Ljubljana, 18 May 2023 – At its 33rd meeting, the Supervisory Board of Petrol d.d., Ljubljana discussed the Report on the Operations of the Petrol Group and Petrol d.d., Ljubljana in the First Three Months of 2023. After an extremely difficult business year, the Petrol Group’s operations have returned to predictable levels in the first quarter of 2023, yet still affected by the regulation of motor fuel and other energy commodity prices. In the first three months of this year, we successfully pursued our goals set in the Business Plan of the Petrol Group for 2023, all the while staying focused on our strategic guidelines and on protecting the long-term interests of the Group.
The business situation is calming down, but regulation is still in force
Compared to 2022, the business situation has improved in 2023. In the first quarter of 2023, the Petrol Group operated in accordance with the plan, but the price regulation of energy commodities still has a negative effect on the operations on the Petrol Group’s key markets, such as Slovenia and Croatia. The dynamic year 2022, marked by business uncertainty and the energy crisis, ended with the purchase prices of energy commodities dropping to the levels before the start of the war in Ukraine. Despite the economic slowdown in the euro area in the second half of last year, supply chain problems have slowly improved, energy prices on European markets have declined due to more secure supply, and confidence indicators have improved. In their recent forecasts, international institutions expect gradual economic improvement in Slovenia and its trading partners, gradual easing of inflationary pressures, strengthening of external demand, and fewer supply chain difficulties, although business conditions remain affected by uncertainty regarding the war in Ukraine.
Business results in the first quarter of 2023 on a par with the plan
Nada Drobne Popović, President of the Management Board of Petrol d.d., Ljubljana, commented: "The business results in the first quarter of this year are within the planned figures. We have stayed committed to tailoring our operations to the market situation and ensuring further growth, but we should not neglect the fact that as regards regulation, the business conditions were much more demanding in the first quarter of this year than in the same period last year. In the first three months of this year, our operations were constantly under the influence of the motor fuel price regulation in Slovenia and Croatia, whereas last year, regulation was only imposed on 15 March in Slovenia and 7 February in Croatia. In Slovenia, the prices of electricity and natural gas were not regulated in the first quarter last year, but this year, they were regulated the entire first quarter."
In the first three months of 2023, the Petrol Group generated sales revenue in the amount of EUR 1.8 billion, a year-on-year decrease of six percent, mainly because of the lower prices of natural gas and the lower volume of electricity and natural gas trading compared to the same period last year.
In the first three months of 2023, the Petrol Group sold 884.1 thousand tons of fuels and petroleum products, a year-on-year decrease of two percent. The Petrol Group generated EUR 118.3 million in revenue from the sales of merchandise and services in the first three months of 2023, up by 17 percent compared to the same period last year. In the first three months of 2023, we also sold 4.6 TWh of natural gas, 2.6 TWh of electricity, and 72.1 thousand MWh of heat.
Adjusted gross profit amounted to EUR 111.9 million in the period concerned, down by 31 percent compared to the same period last year owing to the quite different business conditions compared to last year’s.
Operating costs in the first three months of 2023 stood at EUR 130.6 million, a year-on-year increase of EUR 11.3 million or ten percent, mostly on account of the higher prices of energy commodities and the higher labour costs.
EBITDA totalled EUR 59.1 million in the first three months of 2023 and was ten percent lower than in the first three months of 2022. The major EBITDA drop compared to the same period last year is recorded in the segment of fuels and petroleum products because the prices of fuels, except premium fuels, are still regulated at all service stations in Croatia and at non-motorway stations in Slovenia. The EBITDA structure shows that 45 percent of EBITDA is from the Energy and Solutions product group, just under a third from Fuels and Petroleum Products, and a quarter from Merchandise and Services.
Net profit amounted to EUR 24.8 million in the first three months of 2023, a decrease of 23 percent compared to the same period last year.
Investments are focused on the energy transition and digitalisation
In the first three months of 2023, we earmarked EUR 18.3 million for net investments in fixed assets, the majority for the sales of fuels and petroleum products, renewable electricity generation, and infrastructure. Almost a half of the investments were earmarked for the energy transition. In the first quarter of 2023, the Petrol Group focused on several key projects, including the supply chain digitalisation (the Oil&Gas E2E project) for logistics optimisation and supply tracking. We continued constructing one of the largest solar power plants in the region with a total installed capacity of 22 MW. The solar power plant is situated nearby Knin, Croatia, and will start operating in 2023. In the context of the Petrol Green project, we are installing photovoltaic power plants on our points of sale, which is in line with our sustainability commitments.
Legal action regarding the compensation for the damage resulting from fuel price regulation and a breach of natural gas supply agreement
The Management Board of Petrol d.d., Ljubljana submitted proposals for amicable settlement of dispute to the State Attorney’s Offices of the Republic of Slovenia and the Republic of Croatia in order to receive compensation for the damage resulting from the regulated prices of motor fuels in 2022, in Slovenia in the amount of EUR 106.9 million and in Croatia in the amount of EUR 55.9 million. Both State Attorney’s Offices rejected the claims. A lawsuit has already been brought in Slovenia and further legal actions are in preparation in Croatia.
Due to a breach of the long-term natural gas supply agreement, the Petrol Group has initiated an arbitration against Gazprom Export LLC.
"All our activities are aimed at protecting the long-term interests of the Petrol Group and its stakeholders. Being one of the largest and most ambitious energy groups in the region, we are building a future with our integrated sustainability-oriented range of energy commodities and energy solutions. We stay committed to ensuring sustainable growth and stability for our shareholders, employees, customers, and suppliers," added Nada Drobne Popović, President of the Management Board.
Supervisory Board’s opinion
According to the Supervisory Board of Petrol d.d., Ljubljana, the results achieved in the first quarter of 2023 are good and reflect the Petrol Group’s successful adaptation to the very challenging market situation. The highlighted commitment to ensuring sustainable growth and energy transition and protecting the Group’s long-term interests attests to the Petrol Group’s reliability and strong focus on the future.