Q2 2025 Results Conference Call. My name is Marton Teremi, Head of Investor Relations. The managers representing MOL on today's call are Dr. György Bacsa, Executive Vice President, Group Strategic Operations and Corporate Development; Dr. Ákos Székely, Senior Vice President of Group Planning and Reporting; Mr. Zsombor Marton, Executive Vice President of Upstream; Mr. Gabriel Szabó, Executive Vice President of Downstream; Mr. Péter Ratatics [Audio Gap] Technical Information. We continue to use Microsoft Teams as a platform to hold our conference call. The presentation can be downloaded from our website at molgroup.info. And we will be sharing the slides in Teams too. [Operator Instructions] I would also like to draw your attention to the cautionary statement on Slide #2. And now we can start the content part with Dr. György Bacsa taking us through the highlights of the second quarter.

Good morning, everyone. Thank you for joining the call. Let me start with Page #4. You can see that on first half results and also our message that we uphold our guidance for 2025. So just the main figures. Profit before tax reached $782 million. Clean CCS EBITDA was above $1.5 billion. Our second quarter results reflect the continued slowdown in global and regional economy and also the normalization in oil and gas prices in the industry. But it also shows our strong internal performance, which we were able to counter affect the volatility of the market. The road ahead us is bumpy, but we uphold on our guidance for this year, and we're confident in all aspects. Let me summarize on the next slide, the most important internal developments in the second quarter. On Page 5, you can see the results of the second quarter itself, including the profit before tax at USD 236 million. The Clean CCS EBITDA at $685 million. The operating cash flow after working capital adjustment with USD 1.1 million and our CapEx standing at USD 444 million. I think the internal performance also shows the economic slowdown, shriking margin, but also, for example, in downstream, these were all offset by strong volumes and increase in the performance of the segment itself. Consumer Service EBITDA increased. It's supported by strong season, both fuel and nonfuel side. Circular economy services EBITDA was minus $10 million. It's because of seasonality and some higher expenses. Operational and other developments that I would like to highlight a SOCAR agreement on the exploration in Shamakhi-Gobustan in Azerbaijan where we got 65% stake. I also would remind you that in this quarter, we paid out the HUF 275 dividend per share. We launched a resilience program in downstream to more downstream from which we estimate. And in later slides the Downstream EVP Mr. Szabo will talk about it. We expect continuous or a sustainable efficiency improvement in the magnitude of $0.5 billion, but also in positive EBITDA effect of USD 200 million beyond 2027. We also had a major step on CSR activities. We purchased operating company of the Budapest Technology and Economics university. Now moving to the next slide. For TRIR results, which is slightly above 1.3. So the TRIR at 1.35, for guidance, we keep at 1.3. Most of the injuries are dedicated to slip and trip related, which is directly linked to industry-specific risk and other activities. We also launched several programs to increase awareness and cautious behavior on all our sites and on the road. Thank you for your patience. And now I would like to give the floor to Ákos Székely.

