ADNOC Distribution’s Q1 net profit down 31%

ADNOC Distribution, the UAE’s largest fuel and convenience retailer, reported a net profit of $109m in the first quarter of the year, down nearly 31 per cent from $157m in the corresponding period last year.

It attributed the decrease in net profit to “revaluation of current inventory stock in the commercial business, following lower oil prices, and prudent provisioning in the current environment.”

The company recorded an underlying EBITDA of $171m in Q1 2020, a year-on-year growth of 4.7 per cent.

In February, it said that its net profit for 2019 was $600m, a 4.2 per cent increase compared to $580m in 2018.

Read: Abu Dhabi’s ADNOC Distribution posts 4.2% profit rise in 2019

Its revenue for Q1 2020 was reported at $1.345bn, up 3.6 per cent from $1.299bn in Q1 2019. Its gross profit figures of $302m was a 3.1 per cent decrease from $312m.

Meanwhile, its operating profit in Q1 2020 fell 30.3 per cent to $115m from $165m in the corresponding period of 2019.

Read also: ADNOC Distribution plans record investment to add gas stations

It added that it had made capital expenditures of $50m in Q1 2020, compared to $13m in Q1 2019.

In November, it announced plans to open 50 smaller ‘on the go’ fuel stations throughout the country.

Read: Abu Dhabi’s ADNOC to open 50 ‘smaller’ fuel stations, launch new loyalty programme

The company said that five such stations were already operational as of the end of April, with more expected soon.

ADNOC’s free cash flow stood at $145m and it opened seven new stations in Q1 2020.

Its retail fuel gross profit grew by 13.1 per cent year-on-year in the first quarter, led by higher margins and volume growth in January and February.

It stated that although retail fuel volumes declined by 1.9 per cent in the quarter, due mainly to the business impact of Covid-19 in March, commercial fuel volumes remained stable year-on-year.

As of March 31, 2020, the company’s liquidity was at $2.2bn in the form of $1.4bn in cash and cash equivalents and $800m in unutilised credit facility.

“In Q1 2020 we have shown strength and agility as a business. By understanding our customers’ needs and adapting our products and services, while they adhere to social distancing, we have built a stronger relationship with our communities, one that we hope will last long into the future after this pandemic is over,” said Ahmed Al Shamsi, acting CEO of ADNOC Distribution.

The company’s 2020 dividend will increase 7.5 per cent to $700m, after a 62 per cent increase in the 2019 dividend to $650m.

During its virtual general assembly, the company’s shareholders approved amendments to the dividend policy for 2021 onwards, setting $700m dividend for 2021 and a dividend equal to at least 75 per cent of distributable profits from 2022 onwards.

“We also remain committed to our shareholders by protecting our business through the application of robust business continuity measures and the strengthening of our business resilience, in readiness to return in a position of strength and continue our growth trajectory when the effects of the pandemic subside,” added Al Shamsi.