Adnoc Distribution’s profit rises by 22% in third quarter as costs decline

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, reported a 22 per cent rise in third-quarter profit as costs declined.

Net profit for the three months to the end of September jumped to Dh671 million, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares trade. Direct costs fell by 47 per cent to Dh2.3 billion.

“Adnoc Distribution’s third- quarter results have continued to advance our strategic priorities of steady and sustainable growth, enhanced customer experience and attractive capital returns for our shareholders,” said acting chief executive Ahmed Al Shamsi.

“We continue to ensure our network has a wider reach across all emirates, particularly in the heart of [districts that] previously did not have convenient access to refuelling services.”

Adnoc Distribution is on track to open 50 to 60 new stations by the end of the year, with 20 to 25 of those in Dubai, the company said.

It had opened 37 new stations by the end of September, 11 of which are in Dubai.

“We maintain significant capacity to [use] capital through a disciplined investment strategy aimed at continuing our efforts to expand our fuel station network, with a focus on the Dubai market, as well as investing in our non-fuel and international business expansion,” Mr Al Shamsi said.

The company’s nine-month profit fell by 8 per cent to Dh1.5bn as revenue slid by 25 per cent to Dh12bn due to coronavirus-related movement restrictions in the first half of the year.

Adnoc Distribution also intends to expand its reach in Saudi Arabia. It opened its first service station in the kingdom in 2018. It said it is in “advanced discussions to finalise land leases with landlords, as well as to grow our network inorganically”.

“We see the Saudi Arabian fuel market as large and fragmented, with underdeveloped customer offerings,” the company said.

“Adnoc Distribution’s experience and strengths can be leveraged to introduce worldclass fuel station and customer service standards in Saudi Arabia to capture growth.”

The company’s liquidity stood at Dh6.8bn at the end of September, of which Dh4bn was in cash and cash equivalents and Dh2.8bn in an unutilised credit line.

About 80 per cent of the company’s capital expenditure in the first nine months of the year was spent on the development and construction of new service stations. Capital expenditure this year is expected to be about Dh1.1bn.

Adnoc completed the placement of 1.25 billion Adnoc Distribution shares in September.