Adnoc Distribution gets shareholders’ approval for dividend policy to fuel growth

Shareholders of Adnoc Distribution – the UAE’s largest fuel and convenience retailer – have approved a new five-year divided policy that allows accelerated growth and long-term payback visibility for investors.

The policy for 2024-2028 sets an annual dividend of $700 million or a minimum of 75 per cent of its net profit, whichever is higher, the company said in a statement on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.

The shareholders at the company’s annual general meeting also approved distributing Dh1.285 billion ($350 million) in dividends for the second half of 2023.

The payout, which equals 10.285 fils per share, is expected to be paid in April. It brings the last year’s total dividend to Dh2.57 billion, a 5.6 per cent yield for investors based on the company’s closing share price of Dh3.66 on March 27.

“Based on our confidence in the new strategy and future growth prospects, we have introduced a more rewarding five-year dividend policy that provides long-term payback visibility and dividend upside from future earnings growth,” Dr Sultan Al Jaber, managing director and group chief executive of Adnoc and chairman of Adnoc Distribution, said.

“Our new policy mirrors the company’s sustainable growth trajectory and predictable cash flow while demonstrating attractive shareholder returns.”

Adnoc Distribution, since its initial public offering in 2017, has delivered a 90 per cent return for shareholders on their investment through improved market value and dividends.

The company achieved $1 billion in earnings before interest, taxes, depreciation and amortisation in 2023, which has set the foundation for its next phase of growth, Dr Al Jaber, who is also Minister of Industry and Advanced Technology, added.

“The company continues to target value-accretive domestic and international expansion opportunities, including new markets,” Dr Al Jaber said.

The new dividend strategy introduced in February comes as Adnoc Distribution focuses on domestic growth, international platforms and future-proofing the business.

It is also aiming to increase the contribution from operations in Saudi Arabia and Egypt while exploring mergers and acquisition, and partnership opportunities to boost growth, the company said.

Adnoc Distribution added 41 service stations to its network in 2023, exceeding its target of 25 to 35, and it plans another 15 to 20 this year.

The company, which operates 50 electric vehicles charging points in the UAE, has also formed a joint venture with Abu Dhabi National Energy Company (Taqa) to build EV infrastructure in Abu Dhabi.

The joint venture, E2GO, aims to become the main provider of EV charging points and associated infrastructure.

“We aim to expand our network to 1,000 service stations by 2028, growing non-fuel transactions by 50 per cent and increasing convenience stores by 25 per cent,” said Bader Al Lamki, chief executive of Adnoc Distribution.

“We aim to strategically grow our electric vehicle infrastructure to more than 500 fast and superfast chargers by 2028, a 10-fold increase from 2023.”

The company reported a fourth-quarter profit increase of 61.4 per cent on an annual basis, boosted by a surge in retail fuel volumes sold. Net income for the three months to the end of December rose to Dh677 million, while full-year 2023 profit reached Dh2.6 billion.

“By prioritising sustainability and leveraging technology and innovation, we are positioning Adnoc Distribution as an international multi-energy mobility and convenience leader,” said Mr Al Lamki.

The policy sets an annual dividend of $700 million or a minimum of 75 per cent of net profit, whichever is higher