Thank you, György. Let start with the EBITDA evolution of more second quarter results. As usual, the heads of each key segment will provide detailed insight into their businesses. I'll take a moment to address three segments, three areas that fall outside the scope. Starting with gas midstream. The results came in at USD 39 million, year-on-year decrease. Market demand for transmission services remains -- or has been robust during the quarter. However, lower regulated price levels and cost inflation weighed on EBITDA. But that was no surprise as we expected. Regarding the Corporate and Other segment and intersegment elimination, a couple of comments. Let me first highlight the BME transaction, so the University of Technology and Economics had a negative impact of group P&L as the future liability arising over the next 10 years from the transaction was recognized upfront in the balance sheet with the corresponding expenses also recognized. Let me note that the transaction did not affect cash flow in the second quarter and the transaction will impact cash flow gradually along the next 10 years. Beyond transaction effects, we do not expect that BME operation will have a material impact on group financials going forward. Let me highlight that after adjusting for this item, group clean CCS EBITDA amounted to almost 800 -- USD 783 million in the second quarter, more in line with the market consensus. After adjusting for the BME transaction, clean corporate expenses amounted to USD 92 million, which mostly reflects the seasonal expenditures in the second quarter as well as the resegmentation of oilfield services to Upstream segment starting this year. And the third point, this is the Intersegment elimination. Intersegment elimination had a positive contribution to EBITDA of $19 million due to a decrease in the amount of home produced crude oil inventory, leading to lower elimination. Moving to CapEx. The total CapEx amounted to $287 million in the second quarter of 2025. Organic CapEx year-to-date is USD 444 million, lower by 35% year-on-year. The CapEx decrease was driven by less turnarounds in downstream with a sustained type expenditure being lower by roughly USD 100 million in second quarter compared to a year ago. Growth and efficiency CapEx in second quarter was slightly higher year-on-year as spending in upstream continued to be driven by ACG, while the key investment in downstream continued crude diversification and DCU Rijeka and also several smaller petrochemical projects. Inorganic CapEx amounted to $3 million and this is related to Endrod acquisition in Q1, we have been already discussing in the last prior quarter. Clean CCS EBITDA $1.57 billion in the first half of 2025 translated to a net income of $496 million. Regarding the components of the bridge, let's see the details on the next slide. Clean CCS FX showed a negative figure of $74 million in the second quarter, which was due to a lower oil price that led to a negative CCS adjustment, which is partially mitigated by the effect of cleaning of CO2 cost. DD&A was $413 million in the second quarter of 2025, up by $76 million compared to the first quarter. A little less than half of this increase was due to a dollar weakening where other drivers were mostly one-offs at customer services and upstream. However, let me note here that DD&A has been on an increasing trend due to a higher amortizable asset base for the group, affecting pretty much our segment to some degree. There was a gain on financial line of $33 million as the forint depreciated during the quarter. And just a reference, the end of June versus end of March, 8% against U.S. dollar and 1% against euro. This was the appreciation of Hungarian forint. Income from associates amounted to $5 million, mainly driven by the seasonal fluctuation and changes. Also, let me remind you that the last time we discussed that a one-off of $39 million gain in the first quarter from the divestment of more stake in ENEOS. Once adjusting for this impact in the first quarter, the quarter-on-quarter change is positive. Income tax came at $127 million in the second quarter decreased quarter-on-quarter year-on-year although profit before tax drop, effective tax rate was as well above the average. The main reason for this increase is that tax base was finalized when preparing the statutory financial statement in Slovnaft in June, and that resulted in a higher tax expense by $50 million. To remind you, we are not facing solidarity taxation anymore in Slovakia. Moving on, let's look at how our cash flow evolved during the quarter. Net working capital supported the cash flow with the release of $157 million in the first half of the year with the second quarter release of $394 million. This is mostly due to the seasonality as inventories were depleted during the quarter before building stocks for the scheduled turnaround at the end of the summer. Operating cash flow reached $1.135 billion. And finally, let's look the debt position of the group. The net debt level remained stable in the second quarter and slightly over $2 billion after dividend payment, which you can see in the slide, and relatively high cash tax paid, which reflects the strong operating cash generation in the first half of the year and the strength of the balance sheet. Consequently, net debt remained well below our guidance threshold and stands at 0.69x EBITDA. And now I would like to hand over to Gabriel to discuss the Downstream performance.

