ORLEN Group Retail operations

PKN ORLEN’s service station networks continued initiatives designed to optimise operating costs and implemented projects to develop their catering services.

Key financial and operating data of the Retail segment

RETAIL , PLNm201420132012change% change
1 2 3 4 5=(2-3) 6=(2-3)/3
Segment revenue 36,104 36,624 38,264 (520) (1.40%)
Segment expenses (35,015) (35,695) (37,588) 680 (1.90%)
Net other income/(expenses)1) (4) (12) (29) 8 66.70%
Operating profit/(loss) before amortisation/depreciation (EBITDA) and impairment losses 1,416 1,268 1,006 148 11.70%
Operating profit/(loss) before amortisation/depreciation (EBITDA) 1,440 1,268 1,006 172 13.60%
Operating profit/(loss) before impairment losses 1,061 917 660 144 15.70%
Operating profit/(loss) 1,085 917 647 168 18.30%
Capital expenditure 345 467 499 (122) (26.10%)

1) Including impairment losses on non-current assets of PLN 24m, recognised in 2014.

Market environment

Changes in regulations setting the technical requirements for fuel storage tanks had a significant effect on the number of service stations operating in Poland, causing some sites to temporarily suspend their operations at the end of 2013 in order to carry out the necessary upgrade work. In some cases, service stations were decommissioned and liquidated. It is estimated that some 200 service stations, the majority of which belonged to independent operators, closed down.

The number of independent service stations is declining steadily as they enter into collaboration with international networks or join associations of independent service stations, adopting their common brand.

In 2014, Hungary’s MOL, which manages Slovnaft and Pap Oil service stations on the Czech market, acquired 44 Lukoil stations as part of a portfolio comprising 138 service stations located in the Czech Republic, Slovakia and Hungary. In May 2014, MOL also announced the acquisition of 125 AGIP sites in the Czech Republic. Following the two acquisitions, MOL will manage a total of 317 service stations on the Czech market, which will ultimately operate under MOL and Pap Oil brands.

In 2014, there were no significant structural changes on the German and Lithuanian markets, where ARAL and Lukoil remain the respective leaders. Retail prices and unit margins in Germany were materially affected following introduction of the requirement for retailers to report fuel prices on an ongoing basis, to allow customers to compare prices at different service stations, which translated into a price decline.

The number of active service stations on the ORLEN Group’s other operating markets did not change materially.

Operations in 2014

With a network of 2,692 service stations in the premium and economy segments, the ORLEN Group is the undisputed leader on the fuel market in the region.

Sales group ORLEN

Struktura przychodów ze sprzedaży Grupy ORLEN

1) Gasoline, LPG.
2) Diesel oil; light fuel oil sold by ORLEN Deutschland.
3) Other – includes revenue from non-fuel products and services.

In 2014, the sales volumes of the ORLEN Group's Retail segment grew by 3.5% (y/y) on the back of higher sales of light and middle distillates on the Polish, German and Czech markets.  The Lithuanian market saw depressed light distillate sales, which were fully offset by a marked increase in diesel oil sales.

Liczba stacji detalicznych

Polish market

An ambitious investment programme – which has seen us open new service stations and other motorway facilities, upgrade existing sites, rebrand BLISKA stations to ORLEN, further develop our catering services, and roll out new store formats – as well as our corporate loyalty schemes  helped us strengthen our leading position and significantly increase our share in the Polish retail fuel market. PKN ORLEN is the undisputed leader in terms of the total number of motorway and expressway service stations it operates.

In 2014, the fuel sales volume grew by 2.7% (y/y) despite the shrinking number of service stations and declining fuel consumption in Poland. The year brought further development of fleet sales, with fleet volumes up on 2013 – to 30% of the total sales. The fleet card functionality enabling payment of motorway toll charges was extended, and new functionalities for the fleet scheme participants were implemented.

In 2014, revenue from sale of non-fuel products and services went up 3% year on year. The number of Stop Cafe and Stop Cafe Bistro outlets rose to 1,250 at the end of 2014. As part of our efforts to introduce new store and catering formats, 18 pilot partner shops were opened. Following the upgrade and further development of automatic car washes, our revenue from these services increased by 19% year on year.

In 2014, the number of ORLEN Premium service stations grew from 1,263 to 1,448 as new outlets were opened (both CODO and DOFO), thorough upgrades were carried out, and the rebranding of BLISKA service stations to ORLEN, begun in 2013, was continued.

German market

Germany has one of the largest and most mature retail fuel sales markets in Europe. STAR, managed by ORLEN Deutschland, is the largest service station network in the economy segment in this country.

In terms of sales volumes, 2014 was a record year. ORLEN Deutschland reported a 3.8% year-on-year increase in sales, which was primarily an effect of higher sales of middle distillates. The network’s efficiency also improved, with the annual average volume of fuels sold at 4.5 million litres per station (up 3.8% year on year). Growth-oriented investments in the non-fuel portfolio and the continuing upgrade of car washes translated into a 6% year-on-year growth in revenue from non-fuel products and services. 

Czech market

The ORLEN Group manages the largest service station network in the Czech Republic under the Benzina brand. Its successful operations contributed to a 0.5 pp market share growth. In 2014, Benzina’s fuel sales improved by 7.5% year on year. Implementing a new operational model for its service station network and new terms of settlements with dealers was an important step for the company. Under the modified framework, Benzina’s revenue from non-fuel products and services increased by 4% year on year. 

Lithuanian market

In 2014, the LOTOS Group’s sales volumes on the Lithuanian market improved by 13.7% year on year, driven by a surge in middle distillate sales (up 26% year on year), offset by lower sales of light distillates, chiefly LPG. In July 2014, PKN ORLEN acquired AB Ventus Nafta, a company of the ORLEN Lietuva Group managing a service station network in Lithuania. AB Ventus Nafta’s stations operated under the ORLEN brand in the premium segment (23 stations) and under the Ventus brand in the economy segment (3 stations). Effective management of the non-fuel product portfolio brought an increase in revenue from non-fuel sales of over 7% year on year.