Adnoc Distribution's third-quarter net profit surges 45% on revenue boost

Growth in company's fuel volumes and non-fuel business boosts income

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, continued to expand in Dubai and Saudi Arabia by adding new stations in 2022. Photo: Adnoc Distribution
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Adnoc Distribution, the UAE’s largest fuel and convenience retailer, said its third-quarter net profit surged 45 per cent as revenue rose on the back of strong growth in fuel sales.

Net profit for the three months to the end of September rose to about Dh767 million ($209m), the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue for the reporting period jumped 58 per cent to Dh8.5 billion, driven by higher fuel selling prices amid a rise in crude prices globally. Higher volumes of fuel sold, as well as a rise in non-fuel business, also supported quarterly revenue.

Net profit for the first nine months of the year jumped 39 per cent to Dh2.3bn, from the same period last year. Revenue over the first nine months surged 63 per cent to about Dh24bn from the same period a year earlier.

“I’m pleased with our strong financial and operational performance. We have continued to demonstrate our growth trajectory, and maintained a robust cash generation with a strong balance sheet,” said Bader Al Lamki, chief executive of Adnoc Distribution.

“The opening of our flagship service station in Dubai has not only showcased our cutting-edge digital customer experience but also reiterated our commitment to long-term sustainable growth and generating attractive shareholder returns.”

Total fuel volumes over the first nine months of 2022 increased 7 per cent on the back of the UAE’s continued economic growth, increased traffic at service stations, and substantial increases in corporate fuel volumes, which rose 27 per cent year-on-year over this period.

The company’s non-fuel business continued to show strong growth over the first nine months of 2022, with an 18 per cent increase in non-fuel transactions. Non-fuel gross profit also increased by 9 per cent.

The company continued to expand in Dubai and Saudi Arabia by adding new stations, resulting in incremental increases in fuel volumes in the first nine months of this year compared to the same period of 2021.

In the first nine months of the year, Adnoc Distribution opened 21 new stations in the UAE, nine of which started operations in the third quarter.

As of the end of September, Adnoc Distribution has 37 sites operating in Dubai and a total network of 481 stations across the UAE.

In Saudi Arabia, the company opened 26 new stations during the first nine months of 2022, taking its total network in Saudi Arabia to 66 stations.

As part of its international expansion the company acquired a 50 per cent stake in TotalEnergies Marketing Egypt, one of the top four fuel retail operators in Egypt, for about Dh683m, with an additional earn-out of up to Dh63.5m, if certain conditions are satisfied.

TotalEnergies Marketing Egypt has includes 240 fuel retail stations, more than 100 convenience stores, over 250 lube changing stations and car wash sites, as well as wholesale fuel, aviation fuel and lubricant operations.

The deal is in line with Adnoc Distribution's aim to become a regional fuel distribution leader and is expected to be completed in the first quarter of 2023 pending regulatory approvals.

"We will continue to explore new growth opportunities that help us to business proof and support sustainable operations of our company," Mr Al Lamki said.

Adnoc Distribution’s 2022 dividend policy is set at a minimum of Dh2.57bn, offering an annual dividend yield of 4.6 per cent (at a share price of Dh4.47 as of November 10).

The company paid a dividend of Dh1.285bn for the first six months of 2022 in October, and expects to pay the second six-month dividend of 2022 (10.285 fils per share) in April 2023, subject to the discretion of the board and shareholders’ approval.

The company’s dividend policy for the years thereafter sets a dividend equal to at least 75 per cent of distributable profits.

Updated: November 11, 2022, 9:21 AM