Thank you very much, Akos, and good morning, everyone. Maybe get to my first slide, please. Thank you very much. So more downstream, please. CCS EBITDA amounted to $307 million in the second quarter, marking a 25% drop year-on-year. On the refining side, EBITDA decreased year-on-year by 9% to $359 million. This performance is mainly due to a slowing economic environment in the region, as mentioned at the very beginning of the call, with fuel market demand shrinking roughly 1% year-on-year in the CE countries. Driven by good availability at our refineries with processed volumes 24% higher, both in Hungary and Slovakia, we increased sales volumes to defend our market shares, and sold volumes were significantly up year-on-year. Regarding petrocrochemicals, as you can see, despite the higher sales, EBITDA amounted negative results of minus $52 million as profitability remained depressed in line with general trends in European industrial demand. Now let's have a closer look at the margins and price environments. Refining margins were down year-on-year to around $6 per barrel from around $7 per barrel a year earlier. The general normalization trend of 2024 seen until the spring of this year was disrupted in the second quarter as geopolitical tensions and other supply side events resulting in widening crack spreads, especially in diesel. This had a positive impact on most refining margins as well, and July figures suggest that it can last for some time. The Brent-Ural spread based on DAP India quotation is slightly narrowed, mainly as a result of higher demand from Turkey and India. Regarding Petrochemicals the margins bounced back in the second quarter, mainly as lower gas prices took some time to filter through price quotation. But as the July margins figure shows the uptick in the second quarter have actually been temporary. So now let's have a look on the waterfall chart. And let's see the components of the second quarter results year-on-year. Changes in the refining price and margin environment had an effect of $184 million on the EBITDA and the drop in petchem price and margin environment had a negative impact of $29 million. The impact of higher volumes, however, could counter most of the adverse price and margin impact. In the category Other, we show a negative contribution of $74 million. The general inflation pressure caused the minor decrease in OpEx, mainly maintenance OpEx was higher due to more small-scale turnarounds this year as compared to the large turnarounds last year. Now a few comments about the operational update. With regards to crude diversification, the first shipment of CPC crude from Kazakhstan was unloaded in Croatia, as you might see it in the media and heading to be processed in our landlocked refineries. Although the shipment provides less than 1% of the total process group volume in Bratislava and Százhalombatta, but we continue to strive to enter and deepen our cooperation in order to expand our options for crude sourcing. So for today, I have also prepared additional slides about our Tomorrow Downstream program. As we all know, internally in MOL Group we call it a To-Do program. So as Mr. Bacsa mentioned, this is a resiliency program. This program aims to strengthen the downstream EBITDA generation and intends to prepare MOL Group to be flexible for potential shocks to come and enhance competitiveness in a rapidly changing environment. It overreaches the full scope of activities within MOL Group downstream, so every control room, field, lab and office will be affected by this program. This is not just the cost efficiency. So it's not just about how to work harder, but it's about how we operate, how we sell and how we invest. So I try to explain it to my teams that we should do things smarter, not just harder. So it includes elements of cost saving, availability improvements and together with margin and yield optimization makes up most of the value that we target to achieve. As you can see, the program is about $500 million and takes roughly 2 years for the full effect to be felt and to boot, there is no material CapEx needed or projected. This also changes our strategic ambition efforts. We planned with efficiency improvements already in our $1.2 billion strategic target we disclosed last year. So not the full $500 million of the Tomorrow Downstream program will be ambition to that. However, we believe that roughly $200 million will come as an addition, meaning $1.4 billion EBITDA target for downstream beyond 2027. And with this, I hand over to Peter and to Consumer Services. Thank you very much.

