ADNOC Distribution (ISIN: AEA006101017) (Symbol: ADNOCDIST), the UAE’s leading fuel and convenience retailer, has announced impressive financial results for the second quarter of 2024. The Company recorded a 15% year-on-year increase in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to $267 million, while net profit rose by 12.9% to $170 million over the same period.
Excluding the UAE corporate tax impact, net profit would have seen a 24.5% year-on-year growth, reaching $187 million. The strong performance in Q2 2024 was driven by increased fuel volumes, growing contributions from international operations, and a boost in the non-fuel retail sector.
Non-fuel retail gross profit surged by 13.5% year-on-year in Q2 2024, reaching $56 million. This growth was propelled by expanding services such as car washes, enhanced convenience store offerings, and new car services. The Company also made significant strides in cost optimization, achieving $10 million in like-for-like operating expense savings in the first half of 2024.
Eng. Bader Saeed Al Lamki, CEO of ADNOC Distribution, remarked, “ADNOC Distribution continues to achieve strong financial results. The strong Q2 2024 results, marked by double-digit growth in EBITDA and net profit, highlights our effective pursuit of the Company’s five-year strategy, focusing on domestic growth, international platforms, future-proofing the business, and investing in convenience and mobility. We are well-positioned to build on this momentum in the second half of the year, leveraging our increasingly diversified revenue streams to continue delivering value to shareholders.”
The Company reported a free cash flow of $330 million in Q2 2024, representing a sevenfold increase compared to Q2 2023. For the first half of 2024, ADNOC Distribution’s free cash flow stood at $488 million, up 46.7% year-on-year, with a solid balance sheet reflected in a net debt-to-EBITDA ratio of 0.53x as of 30 June 2024. This financial strength supports the Company’s future growth and commitment to shareholder value.
The Company expects to distribute a $350 million dividend for the first half of 2024 to shareholders in October, pending Board approval. This aligns with ADNOC Distribution’s five-year dividend policy, which guarantees an annual dividend of $700 million (20.57 fils per share) or a minimum of 75% of net profit, ensuring consistent shareholder returns.
Operational Performance
ADNOC Distribution displayed strong operational performance in Q2 2024. The non-fuel retail business witnessed continued success, driven by enhanced customer experience, new standalone convenience stores, and upgraded car wash services. Non-fuel transactions grew by 8.9% year-on-year in the first half of 2024, with an acceleration to 10.9% in Q2 2024.
As part of its growth strategy, ADNOC Distribution is investing in convenience and mobility, transforming its stations into customer destinations of choice. The convenience store conversion rate in Q2 2024 hit 26.1%, the highest in four years. The Company plans to double its leased property units by the end of 2025, attracting top-tier tenants across various sectors to meet customer needs.
Throughout the first half of 2024, ADNOC Distribution experienced notable growth, with fuel retail transactions up 6.5% year-on-year. Fuel volume deliveries increased by 10.4%, supported by higher network traffic, regional economic growth, network expansion, and rising contributions from international operations.
The Company added 10 new service stations in H1 2024, bringing its total to 847 across the UAE, Saudi Arabia, and Egypt, moving steadily towards its goal of 15 to 20 new stations in 2024. ADNOC Distribution also expanded its electric vehicle (EV) charging network, achieving a key milestone with the opening of a pioneering Mobility Hub in Masdar City and doubling its fast and super-fast charging points to over 100, with plans to reach 150 to 200 by year-end.
ADNOC Distribution also announced plans to begin blending ADNOC Voyager lubricants in Egypt in 2024, aiming to establish the country as a regional export hub. The international footprint of ADNOC Voyager has expanded to 43 countries, up from 32 last year.
Accelerating Growth Through AI
ADNOC Distribution is advancing its AI integration across its operations. The Company is currently pursuing over 20 AI-driven projects and has formed partnerships with leading global AI technology firms to implement transformative solutions, strengthening its market leadership.
Among these innovations is the ‘Fuel Demand AI Model,’ which uses predictive analytics to optimize fuel delivery schedules, potentially preventing up to $34 million in revenue losses over the next five years. This model achieves a 95% accuracy rate, far surpassing the 60% accuracy of traditional methods, and reduces costs while cutting fuel transportation emissions by 10% through optimized scheduling. AI and technology are integral to ADNOC Distribution’s goal of reducing carbon emissions intensity by 25% by 2030.
ESG Stewardship
In addition, ADNOC Distribution has made significant progress in its Environmental, Social, and Governance (ESG) efforts, becoming part of the FTSE ADX ESG Screened Index and the first UAE fuel retailer to join the FTSE Emerging ESG Low Carbon Index. In the first half of 2024, the Company continued to improve its ESG ratings, outperforming the industry average as assessed by key agencies such as Sustainalytics, S&P Global, and FTSE Russell.
Moreover, this achievement underscores ADNOC Distribution’s commitment to sustainable practices, social responsibility, and robust governance. By continuously enhancing its ESG performance, the Company demonstrates its dedication to creating long-term value for stakeholders while positively impacting the environment and society.
Future Outlook
Since its IPO in 2017, ADNOC Distribution has delivered substantial shareholder returns through enhanced market value and consistent dividends. The Company is well-positioned for its next strategic and accelerated growth phase with a record EBITDA of $1 billion in 2023.
A solid financial foundation and strong cash generation support ADNOC Distribution’s strategic investment plan. Moreover, the Company plans to allocate $250 to $300 million in CAPEX for 2024, with 70% directed toward growth-focused initiatives.
