Yesterday, Petrol held its Supervisory Board meeting, during which the 2024 business plan was discussed and endorsed. In this overview, we bring you a detailed summary.
Business Environment
In 2024, the Petrol Group anticipates facing considerable uncertainty due to unstable energy markets and geopolitical tensions, particularly related to the war in Ukraine and conflicts in the Middle East. Despite this, slight economic growth is forecasted, and inflation is expected to be slightly lower than in 2023, though substantial cost pressures are still foreseen. The Company plans to adhere to current regulations on petroleum product prices and margins, assuming that the existing Decree will not be extended beyond February.
Oil markets are stable, and the Slovenian petroleum product market is competitive, with the country having the lowest margin in Europe. The Company believes that due to these factors, further regulation is unnecessary. In 2024, energy market prices are expected to stabilize, with some regulation in electricity and natural gas prices in Slovenia. The Petrol Group’s business plan for 2024 involves adapting to market conditions by investing in renewables and the green transition, aligning with global sustainability trends. Additionally, preparations for a digitized operational landscape and new sales channels aim to ensure resilience and growth amid changing global dynamics.
Main orientations and risks
Due to the slow economic growth, Petrol expects sales will increase in the segment of fuels and petroleum products, especially motor fuels. The Company will compensate for the decrease in fuel oil sales by continuing to substitute them will alternative energy commodities. In the merchandise and services retail segment, they will continue offering a fast and convenient service to customers. They will also keep the market share in the sale of other energy commodities, i.e. electricity and natural gas, while simultaneously, expanding the network of owned and non-owned charging points. The Company also plans on increasing the share of renewables generation in the region, to keep up with the green transition. In the field of energy solutions, the main focus will be on industry and households. Finally, to mitigate the cost growth, they will continue their cost-optimisation activities.
In terms of the main risks, Petrol points towards interventions by the regulators in the price policy, geopolitical risks, and the negative effect of the energy crisis on the price of energy commodities, which directly affects the frequently changing regulatory frameworks that are occasionally adopted without any prior announcement, thus adversely affecting planning. Furthermore, the volatility of the energy markets exacerbates the conditions in petroleum product procurement and increases inflationary pressures on costs. Potential risks of supply chain disruptions are also present, which may affect the economic stability and regulatory requirements regarding bio-component blending in Slovenia and Croatia. The Decree on the promotion of the use of biofuels and other renewable fuels will also affect costs. Other risks of course include the deterioration of the economic outlook in Slovenia’s key partners, the volatility of the European market and related high market risks, as well as the labour force shortages.
Annual business targets
The 2024 plan targets sales revenue of EUR 5.8bn, as well as an adjusted gross profit of EUR 705.6m. This is based on a sale of 4.1m tons of fuels and petroleum products, as well as merchandise and services in the amount of EUR 667.5m, 16.4 TWh of natural gas, 12.4TWh of electricity, 147.7k MWh of heat, as well as by generating 204.4k MWh of electricity and selling energy and environmental solutions.
In terms of EBITDA, it is planned at EUR 304.6m, resulting in a net debt to EBITDA of 1.41x. Finally, they expect to make a net profit of EUR 156.5m. Moving on to investments, they will be focused on business expansion in the field of renewable electricity generation, the supply chain digitalisation, as well as on modernizing and increasing the number of service stations and expanding operations in the field of energy and environmental solutions. In total, the investments are planned at EUR 130m, of which energy transition projects make up 44%.
In 2023, despite challenges from the energy crisis and regulatory issues affecting results, the Petrol Group successfully stabilized operations, maintaining a good financial condition. Although performance fell short of ambitions due to energy price regulation, the Company remained committed to high standards, as recognized by S&P Global Ratings. Through optimizing processes and reducing costs, the Company established a strong foundation for the future. In 2024, there are plans to increase investments in energy transition, aiming to overcome setbacks from 2022 and 2023. The Petrol Group is dedicated to the energy transition and providing an excellent user experience, ensuring stability and profitability for shareholders in the evolving energy and economic landscape.
