The Supervisory Board endorses the Annual Report of the Petrol Group and Petrol d.d., Ljubljana, for 2022
Ljubljana, 13 April 2023 – At its 32nd meeting, the Supervisory Board of Petrol d.d., Ljubljana discussed and endorsed the audited Annual Report of the Petrol Group and Petrol d.d., Ljubljana for 2022. The energy price regulation negatively affected the Petrol Group’s business performance which deviates from the ambitious Business Plan of the Petrol Group for 2022 as result of the radically changed business conditions compared to the assumptions underlying the annual plan. The Petrol Group plans for its operations in 2023 to be stable and that its year-end result will be positive with all financial covenants fulfilled.
Upon publishing the audited annual report for 2022, President of the Management Board of Petrol d.d., Ljubljana, Nada Drobne Popović, highlighted: “Extraordinary events in the international geopolitical and business environment, which could not have been foreseen and which left a strong mark on the European and Slovenian economies, have strongly affected the business performance of the Petrol Group. The year 2023 will also be very complex. Our goals are ambitious, but achievable. As one of the largest energy groups in the region, the Petrol Group will endeavour to remain a stable support to households, businesses and the public sector, both in meeting the challenges of the energy crisis and in the transition to a zero-carbon future.”
Record-high sales, but other business indicators gripped by the energy crisis
The operations of the Petrol Group were marked by an unstable economic environment and difficult macroeconomic conditions in 2022. The Petrol Group was faced with challenges, such as the consequences of the COVID-19 pandemic, geopolitical tensions, volatile prices of energy commodities, and unpredictable and changing regulatory frameworks used by governments to tackle energy price rises. All of these factors required swift response and needed to be taken into consideration when making daily business decisions. In this context, the Petrol Group focused on tailoring its business strategy and efficiently managing risks to ensure reliable energy supply to households, businesses, and the public sector. Despite the complex situation, the Petrol Group generated unprecedented sales revenue, also thanks to the merger of Crodux derivati dva d.o.o. into the Petrol Group and increased sales of fuels and petroleum products on other markets and the steep growth of the prices of other energy commodities.
In 2022, the Petrol Group generated a record-high sales revenue of EUR 9.5 billion, an increase of 91 percent compared to 2021. In 2022, the Group sold 4.1 million tons of fuels and petroleum products, an increase of 25 percent year-on-year. 48.2 percent of revenue was generated with the sales of energy and solutions, 46.3 percent with the sales of fuels and petroleum products, and 5.5 percent with the sales of merchandise and services.
Due to the high purchase prices of all energy commodities and the impact of the regulation of motor fuels and other energy commodities and the damage suffered by Geoplin d.o.o. Ljubljana (a member of the Petrol Group) due to the cut gas supplies under the Russian contract, the aforementioned increase in the sales revenue is not reflected in the adjusted gross profit which stood at EUR 393.4 million, a year-on-year decrease of 28 percent.
The Petrol Group’s EBITDA totalled EUR 96.3 million in 2022, a decrease of 60 percent year-on-year, primarily because of the regulation of motor fuel prices in all markets, which accounted for EUR 188.9 million, and the regulation of the prices of other energy commodities for EUR 8.3 million. The effect of the cut gas supplies was also reflected in the Petrol Group’s EBITDA, in the amount of EUR 51.7 million.
The Petrol Group’s EBITDA structure changed in 2022 compared to the previous periods as a result of the aforementioned reasons. The majority share is represented by merchandise and services (71.4 percent), energy and solutions 18.9 percent, and fuels and petroleum products 2.6 percent.
Due to the described unstable and uncertain business conditions, the Petrol Group generated a net loss of EUR 2.7 million in 2022.
The Management Board of the Company stressed throughout the year that regulation had a negative impact on the Petrol Group’s operations and, consequently, on the Company’s stakeholders. In order to receive compensation for the damage resulting from the regulated prices of motor fuels in 2022 which had a strong negative effect on the profit and loss statement, the Management Board of Petrol d.d., Ljubljana, submitted proposals for out-of-court settlement to the State Attorney’s Offices in Slovenia and Croatia: in Slovenia in the amount of EUR 106.9 million and in Croatia in the amount of EUR 55.9 million. The State Attorney’s Office of the Republic of Slovenia rejected the proposed amicable resolution of dispute, while in Croatia, no decision has yet been made (by the time of Annual Report for 2022 publication). The Management Board of Petrol d.d., Ljubljana, will continue its endeavours to be compensated for the damage, thereby safeguarding the assets of the Company.
Despite the difficult business conditions, S&P Global Ratings reaffirmed Petrol d.d., Ljubljana’s long-term BBB- and short-term A-3 rating with a stable outlook in December 2022.
Steps for an even stronger market presence and the green transition
In the crisis year 2022, the Petrol Group also achieved encouraging milestones and made achievements which have made it even stronger.
- Following the legal merger of Crodux derivati dva d.o.o., it strengthened its position of the second largest supplier of petroleum products in Croatia and started consolidating itself as a comprehensive energy solutions provider in this strategic market.
- The entire operations of E 3, d.o.o. were integrated into Petrol’s information system to further consolidate the position on the electricity market in Slovenia.
- To diversify gas supply sources and enhance supply security for consumers, Geoplin d.o.o. Ljubljana entered into an important medium-term agreement on natural gas supply from Algeria.
- By further implementing process organisation and functional management throughout the Petrol Group, synergies were improved and a more uniform approach in the markets of subsidiaries was implemented.
- Investments were made in three large solar power plants in Knin, Croatia.
- Phase 1 of the Petrol Green project to install solar power plants on roofs of Petrol’s points of sale was started.
- The supply chain digitalisation project was launched; by spring 2024, the logistics processes will have been automated, integrated, and digitalised.
2023 marked by business stabilisation and cost optimisation
The Petrol Group will continue to pursue its strategic objectives and expectations of stakeholders by endeavouring to ensure excellent business performance and focusing on the energy transition and corporate social responsibility.
Due to the still difficult situation on energy markets, Petrol expects 2023 to be a very challenging year. Operations of the Petrol Group will still be significantly affected by the regulated selling prices of fuels and energy commodities, the tightening of the purchasing conditions and the inflation, which will be followed by adjusting business processes and optimising costs. For 2023, the Petrol Group plans to generate sales revenue of EUR 10.2 billion, adjusted gross profit of EUR 675.0 million, and EBITDA of EUR 250.4 million. The investment policy will be focused on the energy transition, more precisely renewables, digitalisation, and energy solutions. As result of the regulation, the Petrol Group is faced with shortfall of funds for investments in the green transition; it has set aside EUR 75 million for investments in 2023.
The Supervisory Board of Petrol d.d., Ljubljana endorsed the Annual Report of the Petrol Group and Petrol d.d. for 2022. According to the Supervisory Board of Petrol d.d., Ljubljana, the Management Board, having regard to the interests of the key stakeholders, successfully responded to the difficult circumstances and efficiently, responsibly and transparently led the Petrol Group. Despite the very complex business environment, Petrol stayed a reliable and responsible supplier of energy commodities to households, businesses, and the public sector in 2022.