Naftna Industrija Srbije (NIS) has approved the use of accumulated retained earnings to offset its 2025 net loss, preserving the company’s equity position while reflecting the financial impact of sanctions-related disruption, weaker oil prices and asset impairments on Serbia’s largest oil and gas company.
The decision was adopted at NIS’s 18th regular shareholders’ meeting, where shareholders approved the coverage of the company’s 2025 loss from profits accumulated in previous years and confirmed the remaining balance of undistributed earnings. According to the resolution published through the Belgrade Stock Exchange, a portion of retained profit recorded on the balance sheet as of 31 December 2025 will be applied against the annual loss reported in the company’s income statement.
At year-end 2025, NIS held RSD 300.12 billion (approximately €2.56 billion) in retained earnings. Of that amount, RSD 12.23 billion (around €104 million) will be used to absorb the loss recorded for the financial year, leaving undistributed profit of RSD 287.88 billion, equivalent to roughly €2.45 billion.
Retained earnings preserve equity position
The retained earnings accumulated over previous years provide NIS with a substantial balance-sheet reserve built during periods of stronger refining margins, higher domestic fuel consumption, regional sales growth and investment following the company’s privatization.
Although the accounting treatment prevents any immediate erosion of the company’s capital base, the shareholder resolution formally transfers the financial impact of the 2025 result from the income statement to retained equity reserves, reflecting a shift beyond short-term earnings volatility.
The use of retained earnings is a standard accounting mechanism for covering annual losses. In the case of NIS, however, the move follows a year in which earnings were affected by a combination of geopolitical developments, market conditions and operational challenges that altered the company’s profitability profile.
Sanctions and market conditions weighed on 2025 performance
The company previously stated that operations during 2025 were shaped by the impact of U.S. sanctions associated with its Russian ownership structure, creating additional pressure on procurement, financing, logistics, crude oil supply and commercial counterparties.
Market conditions also deteriorated during the year. Brent crude averaged approximately $69.1 per barrel in 2025, around 14% lower than in 2024, reducing upstream earnings while adding further pressure to financial performance.
In addition to sanctions-related effects and lower crude prices, the company reported that earnings were affected by losses linked to higher-cost oil inventories, asset impairments in Bulgaria and Romania, and the performance of HIP-Petrohemija, which recorded a loss of RSD 10.27 billion during the year. These factors affected multiple segments of the business, reflecting NIS’s activities across upstream oil and gas production, refining, wholesale and retail fuel distribution, petrochemicals, regional subsidiaries and public revenue contributions.
Operational scale remained significant
Despite reporting a loss, NIS continued to operate one of Serbia’s largest integrated energy businesses during 2025. The company produced 1.124 million tonnes of oil and gas equivalent, processed 3.095 million tonnes of crude oil and intermediate products, and sold 3.023 million tonnes of petroleum products during the year.
The group also calculated RSD 207 billion in taxes and other public revenue obligations for 2025, while gross dividend allocations relating to 2024 totaled approximately RSD 4.6 billion, underlining the company’s continuing importance to Serbia’s fiscal framework.
Ownership structure remains central to business outlook
The shareholder decision follows a period during which NIS relied on temporary operating licences and regulatory measures as sanctions affected the company’s operating environment. Beyond quarterly financial performance, the company continues to face challenges related to its ownership structure, access to crude oil supplies, banking services, insurance arrangements and broader supply-chain stability, all of which influence Serbia’s domestic fuel market.
The company returned to profitability during the first quarter of 2026, supported by improved market conditions and the restart of refinery operations following earlier sanctions-related disruption. However, the earlier annual loss remains reflected in the company’s balance sheet through the allocation of retained earnings.
Balance-sheet reserves absorb financial impact
The retained earnings accumulated by NIS were sufficient to absorb the RSD 12.23 billion loss without affecting the company’s formal equity structure. At the same time, the decision highlights the increasing importance of factors beyond traditional refining margins and fuel demand in determining future profitability.
The company’s financial performance is now also influenced by sanctions waivers, ownership-related developments, crude supply logistics, asset impairment risks and the management of Serbia’s energy relationships with both Russia and Western partners.
For Serbia, NIS remains a strategically significant energy company because of its role in refining capacity, domestic fuel supply, fiscal contributions and broader energy security. The allocation of retained earnings to cover the 2025 loss marks a formal balance-sheet adjustment while leaving the company with substantial accumulated profits following the accounting treatment approved by shareholders.
