Adnoc Distribution fourth-quarter profit rises 6.8% on higher oil prices
UAE's biggest fuel distributor expanding into Dubai and Saudi Arabia
Adnoc Distribution, the UAE's biggest fuel distributor and convenience store operator, recorded a year-on-year 6.8 per cent increase in fourth-quarter profit, boosted by higher oil prices and an increase in fuel sales.
Profit for the three months ending December 31 rose to Dh492.4 million, or Dh0.039 per share, from the end of same period in 2016, the company said in a regulatory filing to Abu Dhabi Securities Exchange, where its shares are traded.
A 16.2 per cent rise in the price of Brent crude in the fourth quarter of last year helped boost income. Full-year 2017 net income climbed 1.3 per cent to Dh1.80 billion from 2016.
"Adnoc Distribution had a very successful 2017 with an enhanced level of profitability and continued healthy margins. Our twin businesses of fuel and non-fuel retail give us ample scope to expand commercially and geographically," acting chief executive officer Saeed Al Rashdi said. "With plans to grow market share through strategic expansion into Dubai and Saudi Arabia already advanced, our core UAE market is a testing ground for a number of planned new initiatives to grow margins and deliver an enhanced customer experience."
It is the first quarterly results announcement from the Abu Dhabi company since it sold shares to the public in December and announced plans to expand its operations in Dubai and establish presence in Saudi Arabia, the region's biggest economy. Adnoc Distribution’s board of directors proposed a dividend of Dh0.058 per share, totalling Dh735m.
The “results and dividend were generally in line with expectations with no major surprises,” said Hatem Alaa, head of health care and consumer research at the Egyptian investment bank EFG Hermes.
Mr Alaa said he expected Adnoc Distribution profit to rise to Dh2.05bn in 2018.
Adnoc Distribution, which is valued at Dh31.1bn, sold 10 per cent of the company in the share float, the first listing on the Abu Dhabi bourse in more than six years. In January, the company said it will open its first service stations in Dubai and Saudi Arabia this year.
The company plans to enter Saudi Arabia through a franchise model, which will be the first of its kind for the fuel distributor. Expansion into Dubai, the only emirate where the company has no physical presence, is now feasible following changes to how fuel is priced were introduced across the UAE in August 2015, Mr Al Rashdi told The National last month.
As part of the expansion plans, Adnoc Distribution which holds a monopoly in Sharjah and Abu Dhabi, will roll-out at least 13 new service stations this year, and extend three of its existing facilities.
The company, which currently operates 360 service stations and 235 Oasis convenience stores in the UAE, said total fuel volumes rose 6.5 per cent in the last three months of 2017 to 2.63bn liters compared to the same quarter of 2016.
The best seller for Adnoc Distribution is 95 unleaded gasoline of which it sold 1.17bn liters in the last quarter of 2017, compared to 1.16bn in the year-earlier period.
Revenue for the 12-month period rose 11.8 per cent to Dh19.76bn from 2016, while total assets at the end of 2017 came in at Dh12.2bn, up from Dh11.44bn in 2016.
Updated: February 26, 2018 04:20 PM