The Supervisory Board discusses the business results in the first six months of 2024
Ljubljana, 22 August 2024 – At its 55th 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 2024. In the first half of 2024, the Petrol Group’s operations were marked significantly by the petroleum product price regulation in Slovenia.
On publication of the half-yearly report, Sašo Berger, President of the Management Board of Petrol d.d., Ljubljana, said: “Despite the challenging market situation, the Petrol Group achieved good business results in the first six months of 2024, which reflect our ability to respond to challenging contexts quickly, prudently and successfully. Nevertheless, the still effective regulation of petroleum product prices does not provide conditions for long-term business growth, especially in the light of the increasing environmental requirements which we are obliged to finance from our operations in the field of petroleum product sales. The success in other segments proves that our strategy of diversification and investments in the energy transition is correct. We are proud to have managed to achieve results which are comparable to last year’s despite the regulatory restrictions and to have stayed committed to the sustainable development and responsible business operations.”
In the first six months of 2024, the Petrol Group operated as planned even though the majority of service stations in Slovenia generated negative results from the sales of petroleum products as a result of the price regulation. Despite energy price stabilisation, we were faced with further tightening of the regulatory framework for petroleum products in Slovenia and the still unresolved issue regarding the compensation for the damage due to the natural gas price regulation on the Croatian market at the end of 2023. Petroleum product prices are also regulated in Croatia and Serbia, but much less restrictively. The environmental requirements regarding biocomponent blending and the increasingly stricter regulation pursuant to the Decree Ensuring Energy Savings for Final Customers, which do not provide for adequate coverage in the sellers’ regulated margin, are becoming key elements for the company’s long-term performance.
According to international institutions, GDP in Slovenia’s main trading partners will strengthen in 2024 compared to 2023, although not as much as projected in the autumn. As most recently reported by the IMAD, the economic growth is slowing in Slovenia.
Despite the challenging situation, the Petrol Group generated good business results in the first six months of 2024. Sales revenue was EUR 2.9 billion, a year-on-year decrease of 14 percent, mainly due to the lower prices of energy commodities on spot and futures markets.
In the first six months of 2024, the Petrol Group sold 1,829.9 thousand tons of fuels and petroleum products, a decrease of 1.5 percent compared to the same period of 2023. Sales on the Slovenian market were slightly higher than in the same period last year, while sales on SEE markets increased much more. The only market that recorded a drop was the EU, as a result of last year’s extraordinary sales due to the shortage of petroleum products caused by the embargo on imports from Russia. In the first six months of 2024, we generated revenue of EUR 305.9 million from the sales of merchandise and services, an increase of 16.5 percent year-on-year in both Slovenia and SEE markets.
We have been successfully increasing the use and number of EV charging stations. At the end of June, Petrol’s entire network had 514 EV charging stations. In the first six months of 2024, we also sold 10.2 TWh of natural gas, 5.8 TWh of electricity and 77.5 thousand MWh of heat.
Gross profit including net commodity derivatives amounted to EUR 335.5 million, down by 1 percent year-on-year; thanks to prudent cost monitoring and successful performance of other segments within the Petrol Group, EBITDA amounted to EUR 123.7 million, which is 6 percent more than in the same period last year.
Net profit was EUR 52.1 million in the first half of 2024, which is at a comparable level to that from the same period last year.
In the business plan, or aim was to earmark EUR 130.0 million for investments, of which 44 percent for energy transition projects. However, the too low regulated margins in Slovenia, which make it impossible to cover all operating costs of fuel distribution and sales, have a negative impact on the Petrol Group’s investment capacity, especially with regard to the energy transition projects which are vital in making a transition to green fuels. The regulatory framework for the retail energy prices should take into account all additional costs arising from the legally binding steps of the energy transition, such as the mandatory biofuel blending, CO2 tax and costs related to ensuring savings for final customers. If the petroleum product price regulation eventually provides for a sufficient margin, we will be able to speed up the investment cycle and ensure a stable capital structure.
For 2024, the Petrol Group projects sales revenue of EUR 5.8 billion, gross profit of EUR 705.6 million, EBITDA of EUR 304.6 million and net profit of EUR 156.5 million. The Government of the Republic of Slovenia passed a decree and on 16 July 2024 returned the maximum permitted margin on diesel and NMB-95 petrol to the level from 2023, as a result of which we suppose that we will achieve the objectives set for 2024 at the end of the year. However, despite the most recent increase of the margin, we estimate that the margin is still not at the level which would ensure a sustainable long-term business growth in the field of petroleum product sales, especially in the light of the increasing environmental requirements which Petrol is obliged to finance from this activity. In Slovenia, the margins are by far the lowest if compared with the rest of Europe.
Supervisory Board’s opinion
The Supervisory Board of Petrol d.d., Ljubljana believes that the Management Board of Petrol d.d., Ljubljana worked in accordance with the plan and successfully tailored the operations to market challenges in the first half of 2024. Despite the challenging situation, the Petrol Group has achieved results which serve as a good basis to keep up with successful performance. The Supervisory Board will continue to monitor closely the operations of the company and support its endeavours to achieve a sustainable growth and energy transformation.