Adnoc Distribution shareholders approve boosting dividends for 2019 and 2020

The UAE’s biggest fuel retailer also approved a share buy-back scheme

Adnoc Distribution's UAE network reached 389 retail fuel stations as of 31 March 2020, including ten fuel stations in Dubai. The company also operates in Saudi Arabia. Courtesy Adnoc Distribution

Shareholders of Adnoc Distribution, the UAE’s biggest fuel and convenience retailer, approved boosting dividends for 2019 and 2020 thanks to the company’s strong financial performance and cash position in 2018.

The shareholders voted in a general assembly to increase dividend for fiscal year 2019 to Dh2.39 billion, or Dh0.191 per share, up by 63 per cent compared to 2018’s dividend of Dh1.47bn, the company said on Thursday.

They also approved boosting the dividend for 2020 to Dh2.57bn, or Dh0.2057 per share, up by 75 per cent from 2018 and paying a minimum of 75 per cent of distributable profit from 2021 onwards, the company added.

“Adnoc Distribution’s impressive 2018 performance illustrates the company’s strong financial position, with an enhanced level of profitability, healthy margins, and strong cash flow generation,” said Dr Sultan Al Jaber, the company’s chairman.

“As we expand the Adnoc Distribution business we will continue to look at both organic and inorganic growth options to deliver ambitious but disciplined growth that delivers attractive returns.”

Adnoc Distribution, which posted its first full-year results following a 10 per cent flotation of its shares in 2017 on the Abu Dhabi Securities Exchange, saw profit surge 18 per cent in 2018 as the company reduced costs and sales increased across its network. Net profit for the year increased to Dh2.1bn from 2017.

Adnoc Distribution will continue to pay half of the annual dividend in October of the relevant year and half in April of the following year.

“Our balance sheet is strong, and we continue to generate significant cash flow,” said Saeed Al Rashdi, the company’s acting chief executive.

“We have an extremely compelling investment proposition that we expect to continue into 2019 and beyond with up to $300 million of capex [capital expenditure] earmarked for further growth 2019.”

Shareholders also approved a plan to implement a share buy-back scheme, subject to approval by market regulator, the UAE Securities and Commodities Authority.

Under the scheme, Adnoc Distribution would buy back up to 62.5 million shares, equivalent to 5 per cent of its free float, during a 12-month period.

“Approval of the share buyback reflects the board’s opinion that the stock is trading below levels consistent with its view of the company’s growth prospects,” Adnoc Distribution said on Thursday.

The company will be holding capital markets days in London and New York on May 7 and 8, at which further details of its growth strategy will be presented.

It has opened its first fuel service stations in Saudi Arabia as it eyes greater expansion in the market on the back of privatisation efforts in the kingdom.

Adnoc Distribution plans to open up to 20 stations in Dubai and Saudi Arabia this year, its deputy chief executive John Carey told The National in February.

The company, which opened three retail fuel service outlets in Dubai in the fourth quarter of last year, expects its expansion into other new geographies to contribute to higher fuel sales volumes, Mr Carey said at the time.

There are “ongoing discussions across a couple of countries” in the fuel retail business, with a more detailed breakdown on the opportunities likely to be announced in the second quarter of the year, said Mr Carey.

The company has also signed a memorandum of understanding with a partner in India for the marketing and distribution of its lubricant products in Asia's third-largest economy.