ADNOC Distribution, the UAE’s largest fuel and convenience retailer, reported an 18 per cent rise in net profit for first half this year, despite selling less fuel as higher oil prices and cost cuts helped.
It made a net profit of AED 1,124 million in the six months ending June, which is up 18 per cent compared with the same period last year, ADNOC said in a statement.
Average fuel prices in the first half of this year have risen in the UAE by 21-23 per cent depending on gasoline type compared to the earlier-year period, while diesel price rose by 27 per cent, according to calculations based on figures from the UAE Ministry of Energy & Industry. This year’s fuel prices also saw the inclusion of a 5 per cent value added tax.
ADNOC said its total fuel volumes sold during in the first half was 4,763 million litres, a 1 per cent decrease compared to the same period last year.
The company’s EBITDA grew by 30 per cent to AED 1,443 million, and gross profit rose by 24 per cent to AED 2,609 million. Free cash-flow (EBITDA minus capital expenditures) generation was up 72 per cent year-on-year to AED 1,111 million in the first half of 2018.
Quarter-on-quarter, the company has also showed growth, with net profit for the second quarter of 2018 up 24 per cent compared to the second quarter of 2017, gross profit for Q2 2018 increased by 33 per cent, and gross profit margin rose to 25 per cent, up from 22 per cent during the same period last year.
ADNOC said its financial performance during the first half of 2018 remained resilient despite a challenging market environment.
“ADNOC Distribution’s second quarter and half-year results reflect our continued progress towards delivering on our strategy,” said ADNOC Distribution Acting CEO, Saeed Mubarak Al Rashdi.
“We have made progress in all three of our strategic pillars: fuel, non-fuel and cost-efficiency. We are on track to hit our declared target of achieving approximately AED 190 million in cost savings in 2018 and, as a newly public company, are continuing to exercise a heightened level of discipline in capital investments, resulting in a reduction in our capital expenditure budget compared to 2017. Notably, we have been able to achieve these costs savings while continuing to grow our service station network, and without impacting safety, quality and our customer experience.”
Operationally, ADNOC Distribution made important progress as it transforms the business into a more customer-centric organisation and expands its fuel and non-fuel offerings. Initiatives delivered during the second quarter include the implementation of ADNOC Flex, which provides customers the choice of Premium or Self-Serve refuelling; the launch of two new retail brands – Géant Express convenience stores and Oasis Café coffee shops and bakeries; and the opening of eight new service stations and 10 new convenience stores since last year’s second quarter.
On the technology front, ADNOC Distribution also installed an additional 69,000 RFID-enabled Smart Tags during the second quarter as part of its world-class ADNOC Wallet cashless payment solution, bringing the total installed base of Smart Tags to over 180,000.
ADNOC Distribution's deputy CEO, John Carey, added: “ADNOC Distribution continues to demonstrate strong and profitable performance supported by improved margins and a continued cost focus. We have seen good momentum across our businesses, led by a 39 per cent increase in EBITDA in our retail segment and a 5 per cent increase in volumes sold by our corporate sales segment in the first half of 2018. We remain confident on the delivery of our business plan for 2018 and beyond, and are well on our way to making ADNOC Distribution a world-class fuels and convenience retailer.”