In 2022, INA recorded sales revenue growth of 56.6% YoY, EBITDA growth of 52.7%, and a net income of EUR 252.5m, an increase of 47.6% YoY.
Starting off with the sales revenue, in 2022 it amounted to EUR 4.66bn, an increase of 56.6% YoY. This was supported by improvements in hydrocarbon prices and product quotations. Breaking this down by segments, in the “Refining and Marketing, including Consumer Services and Retail” segment, by far the largest one, the sales revenue amounted to EUR 4.57bn, an increase of 56.9% YoY. INA notes that the favourable macroeconomic environment was supported by profitable operation on maximum capacity in the peak summer months, which mitigated the risk of lower product availability on the global market driven by the Russian-Ukrainian crisis. Trading activities were mainly focused on competitive crude sourcing, safe and timely product sales and supply, own consumption optimization, and inventory risk management. They also note that they maintained a strong market position on core markets, with both commercial and retail margins under pressure due to government price regulation throughout 2022. Total retail sales volumes amounted to 1,173 kilotons (kt), an increase of 11% YoY, with a significant contribution coming from Croatia (+116 kt) as a result of lifted COVID restrictions and excellent tourist consumption.
The second segment, “Exploration and Production”, recorded a sales revenue of EUR 892.9m, an increase of 73% YoY. This was impacted by higher prices during most of the year, excl. the strong effect of gas price regulation which is only visible as of Q4 2023. Of this revenue, gas sales revenue added EUR 221.7m, Brent price which was 43% higher YoY brought an additional EUR 103.6m of revenue from crude oil and condensate sales, while other products added EUR 20.6m to the overall sales mix. Production was down 4% YoY, as compared to an 8% decrease in 2021 vs. 2020, which INA notes is a strong improvement considering the maturity of its oil and gas fields. This came mainly as a result of an intensive investment campaign.
Next up, we have the operating expenses. In total, they increased by 51% YoY and amounted to EUR 4.34bn. The main drivers of this growth were material expenses, which grew by 64% YoY, to EUR 3.78bn. Inside the material expenses, costs of raw material and consumables, as well as the cost of goods sold (COGS) were the main drivers, increasing by 49% to EUR 1.73bn, and 98% to EUR 1.75bn, respectively. The growth in costs of material and consumables was due to different dynamics of refining operations and higher prices, while higher COGS came because of a price increase and higher imports to ensure market supply. Staff costs only increased marginally in comparison, growing by 5% YoY to EUR 207.9m. As a result of these developments, the EBITDA increased by 53% YoY and amounted to EUR 672.9m. This would mean that the EBITDA margin amounted to 14.43%, a decrease of 0.37 p.p. YoY.
Moving on to the net financial result, it amounted to a negative EUR 16.4m (2021: EUR 12.49m). This came as a result of the following factors: firstly, the net FX loss of EUR 14.7m, as compared to a net FX gain of EUR 1.5m in 2021. Secondly, the interest expense amounted to EUR 11.9m, while the interest income amounted to EUR 1.06m. Finally, other financial net gain amounted to EUR 9.2m in 2022, a decline of 60% YoY. The income tax expense increased significantly in 2022, amounting to EUR 156.3m, an increase of 3.4x YoY. This came as a result of two things. Firstly, the 18% tax rate applied, which means that on an EBT of EUR 408.8m (+98% YoY), INA paid EUR 73.6m in taxes, as compared to EUR 37.2m in 2021. Secondly, the extra profit tax. The extra profit tax refers to the tax proposed by the Croatian government all the way back in September and further discussed and formulated in October/November, to be passed and effective on 21 December 2022. Due to this additional tax, INA had to pay an extra EUR 81.1m (HRK 611m) in taxes in 2022. INA does note that in the entire Group, this tax was only applicable to INA d.d.
As a result of all of these developments, INA recorded a net income of EUR 252.5m, an increase of 47.6% YoY. This would also imply a net income margin of 5.42%, a decrease of 0.33 p.p. YoY. However, excl. special items in 2022/2021, such as the provisions for Ivana D decommissioning of HRK 88m (EUR 11.7m) in 2021, and the impairment and reversal of impairment of assets of HRK 178m (EUR 23.6m) in 2022, as well as the aforementioned extra profit tax, the net profit for the Group would amount to EUR 356.4m, an increase of 95% YoY.
INA Group key financials (2022 vs. 2021, EURm)
Source: INA, InterCapital Research
Lastly, taking a look at the Group’s investments, the total CAPEX for the year amounted to EUR 362m, an increase of 71% YoY. Refining, Marketing, including Consumer Services and Retail’s CAPEX amounted to EUR 234m, an increase of 94% YoY. For the Refining and Marketing, these investments included the Rijeka Refinery Upgrade Project, which has achieved 70% completion, with mechanical completion expected in H1 2022, as well as the CDU energy efficiency upgrade project, and the replacement of condensing turbines with electric drives. Meanwhile, for Consumer Services and Retail, the focus of 2022’s CAPEX was on service station modernization. Finally, in the Exploration and Production segment, CAPEX amounted to EUR 106m, of which, the majority went to Croatia’s Offshore drilling campaign and onshore development activities, with the remainder going to international investments in Egypt and Angola.
