Ljubljana, 24 August 2023 – At its 38th 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 Six Months of 2023. After an extremely difficult business year 2022, the Petrol Group’s results in the first half of 2023 were on a par with the annual plan. The operations are still affected by the capped prices of fuel and energy commodities. Nevertheless, the Petrol Group has continued to pursue the strategic guidelines for the sustainable development and was one of the first Slovenian listed companies to have obtained the ESG rating in the first half of this year.
Business conditions still marked by regulation
The situation on the energy market was more stable in the first half of 2023 compared to last year and we witnessed slight economic growth and gradual easing of inflationary pressures. However, the business situation is still affected by uncertainty surrounding the war in Ukraine and, additionally, the Petrol Group’s operations are still under the influence of the regulated prices of fuels and energy commodities on its key markets – Slovenia and Croatia.
This year, business conditions are quite different than in the same period last year. While the selling prices of certain petroleum products were set even below the cost of such petroleum products most of the first half of 2022, the regulation is less strict this year and enables us to cover costs in Slovenia; in June 2023, Croatia also eased the regulation.
In Slovenia and Croatia, the prices of electricity and natural gas were market-determined in the first six months of 2022, whereas they were regulated in the first half of this year.
Business results 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 half of this year are within the planned figures. We are satisfied with the performance in the field of the energy transition; the results achieved in energy solution sales and renewable electricity generation are particularly encouraging. Through the energy transition, we aim to support the state, households and the economy in implementing the green transition, not only in Slovenia, but also in the region of southeastern Europe. Standing out among this year’s priority development projects is the intensive process of our sales network renovation in the direction towards developing a new generation of points of sale.”
In the first six months of 2023, the Petrol Group generated sales revenue of EUR 3.4 billion, a year-on-year decrease of 17 percent, owing to lower prices of energy commodities and the lower volume of electricity and natural gas trade compared to the same period last year.
In the first six months of 2023, the Petrol Group sold 1,858.6 thousand tons of fuels and petroleum products, a year-on-year decrease of 1 percent, as a result of the regulated prices of petroleum products in the previous year when they were lower than in the neighbouring countries for most of the period concerned, leading to increased sales. Moreover, buyers were stocking up at the start of 2022 because of the uncertainty on the oil market. The Petrol Group generated EUR 262.6 million in revenue from the sales of merchandise and services in the first six months of 2023, a year-on-year increase of 10 percent. In the period concerned, we also sold 8.2 TWh of natural gas, 5.1 TWh of electricity, and 80.6 thousand MWh of heat.
Adjusted gross profit amounted to EUR 264.7 million in the period concerned, up by 8 percent year-on-year.
Operating costs in the first six months of 2023 stood at EUR 275.1 million, a year on-year increase of EUR 39.2 million or 17 percent, especially on account of the higher prices of energy commodities compared to the same period last year, and higher labour costs which increased primarily due to the high inflation.
EBITDA totalled EUR 116.3 million in the first six months of 2023, which is EUR 67.8 million more than in the first six months of 2022. The highest EBITDA growth compared to the same period last year is recorded in the segment of fuel and petroleum product sales as a result of the less strict regulation of the prices of certain petroleum products. The Petrol Group also performed well in the field of the energy transition; especially in energy solution sales and renewable electricity generation. The result was not as good in natural gas trade and sales, most of all because of the capped prices on the Croatian market. In the EBITDA structure, 47.2 percent is accounted for by the Energy and Solutions product group, followed by 28.4 percent by the Fuels and Petroleum Products group, 23.1 percent by Merchandise and Services, and 1.3 percent falls to other activities.
Net profit amounted to EUR 52.8 million in the first six months of 2023, compared to a loss generated in the amount of EUR 1.3 million in the same period last year.
Investments and projects to support digitalisation and the green transition
In the first six months of 2023, we earmarked EUR 36.2 million for investments in fixed assets and long-term investments. 36.8 percent of investments was earmarked for the energy transition in the period concerned.
At the Petrol Group, we have continued the Oil&Gas E2E supply chain digitalisation project, the aim of which is to optimise logistics. Our investments have stayed focused on renewable electricity generation. The project to construct one of the largest solar power plants in the region, on three locations surrounding our Ljubač wind park (Suknovci, Vrbnik and Pliskovo in Croatia) with a total installed capacity of 22 MW, is in the final phase which will allow connecting the power plants to the grid and starting them. We have continued developing the Dazlina wind power plant construction in Croatia. In the context of the Petrol Green project, the first phase of installing photovoltaic power plants at 46 locations is underway. The second and third phases at a total of 41 locations are in the phase of signing contracts with contractors. Simultaneously, activities are in place to obtain documentation and the necessary permits for the next project phase in Slovenia and expansion to Croatia.
In the context of the strategic sales network renovation, Petrol is completing investments in ten points of sale in Croatia (three in Istria, four in Dalmatia and three near Zagreb). The renovated points of sale are now a reflection of Petrol’s trademark. The tree points of sale near Zagreb were fully reconstructed (Desinec north, Sveta Helena east and Sveta Helena west).
In Slovenia, a complete reconstruction of two points of sale on the southern Ljubljana ring road (Barje south and Barje north) was started on 17 July 2023 and is planned to be completed by the end of 2023. The beginning of works marks a very important milestone for Petrol in the field of developing a new generation of points of sale.
At the Petrol Group, we have continued implementing the sustainability strategy towards a low-carbon company, by taking into account the circular economy in partnership with employees and the social environment.
Petrol d.d., Ljubljana, is one of the first Slovenian listed companies to have obtained an ESG sustainability rating (environmental, social and governance standards). S&P Global Ratings gave Petrol d.d., Ljubljana an ESG score of 56 Adequate in June 2023, which is above the average score of 54 in the global oil and gas sector (source: Sustainable Finance Newsletter, August 2023). This is an important step forward in Petrol’s commitment to the environmental, social and governance accountability. Detailed information about the ESG rating is presented in a separate public release.
The impact of floods on Petrol’s operations and support to those who have been affected
At Petrol d.d., Ljubljana, we are aware of the severity of the devastating August flooding in Slovenia due to which we unfortunately had to close some of our points of sale, three of which – Nazarje, Otiški vrh and Žerjav – were still closed on the report publication date. We are making every effort to open them as soon as possible. The supply of heat and natural gas to a part of households in the municipalities of Mežica, Črna na Koroškem, and Prevalje is disrupted due to the damaged gas pipeline infrastructure. The activities to remedy the consequences of flooding are still underway at the time of report publication and it is not possible to estimate when the works will be completed, and supply restored. Moreover, the estimation of the damage to Petrol’s buildings and infrastructure has not been prepared on the report publication date.
In the context of solidarity, the Petrol Group has focused first and foremost on its employees who have been severely affected by flooding and is helping them financially and through other activities.
Our mission is not only to supply energy commodities, but also to provide support to those who need us the most. We stand by our customers during this difficult time, hence we have complied with the initiative of the Ministry of the Environment, Climate and Energy to enable households in the most affected areas to pay for electricity at the price of EUR 1 per MWh until the end of this year.
Supervisory Board’s opinion
According to the Supervisory Board of Petrol d.d., Ljubljana, the results achieved in the first half of 2023 are good and reflect the Petrol Group’s successful adaptation to the 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.