Adnoc Distribution profit increases by 4.2% to Dhs2.22 billion in 2019
- 12 Feb 2020
Adnoc Distribution, the UAE’s largest fuel and convenience retailer, on Wednesday reported that net profit for the full year 2019 increased to Dhs2.22 billion, an increase of 4.2% compared to 2018. The company also recorded Dhs496 million net profit for the fourth quarter of 2019, an increase of 11.3% compared to same period last year.
EBITDA for the fourth quarter of 2019 was Dhs658 million, an increase of 6.5% compared to the same period last year, driven by a solid operational performance in both fuel and non-fuel businesses. Total fuel volumes sold increased by 2.0% in the fourth quarter of 2019 compared to the fourth quarter of 2018, driven by a continued recovery in the company’s retail business, growth in its corporate business and supported by new marketing initiatives.
Growth in retail fuel volumes was driven by improvement in the core Abu Dhabi market, market share gains in the Northern Emirates following implementation of free assisted fueling (effective 3 Nov. 2019) and the contribution from new stations in Dubai. Non-fuel retail gross profit increased by 10.4% for the same period compared to Q4 2018. This was supported by the company’s convenience store revitalization programme which offers customers an improved shopping experience, contributing to an uplift in average basket size by 5.4% in Q4 2019 compared to the same period of 2018.
In Q4 2019, a series of customer-focused initiatives were introduced to enhance the overall customer experience. The company unveiled its innovative next-generation fuel and retail station ‘Adnoc On the Go’, bringing Adnoc Distribution closer to its customers and the communities that it serves; launched its new customer loyalty programme ‘Adnoc Rewards’, offering customers more benefits, a seamless digital experience and smart payment options; and unveiled its next-generation Oasis convenience store to better serve customers, offering a contemporary family-friendly environment where customers can refuel, unwind and enjoy freshly prepared food.
Adnoc Distribution’s Acting CEO, Ahmed Al Shamsi, said: “We have delivered strong results in the fourth quarter as well as for the full year 2019. We continue to transform Adnoc Distribution into a world-class, customer-focused, commercially driven company with a determined focus on driving profitable growth. As we sharpen our focus on customer experience and pursue growth opportunities, both domestically and internationally, we will expand all our distribution channels to reach larger market segments and sustain volume growth. Finally, OPEX reduction and optimization of CAPEX also remain key priorities”.
For the full year 2019, net profit increased to Dhs2.22 billion, an increase of 4.2% compared to 2018. In 2019, EBITDA increased 2.3% to Dhs 2.84 billion, while underlying EBITDA (EBITDA excluding inventory gains) grew 7.2% to Dhs2.72 billion, compared to 2018. The company’s EBITDA margin has also shown continued momentum, reaching 13.3% in 2019, up from 12.1% in 2018. Total fuel volumes sold increased by 0.7% in 2019 compared to 2018. Free cash flow (EBITDA minus capital expenditure) generation was up 16.4% year-on-year to Dhs2.33 billion for 2019. Non-fuel retail gross profit increased by 11.8% for the same period compared to 2018. Adnoc Distribution continues to focus on realizing cost efficiencies, which has contributed to 8. 6 % reduction in operating expenses for 2019 compared to 2018.
Adnoc Distribution’s priorities remain customer focus, profitable growth and shareholder returns underpinned by a progressive dividend policy. To that end, the company’s Board of Directors has proposed a cash dividend of Dhs1.194 billion (9.55 fils per share) for the second half of 2019, which will be submitted to the Company’s shareholders for approval at the Annual General Assembly Meeting scheduled on 31st March 2020. Subject to shareholders’ approval, total dividend for fiscal year 2019 is expected to be Dhs2.39 billion (19.10 fils per share), which would represent a 62% increase compared to the 2018 dividend, in line with the approved dividend policy.
This would translate to a 6.4% annual dividend yield for 2019 (based on a share price of Dhs2.97 as of 11th February 2020). The company paid half of the 2019 dividend in October of last year and expects to pay the final payment in April 2020, subject to shareholders’ approval.
The Abu Dhabi National Oil Company (Adnoc) signed recently a strategic framework agreement with Italy’s energy company, Eni, to explore new opportunities for collaboration in carbon capture utilization and storage (CCUS), where Adnoc is an industry leader, and additional strategic opportunities in research and development (R&D) across the oil and gas value chain.
The agreement brings together two leading energy producers and harnesses their world-class talent and technologies to unlock value in areas of strategic importance to both companies while reinforcing their existing partnerships across the oil and gas value chain. It also builds on Adnoc’s recently announced sustainability goals, particularly its commitment to decrease its greenhouse gas (GHG) intensity by 25 per cent by 2030, enabled by its industry-leading CCUS programme.
Business Bureau, Gulf Today
