ADNOC Distribution reported that net profit for the fourth quarter of 2019 was $135mn, an increase of 11.3% compared to same period last year. EBITDA for the fourth quarter of 2019 was $179mn, an increase of 6.5% compared to the same period last year, driven by a solid operational performance in both fuel and non-fuel businesses.
Total fuel volumes sold increased by 2.0% in the fourth quarter of 2019 compared to the fourth quarter of 2018, driven by a continued recovery in the company’s retail business, growth in its corporate business and supported by new marketing initiatives. Growth in retail fuel volumes was driven by improvement in the core Abu Dhabi market, market share gains in the Northern Emirates, following implementation of free assisted fuelling (effective 3 November 2019) and the contribution from new stations in Dubai.
Non-fuel retail gross profit increased by 10.4% for the same period compared to Q4-2018. This was supported by the company’s convenience store revitalisation programme, which offers customers an improved shopping experience, contributing to an uplift in average basket size by 5.4% in Q4-2019 compared to the same period of 2018.
In Q4-2019, a series of customer-focused initiatives were introduced to enhance the overall customer experience. The company unveiled its innovative next-generation fuel and retail station ‘ADNOC On the Go’, bringing ADNOC Distribution closer to its customers and the communities that it serves.
The company launched its new customer loyalty programme ‘ADNOC Rewards’, offering customers more benefits, a seamless digital experience and smart payment options; and unveiled its next-generation Oasis convenience store to better serve customers, offering a contemporary family-friendly environment where customers can refuel, unwind and enjoy freshly prepared food.
ADNOC Distribution’s acting CEO, Ahmed Al Shamsi, said: “We have delivered strong results in the fourth quarter as well as for the full year 2019. We continue to transform ADNOC Distribution into a world-class, customer-focused, commercially driven company with a determined focus on driving profitable growth.”
“As we sharpen our focus on customer experience and pursue growth opportunities, both domestically and internationally, we will expand all our distribution channels to reach larger market segments and sustain volume growth. Finally, OPEX reduction and optimisation of CAPEX also remain key priorities.”
For the full year 2019, net profit increased to $604mn, an increase of 4.2% compared to 2018. In 2019, EBITDA increased 2.3% to $773mn, while underlying EBITDA (EBITDA excluding inventory gains) grew 7.2% to $740mn, compared to 2018. The company’s EBITDA margin has also shown continued momentum, reaching 13.3% in 2019, up from 12.1% in 2018.
Total fuel volumes sold increased by 0.7% in 2019 compared to 2018. Free cash flow (EBITDA less capital expenditure) generation was up 16.4% year-on-year to $635mn for 2019. Non-fuel retail gross profit increased by 11.8% for the same period compared to 2018. ADNOC Distribution continues to focus on realising cost efficiencies, which has contributed to 8.6% reduction in operating expenses for 2019 compared to 2018.
ADNOC Distribution’s priorities remain customer focus, profitable growth and shareholder returns underpinned by a progressive dividend policy. To that end, the company’s board of directors has proposed a cash dividend of $325mn for the second half of 2019, which will be submitted to the company’s shareholders for approval at the annual general assembly meeting scheduled on 31 March 2020.
Subject to shareholders’ approval, total dividend for fiscal year 2019 is expected to be$ 650mn, which would represent a 62% increase compared to the 2018 dividend, in line with the approved dividend policy. This would translate to a 6.4% annual dividend yield for 2019. The company paid half of the 2019 dividend in October of last year and expects to pay the final payment in April 2020, subject to shareholders’ approval.
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