Minister for economic development, Márton Nagy, quickly announced that his ministry is launching an investigation into the 'unfair ticket pricing.'Continue reading
The windfall tax and the unfavorable economic climate have a mixed impact on Hungarian companies. While some are still making high profits despite the extra tax, others are struggling.
Magyar Telekom will publish its quarterly report on Tuesday, after the stock market close, but the analyst consensus was already published. According to this, the company generated 178 billion forints (EUR 450 million) in revenue in the period from April to July, and its EBITDA (earnings before interest, tax, depreciation, and amortization) margin was close to 30 percent, Hungarian business site Világgazdaság wrote.
However, Telekom’s net profit after tax was only HUF 9 billion (EUR 22.7 million), compared to EBITDA of HUF 53 billion and operating profit of HUF 17.5 billion.
The company’s revenues grew by more than seven percent year-on-year, with data and SMS traffic and fixed broadband internet services contributing to this positive development, according to Erste experts. The analysts believe that in the current economic environment, taking inflation into account, Telekom could not avoid an increase in operating costs – even though it had already fixed its energy costs for 2022.
A special tax on telecommunication companies has also further eroded profit margins. Magyar Telekom will have to pay HUF 25 billion in taxes this year. Excluding the special tax, EBITDA could have stabilized at around last year’s level of HUF 59 billion, but in the current situation Erste expects a 10 percent decline. The weakening of the forint has not been good for the company’s finances either, and net profit could fall to HUF 9 billion, a 33 percent drop.
Meanwhile, KBC Equitas, a company providing financial and investment services, predicts an even lower net profit for Telekom of only HUF 6.4 billion.
It is therefore clear that Telekom has not been able to cope with the economic situation to the same extent as, for example, the Mol Group, which recently published its quarterly figures showing that the company closed with an outstanding result. Mol Group is a leading integrated Central Eastern European oil and gas corporation headquartered in Budapest, Hungary. It has operations in over 30 countries and employs 25,000 people worldwide.
In the second quarter of 2022, Mol Group achieved a “pure” EBITDA estimated at HUF 483.7 billion (EUR 1.2 billion) and operating profits estimated at HUF 372.8 billion (EUR 944 million), according to a report published on the company’s website on Friday morning. Like the Hungarian oil company, international players have also posted big profits so far this year. According to reports, U.S. based Exxon Mobil made a 18 billion dollars profit in the last three months, while Shell and Chevron each earned about 12 billion dollars, a record profit.
The Hungarian government introduced the windfall tax in June and the idea is not uncommon in Europe. Other European countries, such as Belgium, Spain, the United Kingdom, or Greece have also introduced such measures, however, there are differences between the Hungarian rules and the others.
While in other countries, the extra tax only applies to the energy sector, in Hungary it applies to other sectors like the banking sector, air travel, and telecommunication. The harshest idea was born in Greece where the government published a plan in May, according to which they would tax the extra profits of electricity producers at 90 percent.
Featured Photo: Shutterstock
