Unaudited results of the Petrol Group and Petrol d.d., Ljubljana, for 2022
16 March 2023 – At its 30th meeting, the Supervisory Board of Petrol d.d., Ljubljana took note of the unaudited results of the Petrol Group and Petrol d.d., Ljubljana, for 2022.
The key business highlights in 2022 were: the continued implementation of the Petrol Group’s strategy for 2021–2025, an unstable and uncertain business environment, negative interventions on motor fuel markets and related damage, and the Petrol Group’s consolidation in the region and the expansion of activities in the field of energy transition. According to the Supervisory Board, the Petrol Group appropriately responded to the challenges in 2022.
An unstable and uncertain business environment
The business environment in 2022 was very complex and significantly deviated from the assumptions underlying the business plan for 2022. External circumstances that co-shaped the complex conditions of Petrol Group’s operations were the effects of the COVID-19 epidemic in the first months of the year, geopolitical tensions related to the Ukrainian crisis, and the energy market instability. The high prices of fuels and energy commodities and the rising inflation drove governments to impose caps on the prices of fuels, electricity, and natural gas in all markets where the Petrol Group operates (in Slovenia alone, 37 decrees were passed to this end). This had a profound effect on operations and, consequently, the realisation of the Petrol Group’s business plan for 2022. Geoplin d.o.o. Ljubljana’s operations, faced with undelivered Russian natural gas and the highly volatile natural gas prices, also had an important negative effect on the Petrol Group’s performance.
Record-high sales along with the capped prices of energy commodities did not enable achieving the set targets
For 2022, the Petrol Group planned its sales revenue to amount to EUR 5.9 billion, but according to the unaudited data, the total sales revenue reached a record-high figure of EUR 9.5 billion, which is 91 percent more than in 2021. In addition to the higher cost and selling prices of motor fuels and energy commodities, the year-on-year revenue growth was affected by the high volumes of fuels and petroleum products sold due to the low prices and the integration of Crodux derivati dva d.o.o. into the Petrol Group, which sold 4.1 million tons of fuel and petroleum products in 2022, a year-on-year increase of 25 percent. 48.2 percent of revenue was generated from sales of energy and solutions, 46.3 percent from sales of fuels and petroleum products, and 5.5 percent from sales of merchandise and services.
Due to the high cost of all energy commodities, the effect of the regulation of motor fuels and other energy commodities, and the damage suffered by Geoplin d.o.o. Ljubljana due to undelivered natural gas under the Russian contract, the aforementioned increase of sales revenue is not reflected in the adjusted gross profit, which stood at EUR 393.4 million, down by 28 percent from 2021.
EBITDA of the Petrol Group totalled EUR 96.3 million in 2022, a decrease of 60 percent from 2021. This was primarily a result of the regulation of motor fuel prices in all markets in the amount of EUR 188.9 million and the regulation of other energy commodities in the amount of EUR 8.3 million. The effect of undelivered natural gas was also reflected in the Petrol Group’s EBITDA in the amount of EUR 51.7 million.
For the reasons explained above, the Petrol Group’s EBITDA structure in 2022 changed considerably compared to the previous periods; the majority share in the structure is represented by merchandise and services with 71.4 percent, followed by energy and solutions with 18.9 percent, and fuels and petroleum products with 2.6 percent.
As a result of the unstable and uncertain business situation, the Petrol Group generated a net loss of EUR 2.7 million in in 2022. The compensation for the damage resulting from the capped fuel prices in Slovenia (EUR 106.9 million) and Croatia (EUR 55.9 million), for which a proceeding for amicable dispute resolution has been initiated with the Slovenian and the Croatian State Attorney’s Offices, is not included in the unaudited results.
The Petrol Group was forced to adjust its investment funds to the changed circumstances. In its plan for 2022, the Petrol Group earmarked EUR 100.0 million for further development in 2022, but due to the cash flow shortage resulting from the negative interventions, the company earmarked EUR 59.8 million for investments, of which 48 percent for energy transition projects.
An integrated partner in the energy transition
Despite the business environment instability, the Petrol Group continued to pursue the path it set in its strategy for 2021–2025 by staying focused on the energy transition and offering a range of integrated services with a high added value. The Petrol Group consolidated its presence in the SEE region and expanded its activities in the field of energy products and energy transition services. Following the legal merger of Crodux derivati dva d.o.o. into the Croatian Petrol d.o.o., Petrol has become the second major petroleum product seller in Croatia and one of the largest Croatian companies. The Petrol Group will notably increase its volume of renewable electricity generation once its three large solar power plants with the expected capacity of 29 GWh in the area of Knin in Croatia start operating in 2023 (the construction began in 2022). At the end of 2022, the Petrol Group’s retail network consisted of 594 points of sale, of which almost a half outside of Slovenia. The number of Petrol Group’s operated EV chargers has increased by 121, from 296 at the end of 2021 to 417 at the end of 2022.
The Supervisory Board’s opinion
According to the Supervisory Board, the Petrol Group appropriately adjusted its operations to the difficult market situation in 2022. In the light of the demanding situation marked by the energy crisis and the regulations imposed by countries, the Supervisory Board believes that the Management Board of Petrol d.d., Ljubljana, managed the company professionally and the business and liquidity risks well, implemented the company’s key development projects and mitigated the effects of negative trends on the energy market to the maximum possible extent by providing a comprehensive range of energy products and services and efficiently adjusting to the exacerbated business situation, and ensured a stable and reliable fuel and energy commodity supply and support to its customers by leading efficient procurement processes. This is also confirmed by the rating awarded by S&P Global Ratings, which reaffirmed Petrol, d. d., Ljubljana’s “BBB-“ long-term and “A-3” short-term rating with a stable outlook in December 2022. The Supervisory Board confirms that the Management Board of Petrol d.d., Ljubljana regularly and transparently reported all challenges and effects on operations throughout 2022 to the Supervisory Board and the shareholders.
Ambitious plans for the difficult year 2023
The Petrol Group constantly monitors and analyses market events and plans its operations accordingly. The Petrol Group’s operations will continue to be strongly affected by the regulation of the selling prices of fuels and energy products, the exacerbation of purchasing conditions, and the inflation, to which the Petrol Group will respond by tailoring its business processes and optimising 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 its strategy until 2025, the Petrol Group will continue to pursue its fundamental principles of ensuring business growth while staying committed to sustainable development. It should be pointed out that the Petrol Group, as one of the key drivers of the energy transition in the region, is faced with a reduced volume of funds for investments in the green transition, mainly due to the impact of regulation. Slovenia, Croatia, and Serbia will remain the Petrol Group’s key markets. The Petrol Group plans that in 2023 its operations will be stable, the year-end result positive, and all financial covenants fulfilled.