Extended Expert View: Consolidation in CEE fuel retail

Introduction

It is three years since stories about the creation of a central European oil champion involving OMV, MOL and PKN started. However, with the three companies tackling different priorities the deal is firmly on hold. This extended expert view details their acquisition activity and the extend to which the efficiency of their recently acquired sites must be improved to enhance downstream value.

Scope

• Details of the core acquisition activity in Central and Eastern European fuel retailing over the last 2 to 3 years
• A quantitative examination of the new retail positions of MOL, OMV and PKN in terms of the relative efficiency of their recently acquired sites
• A discussion of the speculation surrounding the future of these companies, including the prospect of an acquisition by a major oil company

Highlights

PKN's lack of focus on upstream activities compared to OMV and MOL means that it is behind them in terms of market valuation. The net worth of both MOL and OMV is over 50% higher than PKN. Until PKN catches up with its CEE peers, the prospect of a merger will fade further into the distance

MOL and OMV are also in a superior position to PKN in terms of network efficiency. Their average annual volumes per site are 3.8 and 3.4 million litres respectively, whilst PKN's average is 2.6. Although the bulk of value enhancement will come from upstream activities this also requires the attainment of a more efficient forecourt network

Only when MOL, OMV and PKN have enhanced their company valuations and CEE market activity subsides a little, will a large-scale co-operation become more of a reality. However, by this time, a truly global western oil player, or indeed an eastern company might attempt to buy its way into the market

Reasons to Purchase

• Ensure an understanding of the key acquisitions made by MOL, PKN and OMV in the CEE forecourt retailing sector within the last 2-3 years
• Gain quantitative insight into the level of network efficiency required in CEE markets to maximise competitive performance
• Understand the ownership structures of MOL, PKN and OMV and the implications it has for their future