The Supervisory Board endorses the Annual Report of the Petrol Group and Petrol d.d., Ljubljana, for 2023
Ljubljana, 18 April 2024 – At its 51st meeting, the Supervisory Board of Petrol d.d., Ljubljana, discussed and endorsed the Annual Report of the Petrol Group and Petrol d.d., Ljubljana, for 2023. In 2023, the Petrol Group was once again faced with a complex business environment, but despite the challenges, the Petrol Group maintained financial stability and continued expanding and diversifying its activities as set in the strategic plan for the 2021–2025 period. The Petrol Group demonstrated its ability to adapt to the volatile circumstances and even thrive in them, thereby laying sound foundations for the preparation of the new strategy for the 2025–2030 period, which is expected to be adopted by the end of this year. In 2024, the Petrol Group will continue to adapt its operations to the changed market situation and invest in renewables and the green transition.
In 2023, the Petrol Group was faced with slowing economic growth, a loss of purchasing power and the tightened financing conditions. Despite the downward trend of energy prices which started at the end of 2022, the government-imposed cap on the prices of petroleum products and other energy commodities remained present in 2023, which had an important impact on the operations. The Petrol Group was faced with inflation, energy price regulation and geopolitical tensions, but it nevertheless maintained financial stability and continued to expand and diversify its activities as set in its strategic plan for the 2021–2025 period. Furthermore, it successfully adapted to the volatile circumstances, pursued sustainability, and continued to implement energy transition projects and provide a great customer experience.
On the endorsement of the Annual Report for 2023, Sašo Berger, President of the Management Board of Petrol d.d., Ljubljana, stressed: “The business results achieved in 2023 demonstrate the Petrol Group’s agility and performance, which could not have been possible without the endeavours by every one of the approximately 6,000 Petrol employees throughout the region, for which I sincerely thank them. The capped margin on certain petroleum products in Slovenia, imposed in December 2023, is a special challenge for the Petrol Group, the largest Slovenian energy company in the region, since it does not enable covering the costs of fuel and petroleum product operations and, as such, makes it challenging to adapt to the requirements of the European Green Deal. In this context, we see market liberalisation as an appropriate long-term solution to the increasing needs for investments in a new, environmentally sustainable business model. This is a path we cannot walk alone, as it requires understanding and cooperation of all stakeholders, from the government to business partners and each individual in our community.”
Improved key performance indicators
In 2023, the Petrol Group generated sales revenue in the amount of EUR 7.0 billion, a year-on-year decrease of 26 percent, owing especially to the lower prices of fuel and other energy commodities on spot and futures markets. It sold 3.8 million tons of fuels and petroleum products, a decrease of 8 percent compared to 2022, while the sales of merchandise and services increased by 10 percent to reach EUR 571.2 million. The Petrol Group also sold 16.6 TWh of natural gas, 12.8 TWh of electricity and 143.4 thousand MWh of heat. The gross profit totalled EUR 677.6 million in 2023, a 72-percent increase compared to 2022. Operating costs increased by 20 percent, to EUR 561.3 million, mostly because of the higher labour costs and costs of materials. EBITDA in 2023 totalled EUR 277.1 million, a year-on-year increase of EUR 180.8 million. The share of the Energy and Solutions product group in the EBITDA structure increased, which is in line with the strategic commitment related to the transition from traditional energy sources to cleaner renewable energy sources. The net profit amounted to EUR 136.6 million in 2023.
We successfully continued to pursue the debt management strategy and reduced the Petrol Group’s net debt below the level from 2021. We kept all key indicators at acceptable levels which provides the Petrol Group with financially sustainable foundations for future operations. In December 2023, S&P Global Ratings reaffirmed Petrol d.d., Ljubljana’s long-term BBB- and short-term A-3 rating with a stable outlook.
Drago Kavšek, Member of the Management Board of Petrol d.d., Ljubljana, responsible for financial management, risk management and business optimisation, added: “In 2023, the Petrol Group demonstrated its financial efficiency and effectiveness, resulting in a high yield for our investors. The capital gains yield, which reflects the growth in the value of the Petrol share, was 16.5 percent by comparing the closing share price at the end of 2023 to the closing share price at the end of 2022. Together with the 7.5-percent dividend yield, this represents a 24-percent total return per share in 2023, clearly indicating strong investor confidence.”
Development projects with a focus on sustainability
Thanks to its sound financial basis, the Petrol Group is the leading player in the energy transition, getting ready for the coming challenges and opportunities. In 2023, we earmarked EUR 82.9 million for net investments, of which 31 percent for energy transition projects. Despite the challenges brought by the energy crisis, energy transition and regulatory interventions and the uncertainty regarding the reimbursement for the damage resulting from price regulation, which required substantially decreasing CapEx in 2022, the Petrol Group successfully continued its key development projects in 2023.
In the context of the strategic renovation of the sales network in Slovenia, two completely reconstructed new-generation service stations stand out, namely Barje–North and Barje–South on the Ljubljana ring road. In Croatia, seven service stations were completely renovated, three were reconstructed and one was newly built. The Oil&Gas E2E supply chain digitalisation project, which is aimed to optimise the logistics process, was continued in 2023 and will be completed in 2024. Furthermore, our investments have stayed focused on renewable electricity generation. We completed the construction of one of the largest solar power plants in the region set in three locations surrounding our Ljubač wind park in Croatia. We also continued developing the Dazlina wind power plant project in Croatia. We are connecting solar power plants to the grid in the context of the Petrol Green project; in parallel, activities are in place to obtain documentation and the necessary licenses for the next project phase in Slovenia and to expand to Croatia and Serbia.
The Petrol Group’s investment policy in 2024 will be focused on expanding operations in the field of renewable electricity generation, digitalisation and consolidation in the field of energy and environmental solutions. Despite the limitations arising from regulation, we plan to earmark EUR 130.0 million for investments in 2024, of which 44 percent for energy transition projects.
Glance forward
In 2024, we are faced with new challenges, but also opportunities for growth. We are focused on improving our key financial indicators, while staying committed to our vision to become an integrated partner in the energy transition with a great customer experience. We will continue developing and implementing sustainable solutions which not only meet but also exceed the expectations of our customers and the community. In 2024, the Petrol Group plans to generate EUR 5.8 billion in sales revenue, EUR 705.6 million in gross profit, EUR 304.6 million in EBITDA and EUR 156.5 million in net profit. At the time of preparing the business plan for 2024, we assumed that, on 1 March 2024, margins on fuels would return to the level in effect until 4 December 2023, but this did not happen. The strict regulation of the prices of some petroleum products has stayed in effect; this, and potential other unfulfilled assumptions, may result in a deviation from the goals set for this year.
For the 2021–2025 strategic period, which will end next year, we have set ourselves a goal to achieve EBITDA of EUR 336 million in 2025, which is an ambitious, yet achievable goal. We are starting to prepare a new strategy for the period until 2030, which is expected to be submitted to the Supervisory Board for approval in the last quarter of 2024.
The Supervisory Board of Petrol d.d., Ljubljana endorsed the Annual Report of the Petrol Group and Petrol d.d., Ljubljana, for 2023. The business results show that the Petrol Group responded successfully to the challenges brought by the energy crisis, and efficiently tackled the dynamic market situation, which gives confidence that, in the current uncertain geopolitical situation, the Petrol Group will continue to successfully achieve the set goals, pursue the sustainable development goals and consolidate its leading role in the energy transition.