Thank you, Gabriel. Good morning to everyone. So Consumer Services marked 27% EBITDA growth in the second quarter of 2025 despite the challenging macro environment. The main contribution came from the fuel side, but non-fuel margin remained also on growth track and also contributed to the increase. The rise in the OpEx contributed altogether $12 million in this quarter, reflecting the continued wage and inflation pressure in the region. With the weakening of the dollar, the FX impact was some more significant than usual and that also supported our reported EBITDA numbers. But let's turn to the fuel slide. And with regards to the biggest contributor to this quarter, the fuel margin, let's kind of start with the volumes. So altogether, it grew by 1% year-on-year and the throughput per site remained close to flat. As far as the unit margin is concerned, we were able to increase the unit margin before the season started, so the driving season started. Most notably actually in 2 countries, in Romania and Croatia were the main factor. These 2 countries were the main factor of the rising EBITDA. So let's go deeper into these 2 countries. In Croatia, the regulated fuel price cut was widened at the very beginning of the year. And just recently there, the full market was liberalized and from July onwards, actually, there is no regulated fuel margins in place in Croatia. So that's very important for this quarter which is, I mean, the July and August and also in September in Croatia is very important for us since it's a very seasonal country. And also in Romania, just as I have already mentioned in the previous quarter, the structural changes in the wholesale market continued, resulted in lower wholesale prices what all the retailers were able to capture. And that's why actually the unit margin in Romania increased. So apart from that, the long-standing trend of a higher premium fuel share continued in the second quarter as well. And that's also very important for us since the premium fuel unit margins are much, much higher than the main grades. All in all, more than 90% of our fuel volumes are being sold on our non-regulated market. So now after the liberalization of the Croatian market, only one country left, that's Slovenia. But altogether, the Slovenian volume is representing just close to 8% of the total volumes. Other than that, all the other markets are working properly. And the last slide, just about the nonfuel segment. So the dynamics remain broadly in line with the year-over-year trends. So although we do see some first signs of the macro slowdown. Although the nonfuel sales shows 8% increase, margin grew by 7%, which shows our intention to focus on sales over margin to keep and attract further our customers, to transact despite the challenging commercial environment. So we really are focused now on the sales instead of the margin at the current moment. Thank you very much, and I will hand over to Zsombor.

Good morning, everyone. So upstream's EBITDA performance amounted to $276 million in the second quarter of '25, marking 13% drop quarter-on-quarter. With the production remaining on high levels and internal performance including no material one-offs during the quarter, the major driver of the EBITDA decrease was a drop in oil and gas prices. And even in such environment, upstream continued to deliver the strong free cash flow on the healthy levels nearing $200 million for the second quarter of the year. If we have a look at how it translated to unit cash flow, so the hydrocarbon prices changes are well reflected in the realization, but we are still above our strategic $20 guidance of the unit free cash flow. If you move on to the next slide, what you can see here is that regarding the components of the changes quarter-on-quarter and year-on-year. The main message is that there are no surprises. Quarter-on-quarter, it is clear that the hydrocarbon prices change. The main driver of the results change. Volume effect was positive due to 2 cargoes lifted in Azerbaijan, one actually jointly with MVM. On the year-on-year, the price effect was not material as the lower oil price was coupled with offsetting effect of higher gas prices and the FX impact, and the ACG cargo effect had a negative impact on results year-on-year. Lifting costs contributed negatively in light with the increase in unit OpEx year-on-year, two one-off items lifting results by $21 million in total for the year-on-year. One is the Shaikan receivables impairment, which affected the base period last year. And the Oilfield Services business unit, which was transferred to the Upstream segment as of 1st of January '25. So moving to production. In the second quarter, we reached 93,500 barrels of oil equivalent per day, which is well in the upper half of our guidance range, 92 MBOEPD to 94 MBOEPD. And if we look at the individual assets, production in Hungary was broadly uninterrupted and close to 38,000 barrels of oil equivalent per day. That's a strong performance. However, in Croatia, we continue to be exposed to a stronger natural decline. Regarding the international assets, production decreased mainly due to logistics issues in the Kurdistan region of Iraq and the Pakistani curtailment. In Iraq, Shaikan's operation was disrupted due to lack of available trucks and transportation during the Israel-Iran conflict, while there is a bottleneck in Pakistan due to the curtailment of service by the local transmission system operator. If we see a bit to the future, going forward, the July production rate is 91 MBOEPD and that effect and that reflects in the latest round of drone attacks in the Kurdistan region of Iraq. And following those drone attacks are on the nearby assets in the middle of the month, there has been a full shut-in of operations on the Shaikan field, and the production could just restart actually this week. So still, we are confident that the production guidance can be reached for the full year. And finally, let us look at the evolution of unit OpEx and the CapEx. And I will talk also about strategic milestones, too. So in the second quarter, the OpEx shows an increment year-on-year, 11%. Without the FX impact of the depreciating dollar, the year-on-year change would be around 8%. Otherwise, the production structure shift towards a bit higher OpEx assets is moving group OpEx slightly higher, which the Endrod acquisition in Hungary also contributed to, and we are still integrating that operations into our portfolio. Despite the high inflationary pressure, we are continuously executing projects of production optimization and facility simplification to deliver strong performance on unit cost. With regards to the CapEx, organic investments moderated by 3% at the half of the year. Certain works in Azerbaijan have been rescheduled for the second half of the year, so that's a timing effect. Let me also update you on two investments that will take years to materialize, but are strategically important milestones in our business development. We have kicked off and made the final investment decision together in partnership with Energean to jointly invest into the development of the Irena gas field in the Northern Adriatic. This will be on a 50-50 basis. Gas production is expected to be in the first half of '27 with a maximum daily output of 300,000 cubic meters per day. And another important milestone from Azerbaijan as the key terms were signed with SOCAR on joint investment in the Shamakhi-Gobustan area mentioned even in the early phase of the call. Although we still are at the phase of negotiating the detailed PSA, we expect that to sign it in a very recent future. And then we are excited about this opportunity at 65% shareholders and operators responsibility for MOL. And with that, let me pass the floor to Péter Ratatics to discuss the Circular Economy services of MOL.

