STA, 26 August 2022 - Despite more than doubling its revenue, Slovenia's energy group Petrol posted a net loss of EUR 1.3 million in the first half of the year as a result of fuel price regulation, the company said on Friday.
The group saw sales revenue rise by 126% to EUR 4.2 billion, a figure well above the target, on the back of increased volume sales of fuels and oil derivatives as well as price hikes.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at EUR 48.6 million, down by 52% year-on-year and 64% below plans.
The net loss is a result of the steep drop in EBITDA that was caused by the price regulation measures in Slovenia.
The price regulation forced Petrol "to sell fuels at a lower retail price than the purchase price 90% of the time between 15 March 2022 and the end of June".
"The company's EBITDA loss of EUR 108.9 million in Slovenia was caused by the government's freeze on retail prices of petroleum products from 15 March to 30 April and the reintroduction of the cap on 11 May for a period of 90 days, which was lifted prematurely by the current government on 21 June," the company said.
The group's EBITDA loss in Croatia, where the price regulation has been in force since 7 February, stood at EUR 14.5 million.
Adjusted gross profit for the first six months of the year totalled EUR 245.4 million, down 5% year-on-year and 19% below plans. The positive contribution to gross profit growth due to the integration of the company Crodux Derivati Dva into the group was reversed by the impact of price caps in Slovenia and Croatia.
In 2021, Petrol posted nearly EUR 5 billion in sales revenue and EUR 124.5 million in net profit. In the first quarter of this year, the group was still in the black as net profit stood at EUR 32.4 million and was higher than the quarter-one figure in 2021.
Petrol's chief financial officer Matija Bitenc told the STA that the company was hoping to reach an agreement with the government on reimbursement of damages it incurred during the first wave of price regulation in spring, under the previous government.
"We incurred costs, sold more fuel, but we did not cover the purchase price," he said." A request for reimbursement has already been sent to the government. Several meetings with the finance and economy ministries have been held but a final agreement has not been reached yet.
He also warned that the uncertainty might have an impact on the company's credit rating. In March S&P put Petrol on watch with a negative outlook as it awaits information about how important Petrol is for the state.
"The rating agency has so far assessed that in the event of any problems the state would come to the rescue ... Today their view is slightly different and they are wondering if this is still the case," he said.
A meeting with S&P is scheduled for September, until which time they want to know to what extent the damage will be reimbursed by the state. "Having Petrol in poor financial shape is not good for anyone at this time, least of all for the taxpayers," he said.
With its current rating Petrol does not need bank guarantees to purchase oil derivatives, but if the rating is downgraded they would have to issue guarantees in the EUR 300-500 million range per month, he said.
The Economy Ministry told the STA there had been no final decision yet about compensation. If one is made, the government will first set the criteria for eligibility and require evidence.
"In recent months some oil companies have proactively sent 'notifications of damages' to the [ministry], but we do not consider these formal claims," it said.
Under the law on price controls, the government has the prerogative to decide whether to reimburse companies or not. It also decides on the appropriate means of compensation, either financial remuneration, tax benefits or other forms of financial incentives, it said.