Adnoc Distribution's second-quarter net profit rises on revenue boost

Fuel retailer's quarterly revenue surged 66% to $1.36bn

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, said its second-quarter net profit was supported by higher fuel volumes. Courtesy Adnoc

Adnoc Distribution, the UAE's largest fuel retailer, reported a 2.1 per cent increase in second-quarter net income as revenue climbed, supported by higher fuel volumes and cost efficiencies.

Net profit for the three months to the end of June rose to Dh521 million ($141.96m), the company said in a statement to Abu Dhabi Securities Exchange, where its shares are traded.

Second-quarter revenue rose by 66.4 per cent annually to Dh5 billion ($1.36bn), compared with Dh3bn last year.

"These results reflect our focused drive towards delivering on our strategy and sustained progress in all of our strategic pillars: fuel, non-fuel and cost efficiency," said Bader Al Lamki, chief executive of Adnoc Distribution.

"We continue to make disciplined capital investments, achieving cost savings while growing our service station network and maintaining high levels of safety, quality and customer experience."

Fuel volumes made a "progressive recovery" towards their pre-Covid levels as consumer sentiment improved after a successful vaccination drive in the UAE.

The company also managed to lower its operating costs, which fell by 10 per cent in the first half of the year, compared with the same period last year.

The company will pay a dividend of Dh2.57bn in 2021, with the payment for the first half – of 10.285 fils per share – set for distribution in October, pending board approval.

In March, Adnoc Distribution's shareholders approved a proposal to raise the dividend for 2020 by 7.5 per cent and maintain a similar payout for the next two years.

The company set a minimum dividend payout of Dh2.57bn for 2022, compared with 75 per cent of distributable profit as per the previous policy.

In May, Adnoc said it had successfully raised $1.64bn through the sale of new shares and issuance of exchangeable bonds in Adnoc Distribution.

The company offered 375 million shares, equal to 3 per cent of its share capital and a three-year unsecured bond that could be exchanged for a further 7 per cent of shares, subject to certain conditions.

The placement of additional shares will leave the Adnoc Group with a 70 per cent interest in its fuel distribution arm.

Adnoc Distribution opened 12 new fuel retail stations in the UAE in the first half of the year. The company also obtained no-objection certificates from the Saudi General Authority for Competition to acquire 35 new stations in the kingdom.

The acquisition of the stations in Saudi Arabia was announced in December and in February.

In the UAE, the company also refurbished 24 of its Adnoc Oasis convenience stores in the first half of the year.

The fuel retailer also joined the MSCI Emerging Markets index on May 27. Adnoc Distribution joins nine other UAE-listed companies that are part of the index, which is tracked by funds with assets worth billions of dollars.