ADNOC Distribution released its financial results for the first quarter of 2021 on Monday, reporting underlying EBITDA of AED 740 million and net profit of AED 631 million for the quarter, while cash flow generation remains strong with a free cash flow of AED 835 million.
In the first quarter of 2021, ADNOC Distribution delivered a strong financial performance, with EBITDA of AED 817 million and net profit of AED 631 million, driven by improved margins and OPEX efficiencies achieved during the quarter, the company said in a statement on Monday.
The company’s retail fuel business posted strong operational performance, with gross profit up 12.6 percent year-on-year in the first quarter, driven by improved margins.
During the first quarter of 2021, ADNOC Distribution’s operating expenses (excluding depreciation) decreased by 6.5% compared to the same quarter last year, as part of the company’s efforts to improve operational efficiency. The reduction in operating costs was achieved despite growth in the company’s retail network and was driven by management’s initiatives to optimize OPEX in the business units.
ADNOC Distribution maintains a strong financial position, with a robust balance sheet at the end of the first quarter of 2021. The company remains well-positioned to grow its domestic and international portfolio in line with its smart growth strategy.
As of March 31, 2021, the company’s liquidity stood at AED 5.1 billion in the form of AED 2.3 billion of cash and cash equivalents and AED 2.8 billion of undrawn credit facility.
During the first quarter of 2021, ADNOC Distribution continued to implement its smart growth strategy, aimed at providing customers with a modern and digital fuel retailing convenience, both domestically and internationally, with the opening of four new stations in the UAE.
Of these four stations, two are “ADNOC On the go” convenience stations, designed to provide greater convenience to customers and address the needs of previously underserved locations.
The company intends to accelerate the pace of delivery and remains on track to meet its goal of opening a total of 70-80 new stations across the UAE and South Africa by the end of the year, of which 30-35 are expected to open in the UAE.
To provide a modern, digital customer experience and support the company’s ambitious non-petroleum retail strategy, a total of 14 ADNOC Oasis convenience stores were renovated during the first quarter. As a result of increased customer-centric initiatives, the average gross basket increased by 2.2% as of March 31, 2021, compared to the same period in 2020.
In addition to its growth in the UAE, the company remains well-positioned to capitalize on international growth opportunities, particularly in the Kingdom of Saudi Arabia, building on three definitive agreements signed in 2020 and 2021 to acquire a total of 35 stations, which will bring its total network in the country to 37 stations.
ADNOC Distribution’s acting general manager, Ahmed Al Chamsi, said, “Throughout the first quarter of 2021, we have achieved a feat of vaccinating 100% of our frontline employees, and I am extremely proud of their dedication to always meeting the highest HSE standards.
“In addition, we continued to build on our success in 2020 to deliver strong financial performance. This has provided the company with sufficient liquidity to pursue future growth opportunities, both organic and inorganic in domestic and international markets.”
The company continues its efforts to enhance its customer offering through ADNOC Rewards – the UAE’s first customer loyalty program from a fuel supplier – and the launch of its partnership with Etisalat Smiles, which allows members of both platforms to cross redeem points and maximize benefits.
A total of 27 new partners were added to the Reward program in Q1, offering members, even more, offers and discounts from some of the UAE’s leisure and entertainment brands.
At its general meeting on March 16, 2021, ADNOC Distribution’s shareholders approved a 2020 dividend of AED 2.57 billion (20.57 fils per share, a growth of 7.5% compared to 2019).
The company’s continued robust growth has allowed for a progressive dividend policy, with a dividend of AED 2.57 billion for 2021 and a minimum of AED 2.57 billion for 2022 (compared to the minimum of 75 percent of distributable profits under the previous policy), providing a visible return to shareholders until April 2023.
The dividend policy for subsequent years remains unchanged, with a dividend equal to at least 75 percent of distributable profits. The approved dividend policy change recognizes the company’s strong financial position at the end of 2020 and confidence in its growth prospects and ability to generate cash flow in the future.
Despite current market conditions, ADNOC Distribution remains confident and committed to delivering on its strategic commitments and generating sustainable returns for its shareholders.