Wage talks with one of the three trade unions ended without a result yesterday, prompting the union’s chairman to threaten MOL with a strike. The union, representing 1,100 of the company's 5,300 employees, will call for a strike and inform MOL about the timing and length of the work stoppage today, trade union chairman said adding that the strike may affect production at MOL's main Dunai refinery in central Hungary.
The strike was initiated after MOL rejected union requests for a 7% average salary increase in 2006 and only agreed to a 5% rise.
Negotiations are expected to continue during the strike, and MOL will do everything to avoid direct affect its company financials, MOL spokesman added.
While seeing relatively low chance for any stoppage in the key refinery assets, we consider the news as negative, imposing a risk for shareholders. However, we keep our Buy recommendation on MOL with our price target of HUF 29,033.