Adnoc Distribution, the UAE’s largest fuel and convenience retailer reported a 22 per cent rise in third-quarter profit on the back of lower costs.
Net profit for the three months to the end of September jumped to Dh671 million, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares trade. Direct costs fell 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,” Ahmed Al Shamsi, acting chief executive of Adnoc Distribution, said. “We continue to ensure our network has a wider reach across all Emirates, particularly in the heart of neighbourhood communities, which previously did not have convenient access to refuelling services.”
Adnoc Distribution remains on track to open 50 to 60 new stations by full-year 2020, of which 20 to 25 will be in Dubai, the company said. Adnoc Distribution opened 37 new stations as of the end of September, 11 of which were in Dubai.
“We maintain significant capacity to deploy 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 8 per cent to Dh1.5bn as revenue slid 25 per cent to Dh12bn in the wake of movement restrictions put in place to curb the spread of the Covid-19 pandemic in the first half of the year.
Adnoc Distribution is also looking to expand its presence in Saudi Arabia further. The company opened its first service stations in the kingdom in 2018, one year after its listing in Abu Dhabi.
It said its in “advanced discussions to finalise land leases with land lords 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 world-class fuel station and customer service standards in Saudi Arabia to capture growth.”
At the end of September, the company’s liquidity stood at Dh6.8bn including Dh4bn in cash and cash equivalents and Dh2.8bn in an unutilised credit facility. About 80 per cent of the company's capital expenditure in the first nine months of the year were for the development and construction of new service stations. Capital expenditure in 2020 is expected to be about Dh1.1bn.
In September, Abu Dhabi National Oil Company successfully completed a placement of 1.25 billion of its shares in Adnoc Distribution with institutional investors. This represented 10 per cent of Adnoc Distribution’s total share capital, and increased the company’s free float to 20 per cent.
