Adnoc Distribution looks to open up to 20 stations in Dubai and Saudi Arabia in 2019
Full-year profit for 2018 jumped 18 per cent as costs fell and sales increased
Adnoc Distribution, the UAE’s biggest fuel and convenience retailer, aims to open up to 20 stations in Dubai and Saudi Arabia this year, even as it looks to enter the Indian lubricants market.
"We talked about opening 10 service stations per year and we hope to keep that momentum in 2019. That’s just Dubai. For the Saudi market, we have a guidance of five to 10 sites organically for this year as our target,” deputy chief executive John Carey told The National.
The service stations will be launched towards the second half of the year, he said.
"It tends to be back-end loaded. As we go into 2020, the pipeline will be more evenly spread but for 2019, I expect it to be more second half,” he added.
Adnoc Distribution, which posted its first full-year results following a 10 per cent flotation of its shares in 2017, saw profit surge 18 per cent as the company reduced costs and sales increased across its network. Net profit for the year increased to Dh2.1 billion from 2017, the company said in a statement to the Abu Dhabi Securities Exchange on Thursday, where its shares are traded.
The company, which started operating in Dubai last year and is planning its expansion into Saudi Arabia, said revenue for the year increased 16 per cent to Dh22.9bn. Adnoc Distribution is expected announce details about its Saudi partner “over the next couple of weeks”, said Mr Carey.
The Saudi fuel retail market has started seeing traction over the past couple of years thanks to privatisation initiatives. Dubai-based Emirates National Oil Company said it would open up to 45 stations over the next five years, connecting 13 provinces in the kindgom.
On Thursday, Saudi Aramco and French energy major Total signed a 50:50 joint venture agreement to invest around $1bn over the next six years in the Saudi retail fuel market.
Adnoc Distribution, 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 higher fuel sales volumes.
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.
Partnerships in India, where the company is currently positioning itself, would typically be with private players, said Mr Carey.
He expected new opportunities to grow in the Indian market on the back of Adnoc’s entry into the refining and chemicals segment through joint investment with Saudi Aramco in a $44bn downstream complex along the country's west coast.
"We’re always looking at opportunities. Adnoc is a significant shareholder and also in a very strong supply position, so we’d look at where we have an advantaged position and we’d look to exploit that advantaged position if possible,” said Mr Carey.
Adnoc Distribution also aims to spend as much as Dh1.1bn in capex to boost its network expansion in the UAE, focusing on Dubai, and internationally, and has plans to invest in its digital initiatives.
Updated: February 14, 2019 07:20 PM