The Supervisory Board endorses the Business Plan of the Petrol Group for 2023
Ljubljana, 26 January 2023 – At its 28th meeting, the Supervisory Board of Petrol d.d., Ljubljana, discussed and endorsed the Business Plan of the Petrol Group for 2023. The Petrol Group expects that the situation exacerbated by the inappropriate petroleum product price regulation and the conditions on energy markets will continue in 2023. As a result, the economic growth will slow down, and the inflationary pressures will linger. The Petrol Group plans the sales revenue to amount to EUR 10.2 billion, EBITDA to EUR 250.4 million, and the net profit to EUR 117.1 million in 2023. Up to EUR 75.0 million will be earmarked for investments.
“Although we are looking at a demanding year due to the difficult situation on the energy markets, the Petrol Group’s plan for 2023 is optimistic. The regulation of energy selling prices, the exacerbated purchase conditions, and the inflation will have an important impact on the Petrol Group’s operations; to this end, we will adjust our business processes and optimise costs. In addition, the Petrol Group’s operations will be affected by many factors present on the international and domestic markets: the uncertain geopolitical and economic situation, the situation on the global oil and energy market, and changes in the US dollar exchange rate. In line with our strategy until 2025, we continue to pursue the fundamental principles of ensuring business growth while staying committed to sustainable development. Slovenia, Croatia and Serbia are and will stay the Petrol Group’s key markets. We plan that our operations will be stable in 2023 and that our year-end result will be positive, with all financial covenants fulfilled,” said President of the Management Board of Petrol d.d., Ljubljana, Nada Drobne Popović, regarding the Petrol Group’s Business Plan for 2023.
BUSINESS PLAN OF THE PETROL GROUP FOR 2023 (executive summary)
1. Business environment
The Petrol Group’s business plan for 2023 is prepared in a period marked by high uncertainty, related especially to the situation on the energy markets. Economic growth is slowing down. The embargo on Russian crude oil and petroleum products has exacerbated the purchase conditions and increased risks of the economic outlook further deteriorating in the countries which are Slovenia’s important trading partners. The inappropriate regulation of petroleum product prices and the inflationary pressures in 2022 and the expected inflation in 2023 require us to adjust business models and optimise costs. The year 2022 was gripped by extreme fluctuations of petroleum product and other energy commodity prices and government regulations. The Petrol Group, one of the key players in the field of the energy transition in the region, is now faced with reduced funds for investments in the green transition, owing especially to the regulations.
2. Main orientations and risks of the Business Plan for 2023
Based on economic forecasts, the Petrol Group plans that the sales of petroleum product volumes will increase in 2023 compared to the plan from 2022. In the field of merchandise and service sales, the Petrol Group will continue to offer fast and convenient shopping options to consumers and a wow customer experience. The Petrol Group will maintain its market share in electricity and natural gas sales in Slovenia. In 2023, the Petrol Group will increase the number of EV charging points. It will actively increase its energy independence, efficiency and RES in Slovenia and other Central European countries. The share of green energy generation will be increased through successful RES generation projects in the region. In the field of energy solutions, the majority of activities will be focused on the industry and the household segments. We will continue being highly concentrated on cost efficiency. We plan that by optimising processes and implementing other measures, the share of operating costs in the adjusted gross profit will amount to 77 percent in 2023.
The Petrol Group is aware that despite careful preparation, informed business decisions, quick response to change and an efficient risk management system, external factors may arise in the business environment which are beyond the Petrol Group’s direct control and as such, they may pose a threat and risk of not achieving the set targets, which we have already witnessed during the Covid-19 epidemic and even more during the energy crisis in 2022.
The main risks underlying potential failure of the plan for 2023 are the negative effects of the energy crisis on the inflation and, consequently, on the growth of the cost of living and the management of higher operating costs. Other risks underlying potential failure of the plan for 2023 are:
- Supply chain disruption and the effect on the economy,
- Intensification of petroleum product purchase conditions,
- Even stricter regulation of the selling prices of energy commodities,
- Impact of the Energy Savings Act in Slovenia and Croatia,
- Potential change of the Decree on the promotion of the use of biofuels and other renewable fuels for the propulsion of motor vehicles,
- Uncertainty in sales to EU markets which are extremely volatile,
- Other regulatory requirements.
3. Business plan for 2023
The Petrol Group plans to generate the sales revenue of EUR 10.2 billion and the adjusted gross profit of EUR 675.0 million in 2023. The Petrol Group will achieve the results planned for 2023 by selling 4.0 million tons of fuels and petroleum products, merchandise in the amount of EUR 544.8 million, 11.6 TWh of natural gas, 12.9 TWh of electricity (trading and sales to end customers), 154.6 thousand MWh of heat, and by producing 188.4 thousand MWh of electricity and selling energy and environmental solutions.
The Petrol Group plans its EBITDA to amount to EUR 250.4 million and the net debt-to-EBITDA to stand at 1.7. The business plan was prepared by taking into account the last known energy price regulations. The regulation of petroleum product margins still has a negative effect.
The Petrol Group plans to generate a net profit of EUR 117.1 million in 2023.
The Petrol Group’s investment policy in 2023 will be focused on business expansion in the field of renewable electricity generation, the supply chain digitalisation, modernisation of points of sale, and expansion of operations in the field of energy and environmental solutions. The price regulation will stay in effect in 2023, so the volume of investments has been adjusted accordingly. We will earmark up to EUR 75.0 million for investments in 2023, a third of which for energy transition projects; in the strategic business plan for 2023, we planned investments to amount to EUR 135.0 million.
Before the energy crisis and the resulting price regulation, the Petrol Group was in a very sound business and financial condition. Due to the negative effect of energy price regulations on the Group’s operations, we ended 2022 much below the plan. We expect that 2023 will be an extremely demanding year and to this end we will focus greatly on optimising business processes and, as a result, costs. We will continue to meet the high business standards as recognised by the ratings awarded by S&P Global Rating Services. Despite the difficult business situation, the Petrol Group will continue to pursue its objective of ensuring stable operations, hence appropriate returns for shareholders.