Thank you, Zsombor. Good morning, everyone. The EBITDA of circular economy services marked a negative $10 million in the second quarter of 2025, which brings the first half of the year at slightly above breakeven. Results were affected in this quarter by seasonality as the expenses rose related to the increased volume of return bottles in the deposit return system as well as some higher amounts of waste collected, mainly the green waste, which is bringing us volume, bringing us cost, but no income. Let me note that efficiency-enhancing efforts are continuous, including the renegotiation of prices and fees with our subcontractors. Overall, for now, the Circular Economy Services segment remains in an early phase mode with its financial performance characterized by high volatility. Regarding the main CapEx items, there has been progress in the main projects. The deposit refund network with this reverse vending machines has grown further and developments on waste yards and the collection infrastructure have been progressing as planned. Thank you. And let me give the floor to Marton and to your questions, of course.

Thank you very much. That completes the formal part of our presentation. So I would like to now open the floor for the Q&A session. [Operator Instructions] Anna, please go ahead.

First would be around this Tomorrow Downstream program. Can you please provide the rough split of which measures will lead to this $500 million of EBITDA contribution? If it's not possible at this stage, maybe you can just give us some color on what will be the key measures that you plan to implement over these 2 years? That would be the first question. The second question will be around Slovakia tax. This quarterly taxes that you are paying, will the rate of around $15 million per quarter stays the same despite this increase of the windfall tax that we saw? And final question is just a clarification regarding this JV in Adriatic. Can you please repeat how much production of gas is expected?

Thank you, Anna. Thank you very much. So let me respond to the first part of your question or your first question regarding our To-Do, our Tomorrow Downstream program. So as I mentioned, we will target all the areas, all the organization, and we would like to do things smarter. But I would mention that we would like to tackle the availability, the energy efficiency yield and there are more than 200 actions or Excel table or database with 200 actions there. So it will have impact in each and every organization of Downstream.

The next question, this is about the Slovakian taxation. Because there is special levy on regulated areas, yes, last time we discussed that our expectation is that the overall yearly figure would be around $50 million, $60 million. Year-to-date wise, we are at $20 million. So yes, somewhat behind the proportional part. But at the moment, what we see is that, well, yes, we keep the guidance of this $50 million, $60 million for the year. So also you can calculate how much is the quarterly figure.

