Petrol d.d. shares slide as Slovenia extends fuel price caps despite profit jump

Petrol d.d. Ljubljana shares slipped after Slovenia extended fuel price regulation to motorway stations, a move the company asserts will negatively impact future investment and operations despite reporting a 44% surge in first-half net profit to €75.2 million. While the company's H1 performance included a 13% rise in EBITDA to €145.4 million and increased fuel volumes, it views Slovenia's capped fuel margins as the lowest in the EU, prompting it to pursue over €128 million in legal claims for past regulatory losses in Slovenia and Croatia.

Analysis

Petrol d.d. Ljubljana faces a significant headwind from the Slovenian government's decision to extend fuel price regulations to motorway service stations, a move the company states will directly impact future investment plans. This negative regulatory development overshadows an otherwise strong first-half 2025 financial report, which saw net profit surge 44% to €75.2 million and EBITDA rise 13% to €145.4 million. The company has demonstrated operational resilience, increasing fuel sales volume by 7% year-over-year, partly driven by transit customers shifting to lower-priced Croatian stations, and successfully reducing overall operating costs by 0.4% despite a 9% increase in labor expenses. The balance sheet has also strengthened, with net debt falling to €335.9 million and a BBB- stable credit rating reaffirmed by Standard & Poor's. However, the core issue remains the capped gross fuel margin in Slovenia, which the company claims is the lowest in the EU. To mitigate historical impacts, Petrol is actively pursuing legal claims for compensation totaling over €128 million in Slovenia and Croatia, representing a material but uncertain future cash inflow. The stock's negative reaction indicates that investors are weighing the forward-looking regulatory risk more heavily than the backward-looking positive earnings.

Key Decisions for Investors

• Investors should weigh the company's strong H1 2025 financial performance, including a 44% net profit increase and falling net debt, against the significant forward-looking risk posed by extended Slovenian fuel price regulations.
• The outcome of legal claims totaling over €128 million in Slovenia and Croatia for past price-cap damages represents a key potential catalyst that could materially impact the company's valuation and should be monitored closely.
• It is prudent to assess the company's ability to offset domestic margin pressure through its demonstrated growth in Southeast Europe and the expansion of its e-charging network, as these are crucial components of its diversification strategy.