Adnoc Distribution reports 61% rise in fourth-quarter profit on higher fuel volumes

The company's revenue climbed nearly 17% annually to Dh9.56 billion

Adnoc Distribution’s board has approved a new five-year strategy for 2024-2028. Photo: Adnoc Distribution

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, said fourth-quarter profit increased 61.4 per cent on an annual basis, boosted by a surge in retail fuel volumes sold.

Net income attributable to equity holders of the company for the three months to the end of December rose to Dh677 million ($184.3 million), the company said on Wednesday in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue for the reporting period climbed by nearly 17 per cent annually to Dh9.56 billion.

Fuelled by record earnings before interest, taxes, depreciation and amortisation of $1 billion, 2023 was a “remarkable and transformative year for Adnoc Distribution”, chief executive Bader Al Lamki said.

Adnoc Distribution’s board has approved a new five-year strategy for 2024-2028.

It will include optimising existing assets to improve the company’s profitability, “doubling down” on non-fuel retail and generating new revenue streams offered by energy transition to “future-proof” Adnoc Distribution’s business, said Mr Al Lamki.

As part of optimising its assets, the company will allocate more capital expenditure to converting its fuel stations into "destinations" and "community hubs" for customers, Mr Al Lamki told The National in an interview.

Total fuel volumes sold in the October-December quarter jumped by 39 per cent year-on-year, mainly due to the consolidation of TotalEnergies Marketing Egypt, the company said.

Last year, Adnoc Distribution completed the acquisition of a 50 per cent stake in TotalEnergies Egypt, marking its entry into the country.

The company said that nine service stations were rebranded to Adnoc in Cairo last year, with further openings targeted for 2024.

“Egypt’s retail fuel, lubricants and aviation markets are highly attractive with a potential for future growth,” it said.

Fuel volumes sold in the UAE and Saudi Arabia rose 9.6 per cent annually in the fourth quarter, supported by continuing economic growth, higher mobility as well as network expansion.

Retail fuel volumes, which represent the largest portion of Adnoc Distribution's sales, increased by 7.6 per cent while commercial fuel volumes were up by 13.2 per cent.

The company said it expected a “solid outlook” for 2024 and beyond, underpinned by fuel volume growth momentum, higher contribution of non-fuel retail, and expansion in international operations.

Adnoc Distribution added 41 new stations in 2023, exceeding its full-year target to open 25-35 new stations across its network. The company expects to add 15-20 new stations across its network this year.

“In its quest to futureproof the business, the company is rapidly developing fast electric vehicle charging infrastructure across its UAE network,” it said.

Adnoc Distribution, which operates 50 EV charging points in the UAE, teamed up with Abu Dhabi National Energy Company, better known as Taqa, in January last year to create a joint venture that will build and operate electric vehicle infrastructure in Abu Dhabi.

The company, E2GO, aims to become the main provider of EV charging points and associated infrastructure across the UAE capital.

"Our our appetite for this space is solid. We believe ... sustainable mobility is the future," Mr Al Lamki told The National.

He added that Adnoc Distribution was open to supporting home-grown technologies while facilitating EV adoption in alignment with the UAE's carbon abatement strategy.

The UAE aims to increase the share of EVs to 50 per cent of the total vehicles on roads by 2050, from about 1 per cent currently.

For the full-year 2023, Adnoc Distribution's net profit dropped by 5.4 per cent year-on-year to Dh2.6 billion.

However, revenue during the same period increased by roughly 8 per cent to Dh34.63 billion.

Adnoc Distribution said that a dividend of Dh1.285 billion for the second half of 2023 would be paid out in April, depending on shareholder approval.