Okay. And with regards to the Irena joint venture with Energean, so it's a 50-50 joint venture. We will start the operations after the final investment decision and expect first gas first half of '27. That's a development project, and the maximum daily output will be 300,000 cubic meters per day.

Oleg, please go ahead.

I have a few questions. A follow-up on the Tomorrow Downstream program, please. Currently, you are booking some gains from the ability to import Russian crude oil, which comes at a cheaper price than Brent. And I was wondering whether your EBITDA target of $1.4 billion for beyond 2027 assumes continuous gains from import of Russian crude oil? Or if not, then what is the underlying assumption? And secondly, also on the downstream business. I was wondering whether you could provide more color on the evolution of the refining, specifically Clean CCS EBITDA on a quarter-on-quarter basis? Because frankly speaking, we're looking at the moving parts, namely refinery utilization, which was higher model, refining margins have been stronger. Sales volumes were higher. I would have expected a higher quarter-on-quarter increase which, however, in dollar terms was below 5%. So I was wondering whether there are other moving parts, which are worth mentioning in order to understand this evolution such as, for example, what happened on the imports of Russian crude, again, because this is having quite an impact on the refining results. And then on the Consumer Services, this termination of retail fuel price regulation in Croatia. Could you please help us understand what could be the impact on the segment's results as a result -- due to the determination or liberalization of fuel prices in Croatia? And lastly, on the acquisition of the Budapest University of Technology. Since it will be consolidated in your financial statements, could you please tell us what to expect going forward in terms of contribution on the EBIT level? I know that you mentioned that the free cash flow is expected to be positive, but what do you expect as an impact in the P&L., that would be very helpful.

Thank you, Oleg. I would like to ask Gabriel to start first.

Thank you, Oleg. So good point. In terms of the supply of the Russian crude in the coming period and after 2027, so I think that we all hope that the war is over soon. And in all our projection, we count, we denormalize Brent-Ural spread, so with the historic one, pre-2020, so pre-COVID era there. Regarding the moving parts and as you properly mentioned that, on the one side, a strong refining margin, high availability, good sales performance in terms of the volume, it's rather difficult to understand. So I would mention that the high availability was not just reported on other side, but in all refineries around us in the CE region, which means that there were no unplanned shutdowns from the supply. And customer point of view, the situation was stable. But on the other hand, it means that there is a higher supply with, let's say, slowing demand. So as in the past, I used to praise the sales performance of my team. Now I believe we did have the best to keep the market share, but in terms of the sales prices, we were not able to achieve the levels, so about the refining margin levels, which we were able to report in the last seasons. So I would not go to the -- so the Russian crude, this is not a moving part. So we comply with all the sanctions. There was no change in the reported period there. This will be the sales performance. Thank you.

Then on the Croatian impact, please go ahead, Peter.

