Adnoc Distribution shareholders approve $350m dividend as profit set to surge

Robust financial performance and balance sheet growth to support company's dividend policy

Adnoc Distribution will pay an interim dividend of Dh1.28 billion for the first six months of 2022. Photo: Adnoc Distribution

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, has announced an interim dividend after reporting strong profits in the first six months of the year.

The company’s shareholders approved a second-half dividend payment of Dh1.28 billion ($350 million), the company said in a statement to Abu Dhabi Securities Exchange (ADX), where its shares are traded.

This is the first payment of the full-year 2022 dividend payment of a minimum of Dh2.57bn (20.57 fils per share), in line with the company’s dividend policy, with the second and final dividend for 2022 expected to be paid in April 2023.

Adnoc Distribution said it will continue its policy of paying a minimum dividend of Dh2.57bn for 2022 and a yearly payout equal to at least 75 per cent of distributable profits from 2023 onwards.

The 2022 full-year dividend would offer a 4.9 per cent annual dividend yield based on a share price of Dh4.21 as of September 27.

“Adnoc Distribution’s resilience and steadfast focus on smart growth has positioned us to confidently deliver on our strategic priorities while ensuring attractive capital returns for our shareholders,” said Bader Al Lamki, chief executive of Adnoc Distribution.

Since its IPO in 2017, the company has maintained a consistent dividend track record. It expects earnings momentum in fuel and non-fuel businesses to improve in 2022 and beyond and support its dividend policy.

During the first six months of the year, Adnoc Distribution recorded a strong performance, reporting Ebitda [earnings before interest, taxes, depreciation and amortisation] of Dh1.99bn, net profit of Dh1.56bn, up 35.6 per cent from the same period last year, and a free cash flow of Dh1.96bn.

As of the end of June 2022, the company maintained a solid balance sheet alongside robust liquidity. It had cash and cash equivalents (including term deposits) of Dh2.8bn, unutilised revolving credit facilities of Dh2.8bn, retained earnings of Dh2bn and net debt to Ebitda of 0.77 times.

“The attractive value proposition that we offer is backed by our strong earnings, stable and predictable cash flows and dividend policy that reaffirm our ongoing commitment to the shareholders,” Mr Al Lamki said.

During the first half of 2022, the company opened 12 new stations in the UAE, of which four are in Dubai, taking its domestic network to 472. In Saudi Arabia, the company added 26 new stations over the same period, taking its network in the kingdom to 66. The company’s total network stands at 538 stations as of June 30, as it increased exports of its lubricants business, Adnoc Voyager, growing its network to 21 global markets.

Adnoc Distribution recently announced its transaction to acquire a 50 per cent stake in TotalEnergies Marketing Egypt, one of the top four fuel retail operators in Egypt. The acquisition is expected to be completed in the first quarter of 2023.

The company was included on the FTSE Emerging Markets Index in September last year, followed by an increased weightage in May 2022. It is also listed on the new blue-chip FTSE ADX 15 (FADX15) Index, launched as a partnership between FTSE Russell and the ADX.