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One size does not fit all

One size does not fit all. Laszlo Varro, MOL Group. Agenda. MOL’s way to international expansion How we have been doing it Conclusions. 2. MOL Group today. One of the best performing integrated energy companies in the world Leader in core markets of Hungary, Slovakia and in

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One size does not fit all

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  1. One size does not fit all Laszlo Varro, MOL Group

  2. Agenda • MOL’s way to international expansion • How we have been doing it • Conclusions 2

  3. MOL Group today • One of the bestperforming integratedenergy companies in the world • Leader in coremarkets of Hungary,Slovakia and in Croatia via INA • State of the artasset base servingahigh growth downstream region • Highly successful regional partnerships: Slovnaft, TVK, INA • Management with outstanding trackrecord in operationalintegration and efficiency improvement • Market cap as of 04/06/2007 USD 14 000 million Operational integration DOWNSTREAM (R&M) UPSTREAM (E&P) E&P GasTransmission R&M Petrochemicals TVK ( 94.9%)* MOL Plc. Slovnaft ( 98.4 %) INA ( 25.0%+1 share) *direct and indirect influence Shareholding structure(%) (approximate) (10.09.2007) 3

  4. Successful transformation from a state-owned conglomerate to a leading regional private oil company Market capitalization 4

  5. Way to inorganic growth 5

  6. H CR RUS KAZ H RO CR SYR ALG EGY PAK LBA I OM YEM MOL INA Potential new core markets PRODUCTION ANG EXPLORATION Truly international operation in Upstream (exploration and production) 6

  7. We are stepping out of our conventional Downstream region +3.2% PL +2.0% D +3.2% UKR CZ +5.0% SK +3.2% A +3.1% +3.1% H +3.6% SLO RO HR +3.2% BIH +3.7% SCG +6.5% I +6.0% BG +2.0% AL +4.0% MK +6.5% +3.9% +7.1% GR TR Conventional investment markets New targets Expected motor fuel demand CAGR 2006 - 2010 7

  8. Agenda • MOL’s way to international expansion • How we have been doing it • Conclusions 8

  9. Building blocks of international expansion strategy INTERNATIONAL EXPANSION ONE SIZE DOES NOT FIT ALL STRONG DOMESTIC POSITION INTERNAL CAPABILITIES MENTAL CHANGE Market oppotuninty 9

  10. Mental change: Talents are distributed equally on planet Why others not us? 10

  11. Executing mental change Develop new capabilities from OPPORTUNISTIC …….. to SYSTEMATIC Confident REGIONALLY Become truly INTERNATIONAL PEOPLE DISCIPLINED corporate operation Develop an INTEGRATIVE corporate structure ORGANIZATION Create value through HOMOGENITY Nurture DIVERSITY CULTURE Concentrate on COST Emphasize superior internal and external CUSTOMER service FOCUS Change while keeping our existing strengths: effective, result-oriented, adaptive, aspirational 11

  12. Leveraging strong domestic market position – MOL in ‘99 • Favourable geographical position • Sole refiner in Hungary with 3 operating refineries • Pipeline based supply with alternative route (Adria) • Dominant player in wholesale (cca. 80% market share) • Market leader in retail (cca. 40% market share) • Balanced portfolio of international upstream assets • New management focusing on value creation and efficieny improvement PL D CZ UKR A H SLO RO BIH I SCG BG AL MOL depots used MOL refineries MK Product pipeline Adria oil pipeline Friendship oil pipelines 12

  13. OPERATIONAL CSF Strengthen cooperation and integration with INA Triple E&P production via international acquisitions Double R&M production & sales Maintain quality leadership in refining Develop central role in Gas Transmission Diversify and sustain our crude oil supply Establish a sustainable, scaleable Retail operation and brand structure Achieve our efficiency improvement targets Capability Development to Ensure International Operational Excellence  CAPABILITY CSF • Improve our ability to acquire new businesses & partners • Integrate new businesses quickly and efficiently • Become an international player • Develop change management and continuous improvement culture 13

  14. „One size does not fit all” – adapting to local conditions is key for successful international expansion 14

  15. Agenda • MOL’s way to international expansion • How we have been doing it • Conclusions 15

  16. „Must have”-s and „Can be”-s of becoming international We invest only if: We can be flexible at: • Market opportunity is there • We can have added value • Synergy potential is important • We have the capabilities (or can build up) to capture value creation opportunities • Investment size • Investment structure • Rights • Partners • Ownership share • Depth of integration • Brand Why to do How to do 16

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