Thank you very much. So I mean just to clarify what was in place. So actually, it was a margin regulation, which means that they were a formula, which were connected to the seasonal price quotation and they were allowed maximum unit margin what generated and directed the total price environment in Croatia. So that was eliminated. It means that all the market players from now on can freely set the prices on the total. Will that mean automatically a significant increase on the total price environment? I wouldn't say that it will be a harsh increase because anyway, the total price environment was quite proper. And also, the unit margins in Croatia was not low at all, but it gives us the possibility to make the proper competitive price environment in Croatia. Altogether on yearly basis, the total volumes in Croatia is roughly 1.2 billion liter. And if you would just calculate with EUR 0.01 increase on the margin side, then that could, in theory, means $12 million margin increase as a quantum increase. But as I said, the market prices were quite competitive. The neighboring countries market environment was also, I mean, a factor what we have to take into consideration when we set the price. So we will be very cautious with this because if it will start to just increase significantly, the total price environment, then the regulator will change their mind. So it's quite a kind of a sensitive topic. And I can't estimate one single number that what the effect will be at the end. It's more important that we have the possibility to react on the market freely. And I think the other question that comes to me as well the Hungary and Technological -- Budapest Technological University and the impact on the EBITDA level or on the top line numbers. So I think I have to kind of put it into a different angle. So the structure or the whole kind of structure of this acquisition is 10 years payment. So the acquisition price will be paid in 10 installments. And we have to kind of consider it rather research and development or even on innovation type of budget from MOL group side. So it's certainly not a CSR, and it's certainly not a traditional core business logic what we are following here. But it's more a kind of research and innovation and development budget. Altogether on a yearly basis, if you calculate it in dollar terms, it will be like $12 million per year, which is less than 0.5% of the EBITDA -- or the yearly EBITDA of MOL Group. If you calculate with the large international or global energy companies, I think their yearly research and development budget is much, much larger than that is in respect of the EBITDA percentage. So I think MOL Group, especially in the middle of an energy transformation, I mean it's fair to have a very strong science base and research and innovation base or background to which actually we can turn to and also invest into this operation. Altogether, this technological university consists 1,100 lecturers and researchers and also, they have 22,000 students. And I think that's a very, very good science base to whom we can turn to and build up joint projects, research and development. Also that cooperation or that investment will open up the gate for intellectual properties, different start-up organizations and ventures, what we can build up together with the university. And with that later on, we can expect a larger even cash flows. Short term, we do not expect that we will have EBITDA or we will have any profits or any dividends from this venture, so from this investment, but we don't expect that we have to financially contribute anything into this university. So it means that on a yearly basis, the university will spend what they got from different sources, like the state sources, European Union sources and also the tuition fee, what the students are paying. And the cost level of the university will be very strongly controlled by us, and we will not allow that they will overspend what they have. But it means that roughly 0-ish EBIT level we can expect in the upcoming period. And if any, in the future profit or benefits will come out that not necessarily will come out from the university side, but rather from the research and development utilization, either within MOL Group or with start-up ventures.

Maybe just one additional follow-up questions because you keep mentioning research and development. Could you maybe say a few words about in which area does this university specifically has competitive advantages in terms of R&D? Is it related to petchem, refining or other fields, which would be helpful for MOL as well?

Well, as I mentioned, it's quite a large university with a lot of discipline, different faculties. I think it's very, very strong and also that can be a good connection to MOL Group that the engineering, the technology and also the informatics area, especially the artificial intelligence. I think that's the support that we and also -- I mean, not just MOL Group, but also other companies can benefiting. But also the energy efficiencies, as I said, so everything around the engineering and technology, that's what the core competence of this university. And I think that's the area where we also can benefit. I mean if you want to translate it into the MOL's unit, then I think the biggest user can be the downstream organization and also the circular economy.

Ricardo, please go ahead.

First question that I have on your earnings release and then on the presentation as well, you mentioned some of the downside risks to the guidance even though you have maintained the guidance for the year. Where do you see most of the downside risk coming from the downstream, upstream or a mix of the different segments? And then second question is on petchem. When you look at this negative profitability, what would it take in order for you to get this number to positive territory? Is the polyols ramp up enough to do that? Or do you really need to see a proper margin inflection?

Thank you. Mr. Bacsa just had to step out of the room, but Mr. Viktor Sverla, who is the SVP for Strategy and Sustainability, will answer your first question, Ricardo.

Yes. Thank you very much. So the overall macroeconomic situation is pretty complex. And actually, our Q2 and first half was still pretty strong even with the slowing demand and also slowing economies in the region. And although, of course, we see the downside risks, but also in the second half of the year, we expect some bounce back on the GDP side and on the macro side. And I think what's also important that the diesel has been pretty strong this year so far. And this is not really a demand side story, but the supply side story. And we believe that this strength will stay with us for some time. So definitely this is one of the most important factors that tells us that we will be able to achieve the initial target. And in the Upstream side, we expect similar price environment also, which would bring us to our guidance by the end of the year.

