The Supervisory Board endorses the Petrol Group Business Plan for 2024
Ljubljana, 23 January 2024 - At its 47th meeting, the Supervisory Board of Petrol d.d., Ljubljana discussed and endorsed the business plan and key targets of the Petrol Group for 2024.
In its business plan for 2024, the Petrol Group focuses on tackling the current economic and energy challenges and seizing new opportunities brought by the energy transition. Despite the volatile energy markets and regulatory frameworks, the Petrol Group expects the financial indicators to improve in 2024.
The sales revenue is planned to amount to EUR 5.8 billion, the adjusted gross profit to EUR 705.6 million, EBITDA to EUR 304.6 million and the net profit to EUR 156.5 million. Despite the currently effective legislation which limits margins on certain petroleum products without due grounds, Petrol will pursue the strategic green transition guidelines and earmark EUR 130.0 million for investments.
Upon the endorsement of the business plan for 2024, President of the Management Board of Petrol d.d., Ljubljana, Sašo Berger, stressed: "In 2023, the Petrol Group was faced with many challenges and successfully overcame them, thereby having achieved stability and a moderate growth. Despite the energy crisis and inflationary pressures, the Petrol Group has laid a solid foundation for the coming period. The business plan for 2024 has been prepared by taking into account all known circumstances, including the expected continued volatility of energy markets and unpredictability of regulatory frameworks. Our effective risk management system enables us to respond quickly, yet prudently, to the changed circumstances. The planned increase of investments in renewables and digitalisation will further consolidate the Petrol Group’s position in the region of SE Europe and facilitate the Petrol Group’s sustainable growth.”
Business environment
In 2024, the Petrol Group will still be facing significant uncertainty arising from the unstable energy markets and geopolitical tensions due to the war in Ukraine and tensions in the Middle East. Nevertheless, forecasts point to slight economic growth. Compared to 2023, the forecast inflation for 2024 is slightly lower, but we still expect a substantial pressure on costs.
The plan for 2024 includes the current regulation of the prices for certain petroleum products on all markets where the Petrol Group is present, as well as the margins on petrol and diesel in accordance with the last Decree amending Decree on setting prices for certain petroleum products in Slovenia. The plan is prepared on the assumption that that Decree, which is effective until the end of February, will not be extended. Oil markets are stable, the market of petroleum products in Slovenia is competitive and Slovenia has the lowest margin on petroleum products in Europe. We believe that due to these factors there is no need for regulation anymore.
In 2024, the prices on energy markets are expected to settle down; electricity prices for households are expected to be partly regulated and the prices of natural gas limited in the 2024 heating season in Slovenia.
The business plan of the Petrol Group for 2024 includes adjustments to the changed market condition with continued investments in renewables and the green transition, which reflects global trends and commitment to the sustainability development. At the same time, we are preparing for the development of a market that includes digitalisation of operations and development of new sales channels to ensure resilience and growth in the changing global environment.
Main orientations and risks
In the light of a minimum economic growth, the Petrol Group anticipates that sales will increase in the segment of fuels and petroleum products, especially motor fuels. We are compensating the downward trend in fuel oil sales by continuing to substitute them with alternative energy commodities. In the merchandise and services retail segment, we will continue offering a fast and convenient service to customers and a wow user experience. We will keep the market share in the sales of other energy commodities (electricity and natural gas) and at the same time expand the network of owned and non-owned charging points and further enhance the user experience. Our commitment to the green transition will stay at the forefront and, to this end, we will further increase the share of generation from renewables (RES) in the region. In the field of energy solutions, the majority of activities will still be focused on the segment of the industry and households. To mitigate the growth of costs, we will continue our cost-optimisation activities.
In planning the business targets for 2024, the Petrol Group is faced with several risks which could affect the achievement of the plan, the main risk being interventions by regulators in the price policy, geopolitical risks and the negative effect of the energy crisis on the price of energy commodities, which directly affects the frequently changing regulatory frameworks that are occasionally adopted without any prior announcement, which is an additional adverse factor in business planning. The volatility on energy markets also exacerbates the conditions in petroleum product procurement and increases inflationary pressures on costs. Additionally, there are potential risks of supply chain disruptions which may affect the economic stability and the regulatory requirements regarding bio-component blending in Slovenia and Croatia. Decree on the promotion of the use of biofuels and other renewable fuels for the propulsion of motor vehicles and amended Energy Savings Requirements Act will have an effect on cost increase. Other risks include the deterioration of economic outlook in Slovenia’s key trade partners, the volatility of European markets and related high market risks, while a special challenge is represented by the shortage of appropriate labour force.
Annual business targets
For 2024, the Petrol Group plans to generate the sales revenue of EUR 5.8 billion and the adjusted gross profit of EUR 705.6 million. The Petrol Group will achieve the results planned for 2024 by selling 4.1 million tons of fuels and petroleum products, followed by merchandise and services in the amount of EUR 667.5 million, 16.4 TWh of natural gas (trading and sales to end customers), 12.4 TWh of electricity (trading and sales to end customers), 147.7 thousand MWh of heat, and by generating 204.4 thousand MWh of electricity and selling energy and environmental solutions.
The Petrol Group plans its EBITDA to amount to EUR 304.6 million and the net debt-to-EBITDA to 1.41 in 2024. The business plan is prepared by taking into account the last known energy price regulations on the markets where the Petrol Group operates.
The Petrol Group plans to generate a net profit of EUR 156.5 million in 2024.
The Petrol Group’s investment policy in 2024 will be focused on business expansion in the field of renewable electricity generation, the supply chain digitalisation, as well as on modernising and increasing the number of service stations and expanding operations in the field of energy and environmental solutions. In 2024, the Petrol Group will earmark EUR 130.0 million in investments, of which 44% in energy transition projects.
Despite the challenges brought by the energy crisis, the Petrol Group managed to stabilise operations and keep them stable in 2023, which was instrumental in maintaining the Petrol Group’s good financial condition. Although the results were behind our ambition in the past two years because of the energy price regulation, we have stayed committed to meeting the high standards as confirmed by S&P Global Ratings. Through the optimisation of business processes and costs, we have laid a solid foundation for the future. In 2024, we plan to increase investments in the energy transition which were hampered in 2022 and 2023. By being committed to the energy transition and to offering an excellent user experience, the Petrol Group will continue its endeavours to ensure stability and profitability for the shareholders even in the changed energy and economic circumstances.
In addition to endorsing the business plan for 2024, a resolution was adopted at the 47th Supervisory Board meeting, namely that the five-year term of office of Management Board Member Drago Kavšek will commence on 1 March 2024.