Adnoc Distribution Q2 profit rises 2.2% as company eyes expansion
The UAE's largest fuel retailer is on track for expansion in the country, with a focus on Dubai
Adnoc Distribution, the UAE’s biggest fuel and convenience retailer, reported a 2.2 per cent rise in second-quarter net income as the company looks to expand.
Net profit rose to Dh595 million for the three-month period ending June, the company said in a regulatory filing to the Abu Dhabi Securities Exchange, where its shares trade. Revenue declined by 5.2 per cent to reach Dh5.5 billion.
"During the remainder of 2019 we are focused on the acceleration of our domestic network expansion, particularly in Dubai, and the growth of our non-fuel business to provide a superior experience to our customers,” acting chief executive Saeed Al Rashdi said.
"Our priorities remain growth and shareholder returns, underpinned by our progressive dividend policy. As previously announced, we intend to boost top-line growth in both our fuel and non-fuel businesses, and have targeted in excess of Dh3.67bn of Ebitda [earnings before interest, tax, depreciation and amortisation] by 2023,” he said.
Adnoc Distribution, which floated 10 per cent of its shares in 2017, has since expanded its portfolio to 379 retail fuel stations in the UAE by the end of the second quarter.
Three new stations were opened in the country in the first half of the year while two are under commission. The company remains on track to open 20 to 30 new stations across the Emirates this year, with a focus on expanding in Dubai, Adnoc Distribution said.
Net profit for the first half, meanwhile, increased by 4.3 per cent to Dh1.17bn, despite a 1.7 per cent decline in total volume of fuel and lower inventory gains. The company credited the performance to its cost optimisation as well as continued momentum in convenience stores.
Overall fuel volumes declined for the first half by 1.7 per cent, which Adnoc Distribution said was due to a 3.5 per cent decline in fuel retail volumes, increased competition and longer public holidays in the quarter.
The company’s corporate segment performed well, rising in the first half by 5.5 per cent on the back of higher sales of liquefied petroleum gas, lubricants and base oil. Sales for the aviation segment were also up, the company said.
In an interview with Bloomberg, chief operating officer, Mohamed Al Hashimi, said Adnoc Distribution is open to acquisitions and is focused on entering the Indian lubricants market, which is also on the radar of the other UAE fuel retailer, Emirates National Oil Company.
Enoc as well as Adnoc through its parent have signed partnership agreements with state-backed Indian Oil for the sale of their lubricant products in the high-growth Indian market.
In an earlier interview, former deputy chief executive John Carey said the company was eyeing 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.
Earnings per share for the quarter rose by 2.9 per cent to Dh0.048 compared with Dh0.047 for the same period last year.
Second-quarter free cash flow increased 17.3 per cent to Dh658m from the year earlier period. Free cash flow in the first half of the year increased 21 per cent to Dh1.3bn from the same period last year.
The company’s convenience store network reached 262 across the UAE by the end of the first half of the year. Twelve stores were opened across the Emirates and 10 stores were added to existing retail outlets in the second quarter.
Updated: August 4, 2019 03:42 PM