MVM Reports Record Profits Amidst State Energy Subsidies
Hungary's state energy group, MVM, confirms substantial government support amid soaring profits and rising housing prices.
In a comprehensive 594-page annual report released on Wednesday, Hungary's state-owned energy group, MVM, disclosed that it received 762 billion forints (approximately $2.18 billion) from the central budget for its 'utility protection services' in the previous year.
This funding aims to cover the price disparity between gas sold to households at discounted rates and the market prices from which MVM purchases its supplies, primarily from Russia.
Over the year, this amount is projected to decrease slightly, following a peak of 1 trillion forints in 2023.
Since the inception of the 'utility protection' initiative in 2022, MVM has received a total of 2.3 trillion forints in budgetary support.
The group’s procurement of nearly all of its gas from Russia implies that a large portion of this governmental assistance circles back to benefit Russian interests.
Despite the substantial support, MVM reported record profits, with hundreds of billions of forints in profit margins.
The company strongly denies that the state subsidy for energy is allocated for any purpose beyond energy procurement, citing strict adherence to EU regulations.
Financial figures from MVM indicate that the group’s post-tax profit fell to 324 billion forints in the last reporting year, down from 369 billion forints in 2023. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also saw a decline from 910 billion forints to 825 billion forints.
However, the Hungarian state, as MVM’s sole owner, is set to receive an unprecedented dividend of 339.5 billion forints, a significant increase from previous years.
In addition, MVM announced the recording of a substantial change in its total comprehensive income, which surged to a remarkable 556 billion forints from a previous loss of 190 billion forints in 2023. Revenue dropped from 5.1 trillion forints to 4.5 trillion forints, predominantly due to falling market prices for electricity and gas.
The company’s total liabilities, which peaked at 6 trillion forints in 2022, decreased substantially to 3.8 trillion forints.
Highlights from the previous year include MVM's acquisition of a 5% stake in the Azerbaijani Shah Deniz offshore gas field and a 4% stake in the Azerbaijan Gas Supply Company, totalling 282 billion forints.
Additionally, contracts were signed for the construction of two new gas power plants, each with a capacity of approximately 500 megawatts, at their site in Mátrai and one in Tisza.
In another sector, the Hungarian Central Statistical Office (KSH) reported a 13% increase in housing prices for the last quarter of 2024, reflecting a continuation of market growth observed over the previous year.
New apartments are experiencing a higher rate of price growth compared to used apartments, with the re-evaluation indicating a real price elevation of 8.9% for the entire housing market.
The average price of a residential property in Budapest rose to 54.2 million forints, marking an increase of 2.6 million forints over the past year, with square meter prices now surpassing 1 million forints.
Notably, panel apartments recorded the highest price growth of 21% in the capital.
Province cities reported more modest increases in property prices, ranging from 3% to 12%.
Moreover, mortgage interest rates have stagnated from April to May, but a year-on-year increase has been noted.
Amid rising housing costs, borrowers have adjusted by increasing their loan amounts.
For those seeking a fixed-rate mortgage of 20 million forints over a decade, interest rates range from 6.18% to 7.99%, depending on the bank.
The average mortgage amounts have significantly risen as buyers attempt to bridge the gap caused by escalating property prices.
As of February 2025, the average mortgage amount approached 20 million forints, increased from 14.6 million forints in the same months of the previous year.
The importance of subsidized loans may increase; however, the proportion is expected to decrease as market-driven mortgages rise.
Currently, about 20% of new mortgage contracts are of the subsidized type, down from 25% a year prior.
This funding aims to cover the price disparity between gas sold to households at discounted rates and the market prices from which MVM purchases its supplies, primarily from Russia.
Over the year, this amount is projected to decrease slightly, following a peak of 1 trillion forints in 2023.
Since the inception of the 'utility protection' initiative in 2022, MVM has received a total of 2.3 trillion forints in budgetary support.
The group’s procurement of nearly all of its gas from Russia implies that a large portion of this governmental assistance circles back to benefit Russian interests.
Despite the substantial support, MVM reported record profits, with hundreds of billions of forints in profit margins.
The company strongly denies that the state subsidy for energy is allocated for any purpose beyond energy procurement, citing strict adherence to EU regulations.
Financial figures from MVM indicate that the group’s post-tax profit fell to 324 billion forints in the last reporting year, down from 369 billion forints in 2023. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also saw a decline from 910 billion forints to 825 billion forints.
However, the Hungarian state, as MVM’s sole owner, is set to receive an unprecedented dividend of 339.5 billion forints, a significant increase from previous years.
In addition, MVM announced the recording of a substantial change in its total comprehensive income, which surged to a remarkable 556 billion forints from a previous loss of 190 billion forints in 2023. Revenue dropped from 5.1 trillion forints to 4.5 trillion forints, predominantly due to falling market prices for electricity and gas.
The company’s total liabilities, which peaked at 6 trillion forints in 2022, decreased substantially to 3.8 trillion forints.
Highlights from the previous year include MVM's acquisition of a 5% stake in the Azerbaijani Shah Deniz offshore gas field and a 4% stake in the Azerbaijan Gas Supply Company, totalling 282 billion forints.
Additionally, contracts were signed for the construction of two new gas power plants, each with a capacity of approximately 500 megawatts, at their site in Mátrai and one in Tisza.
In another sector, the Hungarian Central Statistical Office (KSH) reported a 13% increase in housing prices for the last quarter of 2024, reflecting a continuation of market growth observed over the previous year.
New apartments are experiencing a higher rate of price growth compared to used apartments, with the re-evaluation indicating a real price elevation of 8.9% for the entire housing market.
The average price of a residential property in Budapest rose to 54.2 million forints, marking an increase of 2.6 million forints over the past year, with square meter prices now surpassing 1 million forints.
Notably, panel apartments recorded the highest price growth of 21% in the capital.
Province cities reported more modest increases in property prices, ranging from 3% to 12%.
Moreover, mortgage interest rates have stagnated from April to May, but a year-on-year increase has been noted.
Amid rising housing costs, borrowers have adjusted by increasing their loan amounts.
For those seeking a fixed-rate mortgage of 20 million forints over a decade, interest rates range from 6.18% to 7.99%, depending on the bank.
The average mortgage amounts have significantly risen as buyers attempt to bridge the gap caused by escalating property prices.
As of February 2025, the average mortgage amount approached 20 million forints, increased from 14.6 million forints in the same months of the previous year.
The importance of subsidized loans may increase; however, the proportion is expected to decrease as market-driven mortgages rise.
Currently, about 20% of new mortgage contracts are of the subsidized type, down from 25% a year prior.
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