Adnoc Distribution's first-quarter net profit climbs 6% on strong revenue

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, said its first quarter net income climbed more than 6 per cent as revenue rose on the back of strong growth in fuel sales.

Net profit for the three months to the end of March rose to Dh671 million ($182.8m), the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue for the reporting period surged more than 57 per cent to Dh6.74bn, driven by higher fuel selling prices amid a rise in crude prices globally. Growth in both fuel volumes and non-fuel business of the company boosted revenue.

“Adnoc Distribution has had a positive start to 2022,” said Bader Al Lamki, chief executive of Adnoc Distribution.

“We must stay relevant and deliver on our customers’ desire for continued convenience, while ensuring we remain focused on the future, creating solutions that are evolving in response to, and ahead of, changing market dynamics.”

The company expects positive volume growth and earnings momentum to continue in both fuel and non-fuel businesses and accelerate in 2022 and beyond. It will continue to pursue its growth ambitions and reach the target of a minimum Dh3.67bn in earnings before interest, taxes, depreciation, and amortisation (Ebidta) by 2023.

The UAE economy has bounced back strongly on the back of swift mass inoculation drive and fiscal and monetary support worth Dh388bn to businesses and individuals. The country was among the first to ease pandemic-related restrictions and open up for global tourists, which helped businesses to rebound quickly.

The Arab world's second largest economy is expected to grow 4.9 per cent this year, said Japan's largest lender MUFG Bank, while Emirates NBD forecasts growth of 5.7 per cent and Abu Dhabi Commercial Bank estimates a 5.4 per cent expansion, supported by a sharp rise in the oil sector.

Energy and fuel-related businesses have also benefited from a rise in oil prices in recent quarters. Crude, which rose 67 per cent last year amid strong demand, has surged further this year following Russia's military assault in Ukraine that is threatening to disrupt global energy flows.

Brent, the benchmark for more than two thirds of the world’s oil, has already climbed to a notch under $140 per barrel this year before retreating. Emirates NBD estimates Brent will average $120 a barrel for the second and third quarters.

Adnoc Distribution said its total fuel volumes sold rose almost 11 per cent during the first three months of this year, with retail fuel volumes rising more than 10 per cent and commercial fuel volumes jumping 12 per cent year-on-year.

The company generated free cash flow of Dh1.9bn during the reporting period. It maintained a strong financial position at the end of March with liquidity of Dh6.9bn in the form of Dh4.1bn in cash and cash equivalents and Dh2.8bn in unutilised credit facilities.

Adnoc Distribution continued to increase its footprint throughout the first quarter of the year, adding to its local and international network, bring the total number of stations to 500 across all regions.

In Saudi Arabia, the company added 15 new stations, increasing its network to a total of 55 outlets. In the UAE, the company opened three new stations, taking its total to 464. It remains on track to deliver 20 to 30 new sites in the UAE before the end of 2022.

“Our network expansion has maintained strong momentum throughout the first quarter of the year," Mr Al Lamki said.

"We are well on track to deliver 60-80 stations across the UAE and international markets by the end of this year.”

The company's shareholders in March approved $350m dividend for the second half 2021 — which was paid in April this year — bringing the total dividend of 2021 to $700m, or 20.57 fils per share.

In March, the company's shares were included in the FTSE ADX 15 Index that represents the top 15 companies on the ADX main market. Last year, Adnoc Distribution also joined the MSCI Emerging Markets index, which is tracked by funds with assets worth billions of dollars.