When Lider revealed last year, after the financial reports for 2021 were published, that MVM CEEnergy Croatia was the fastest-growing company in Croatia, achieving a revenue growth of as much as 26.5 million percent (from 13,600 kuna in 2020 to 3.59 billion kuna in 2021), CEO Marjan Vugrinec explained that such revenue growth was due to a significant increase in gas prices at the end of 2021, as the company is engaged in the import and sale of LNG, liquefied natural gas.
With incredible revenues of 1.7 billion euros (almost 13 billion kuna) achieved in 2022, also thanks to high natural gas prices that extended into most of 2022, the company, which has existed for just over three years, climbed to fifth place on this year’s Lider list of the 1000 largest companies in Croatia by revenue. This is a jump from last year’s twentieth place on the Lider list, and a sufficient reason to take a closer look at its operations.
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—– The trend of the European market from 2021 continued into 2022. Natural gas product prices at the most important European hubs peaked around August 2022. Accordingly, revenues also increased. It should be noted that in 2022 we imported 13 LNG cargoes, while in 2021 we imported nine. The total amount of LNG we imported in 2022 is approximately 1.8 million cubic meters, which ‘translated’ into natural gas amounts to about one billion cubic meters. If you multiply those numbers by the price movement of gas throughout the year, revenues reflect that – explains Vugrinec.
Dominant Hungarian Player
As the name suggests, MVM CEEnergy Croatia is a Croatian subsidiary of the Hungarian company MVM CEEnergy, which is part of MVM, the leading Hungarian group for natural gas trading. The Hungarian MVM CEEnergy is the sole owner of the Croatian subsidiary. Interestingly, only five employees work in the company, including director Vugrinec. Alongside him at the helm of the Management Board is Péter Bártfai, who is employed at the parent company.
That MVM Group is one of the dominant players in the Hungarian energy sector and has a prominent role in implementing the country’s energy strategic goals is confirmed by our independent source who wished to remain anonymous.
– MVM Group is the second largest company in Hungary and the tenth in Central Europe. Its growing portfolio covers the entire Hungarian energy sector. The current MVM Group represents the most complex MVM in history, as it can practically encompass all segments related to the energy sector: production, storage, trading, distribution, service provision, planning and design, construction, and data transmission – explains the anonymous interlocutor, adding that the company’s credit rating is extremely good.
MVM CEEnergy Croatia is an LNG importer and user of the LNG terminal in Krk, where LNG is regasified (returned to a gaseous state) and dispatched into the transport system of the Republic of Croatia. MVM CEEnergy Croatia has licenses for gas trading and supply in Croatia and accordingly participates in the wholesale and retail market. However, most of its LNG imports are intended for the supply of Hungary. Gas exported from Croatia is sold at a virtual trading point in Hungary, in accordance with the gas trading license issued to it by the Hungarian energy regulator MEKH.
Expensive Business
However, despite the large volume of business and consequently high revenues, last year’s net profit amounted to just over 5.8 million euros, which is only 0.34 percent of total revenues. When asked why the profit is so low, Vugrinec responds that in the energy business ‘there are large amounts, small margins’.
– The natural gas markets in the EU are in a mature status, which means intense competition for customers and low potential margins. Furthermore, financing such businesses requires large commitments and high costs. Especially last year, when not only was the cost of financing extremely high driven by high prices, but the money market environment also changed and financing became more expensive – explains Vugrinec.
What are the largest costs in the LNG business and what are the advantages and disadvantages of this industry, read in the new issue of the printed and digital edition of Lider.
