According to Petrol’s preliminary 2022 results, the Group recorded a sales revenue of EUR 9.4bn (+90% YoY), an EBITDA of EUR 95.9m (-60% YoY), and a net profit of EUR -12.1m (2021: EUR 124.5m).

After the Supervisory Board meeting of Petrol that was held yesterday, 19 January 2023, Petrol today published the 2022 preliminary results. According to the press release, Petrol Group’s business plan for 2022 was optimistic and ambitious in its goals that were set in the Group’s Strategy until 2025, when they committed themselves to lead the energy transition. The annual business plan was prepared on the assumption that the growth of energy prices would settle down in 2022 and that governments would take various measures to increase economic activity and consumption levels.

At the beginning of 2022, economic growth was stable despite the COVID-19 pandemic still being present. This was accompanied by high prices of energy commodities, which increased even further after the beginning of the war in Ukraine. Because of this, the business conditions deviated significantly compared to the plan for 2022. As such, the Group operated under very complex conditions marked by the energy crisis at the EU level, as well as government interventions to mitigate the effects on citizens and businesses. Because of the high energy prices, as well as the rising inflation, governments in markets where Petrol operates started regulating prices of fuel, electricity, and natural gas. As an example, they point out that in Slovenia alone, 37 regulations were adopted for this purpose in 2022. This had a very strong effect on the Group’s business operations, and as such, their ability to achieve the goals set up in the Business Plan for 2022. Furthermore, Geoplin was also subject to Russia having cut off its natural gas supplies and the high volatility of natural gas prices due to the war in Ukraine.

Because of these circumstances, several potential risks outlined in the Business Plan for 2022 were realized: firstly, a negative effect of the energy crisis on inflation, and following this, on the growth of living expenses. Secondly, the intensification of petroleum product purchase conditions, the regulation of selling prices of energy commodities, and other regulatory requirements.

Moving on the results themselves, Petrol Group planned its sales revenue to amount to EUR 5.9bn in 2022, whereas according to the preliminary numbers, they achieved a sales revenue of EUR 9.4bn, a 59% increase compared to the plan. When compared to 2021, this is an increase of 90% YoY. This was due to higher cost and selling prices of motor fuels and energy commodities, but also due to the increased sales of fuels and petroleum products as a result of the low prices and the merger Crodux derivati dva into the Petrol Group. In 2022, the Group sold 4.2m tons of fuels and petroleum products, up 13% compared to the plan. Due to the high cost of all energy commodities and the effect of regulation of motor fuels and other energy commodities, the aforementioned increase in sales revenue is not reflected in the adjusted gross profit, which was planned to amount to EUR 643.9m, but ended up being at EUR 372.5m, or 58% of the plan.

Petrol also mentioned that throughout 2022, they greatly focused on cost management, but it was still not able to fully avoid the deviation from the planned. The estimated operating costs for 2022 amount to EUR 477.7m, exceeding the planned op. costs (EUR 452.5m) by 6%. Most of the growth is tied to the increase in sales, especially the cost of logistics.

Petrol’s planned EBITDA for 2022 amounted to EUR 297.8m, while according to the current estimate, EBITDA stands at EUR 95.9m or 32% of the plan. Compared to 2021, this is a decrease of 60% YoY. The negative effect is mostly on the account of the regulation of motor fuels in all markets, in the amount of EUR 180.1m. The EBITDA was also affected by Geoplin’s operating loss, which as mentioned, came from the stopped natural gas supplies under the Russian contract, and the regulations of other energy commodities in Slovenia and Croatia. This would also mean that the EBITDA margin stood at only 1.02%, a decrease of 3.78 p.p. YoY.

2022 planned net profit amounted to EUR 158.3m, while according to the estimate, it currently stands at EUR -12.1m. As a point of comparison, in 2021 it stood at EUR 124.5m. This would imply a profit margin of -0.13%, a decrease of 2.64 p.p. YoY.

Source: Petrol, InterCapital Research

The Group also commented on its investments for 2022. Due to the nature of the circumstances in the year, it was forced to adjust its investments. According to the plan, they earmarked EUR 100m for development in 2022 but were only able to use EUR 60m, of which more than half is for energy transition projects.

Finally, the Group also notes that the estimated data does not include potential receipt of compensation for the damage resulting from fuel price regulation in Slovenia (in the amount of EUR 106m), and Croatia (in the amount of EUR 52.1m) in 2022.

Romgaz, the largest gas producer in Romania, has announced that it will pay a solidarity tax of 60% on “exceptional profits” from 2022. It is estimated that the company will pay the Romanian state more than RON 900m.

The Ministry of Finance has asked the European Commission for clarifications regarding the European regulation transposed into national legislation, as it concerns the way in which this tax is calculated. The clarification could be decisive in determining the position of the tax authorities in the case of OMV Petrom, a company that has originally submitted that it is not obliged to pay this tax.

The 60% tax rate that the government of Romania has opted for is double the minimum provided in the European Union regulation, which is 33%, and is the third largest in the EU. It is applied to a tax base represented by the difference between the taxable profit for 2022 and 2023 (being an exceptional measure, it applies only until December 31, 2023) and 120% of the average taxable profit achieved in the period 2018-2021.

According to Romgaz, in 2023 more than half of the company’s expenses (55%) will be tax expenses, compared to only 14% personnel expenses, 13% goods and services expenses and 18% other operational expenses. These expenses include royalties, the tax on additional revenues from the sale of gas, the contribution to the energy transition fund, contributions owed to ANRE, the solidarity contribution (mentioned RON 900m), taxes on land and buildings and other taxes and fees. In total, the amount of taxes and fees that Romgaz estimates it will pay to the budget in 2023, including the solidarity contribution, will amount to over RON 4.1bn, which is 2 times higher than the net profit forecast by the company for the same year, which is RON 2bn.

Furthermore, last week OMV Petrom, the largest producer of hydrocarbons in Romania, has stated that according to the European Regulation, transposed into domestic legislation, through which the contribution of 60% of the accounting profit was introduced, it is not obliged to pay this tax. The main shareholder, the Austrian group OMV, has informed the Vienna Stock Exchange that Petrom will not pay the solidarity contribution to the Romanian state. At the same time, the Austrian group announced the amount that OMV will pay on account of the 33% solidarity contribution (if investments are made, 40% in their absence) introduced by the Viennese government: “Based on the preliminary financial figures, we expect that the solidarity contribution from Austria to have a negative impact of approximately 150 million euros for the year 2022. This will be effectively paid only in 2023”.