Well, regarding the second part of your question, regarding the petchem, I have to say I'm not extremely optimistic. So I think that there is a rebound needed from the Bratislava cycle. So we are in this low-margin environment for 2 years. And there were some hopes, as I mentioned, that we saw some improvement in the petchem margins. But yes, we do not see the demand, and the supply is very tricky from Asia and also from the United States.

Mr. Tamas Pletser.

Two questions from my side. The first issue is, what is the status of the decoupling of the Russian crude oil? I mean, in the second quarter, how did you proceed? And what kind of CapEx did you spend on this? I'm very curious if you can share this information with us. Also, my second question is regarding your investment. I mean the investors are pretty much pushing me to ask, is this football club you bought last year? Is it in the consolidation circle of MOL? And the building of a new stadium for this football club, will it also include in the CapEx of MOL Group or not? Also how do you treat this? This would be my question.

Thank you, Tamas. So regarding the decoupling, we are progressing as planned. So I mentioned that there are dozens of projects and a lot of engineers are really doing hard work there. So there are no changes there. Just to give you some numbers. So we have tested 14 blends so far in the past 3 years. And the majority of this CapEx we mentioned is going to be spent in 2025, '26 on quarterly. This last quarter, it was about $20 million there. But what is an important point regarding the Russian decoupling, if I may say, and that what we see even currently that the PTC incidents just assure us that the supply security is really threatened, cutting of Druzhba and the supply to Europe. As you can see what can happen once the terminal of the pipe is contaminated. So it's really -- I believe, that our saying on this that we need at least two independent supply routes and several supply partners, it just proved to be true. Thank you very much for your question.

May I have just a follow-up here that I think some of you mentioned in the Hungarian press that you are considering also to use the Adria-Druzhba route in order to get the two supply routes, as you mentioned. What is the realistic -- so what are the challenges here? I mean, what is the position of this pipeline? What is the position of Adria's support? So do you see this to be feasible in the future to get some supply via Adria's maybe Russian or non-Russia crude in the future and get it to Slovakia and Hungary?

So we are aware of the physical presence of this pipe. And when I said that we would like to do things smarter or differently than we did it in the past, so this could be one of the options. But as you properly tackled that what is the feasibility of it. So it's a long way to go. It's a long way to go, yes.

So if you allow me, then I will continue to answer to the second question of yours about the football club. So let me start first with a bit kind of broader perspective. So during the past, I don't know 15 to 20 years, MOL Group was an active sponsor of the football in the region, not just in Hungary, but also in the neighboring countries as well as part of the sponsorship strategy of MOL. During the past period, we transferred those money to different owners, to different crops in order to wear our brand. But we had just very limited possibility to work with the clubs. Now actually, we came to the conclusion, instead of spending this money as a sponsorship, we rather would invest into our own property or asset. So that's why we bought a club here in Hungary, one the largest club and also one of the most historical one with a lot of fan base, but not in a good shape. So we acquired this club, and roughly the same amount of money, what we spent in the past into sponsorship, that's after restructuring, actually, we are now spending into our own ownership. So from a budget point of view, on a yearly basis, what we spent on this football club is practically equal with those sponsorship what we spent in the past to different clubs. Yes, we are the 100% owner of the club. So MOL is the 100% owner of the club, so that means that we have to consolidate it. So you can see it in our books. And the second part of your question was about the stadium project. Yes, that will be a CapEx project from MOL Group perspective. But we just started to negotiate with different companies and also different foundations to try to spare the cost, and not just all the costs by us, but also to find some sponsors as well for that. But it's too early to kind of communicate any success on that.

Okay. Thank you very much. If there are no further questions, I would like to end today's call. Please do reach out to Investor Relations if you have anything to follow-up, please. Thank you, and goodbye.