Adnoc Distribution, the UAE’s largest fuel and convenience retailer, reported an 11.3 per cent increase in the fourth quarter profit for 2019 on the back of a rise in operating income as the company presses on with expanding its network in 2020.
Net profit for the quarter ending December 31 climbed to Dh496 million, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares trade. Operating income rose an annual 9.6 per cent to Dh509m.
“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,” said Adnoc Distribution’s acting chief executive, Ahmed Al Shamsi. "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."
Operating expense efficiencies and optimisation of capital expenditures remain key priorities, Mr Shamsi said.
Revenue in the last three months of last year declined 9.1 per cent to Dh5.4 billion. Total fuel volumes sold increased 2 per cent, driven by a continued recovery in the company’s retail business, growth in its corporate business and supported by new marketing initiatives.
For the full year, net profit increased 4.2 per cent year-on-year to Dh2.22bn.
The company’s board has proposed a cash dividend of Dh1.194bn (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 in March.
The company said it expects to increase the annual dividend payment again in 2020 with this year's payout estimated at Dh2.57bn (20.57 fils per share), a 75 per cent increase compared to 2018; and a minimum payout of 75 per cent of distributable profit from 2021 onwards.
The company plans to pay half of the annual dividend in October of the relevant year-and-half in April next year, subject to the discretion of its board and shareholders’ approval.
Adnoc Distribution has 382 retail fuel stations in the UAE as of December 31. Six new fuel stations were added in the country last year, including three in Dubai.
"In 2019, we focused on redefining our network deployment allocation, including offering a mix of fuel station formats," the company said. "We are now in a position to accelerate deployment of our network plan starting in Q1, 2020."
The UAE economy is set to accelerate this year on the back of government stimulus and the convening of Expo 2020, which will boost demand for fuel and other non-fuel products, the company said.
"We have already started to see positive impact on our business as our corporate fuel volumes recorded strong growth in 2019 while retail fuel volumes started to grow in Q3 2019 for the first time since our December 2017 IPO," the company said.
The UAE economy is expected to grow 2.5 per cent, according to the latest projections from the International Monetary Fund.
Adnoc Distribution plans to open at least 60 fuel stations this year, including "Adnoc On The Go". In Dubai, 20 to 25 new stations, most of which will be regular pumps are set to open this year.
“We anticipate our Dubai expansion will bring market share gains and contribute to higher growth in retail fuel volumes starting in 2020. We expect overall fuel volume growth of low single digits in 2020,” the company said.
Adnoc Distribution's capital expenditure range for the year is between Dh1.1bn to Dh1.5bn, higher than Dh508m in 2019.
