ADNOC Distribution Q1 net profit drops 30%
ADNOC Distribution reported net profit of $109 million (AED 400 million) for Q1 2020, with free cash flow of $145 million (AED 533 million)
ADNOC Distribution reported net profit of $109 million (AED 400 million) for Q1 2020, with free cash flow of $145 million (AED 533 million). Profit dropped by 30.9% compared to the same period for the previous year.
During the first quarter, ADNOC Distribution responded to the coronavirus pandemic with the daily cleaning of its sites and free car interior sanitization with every auto wash. It also enhanced its advanced Mobile Pay technology, which allows totally contactless refueling and payment. Customer uptake of the ADNOC Distribution Wallet, which includes Mobile Pay as well as the ADNOC Rewards program, increased by more than 100,000 users in the first quarter of the year to over 730,000 users.
Ahmed Al Shamsi, Acting Chief Executive Officer of ADNOC Distribution said: “In Q1 2020 we have shown strength and agility as a business. We are especially thankful to our dedicated frontline colleagues who have played a vital role in this effort by providing a lifeline to communities around the country that rely on our services 24 hours a day to meet their essential fuel, food and grocery needs. In turn, we have taken and will continue to take, every step to ensure their health, safety and wellbeing.”
The company also launched an ‘essential products’ range in its ADNOC Oasis stores, including fresh food, household and healthcare products, at low cost to help customers across the UAE. In addition, retail fuel customers across Abu Dhabi Island have had the added convenience of having their vehicles refueled on their doorstep through ADNOC Distribution’s My Station, a new mobile fueling service that provides services at a location and time of customers’ choosing.
The company has also introduced new complimentary deep cleaning and sanitization of cars at select stations as part of its auto wash service. More recently, ADNOC Distribution launched an online home delivery service with select leading providers, of more than 1,000 of its Oasis products, including groceries and hot beverages for the convenience and safety of its customers.
“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,” added Al Shamsi. “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.”
The company’s retail fuel business posted gross profit growth of 13.1% year-on-year in the first quarter, led by higher margins and volume growth in the first two months of the year. Although retail fuel volumes declined by 1.9% in the quarter, due mainly to the business impact of COVID-19 in March, commercial fuel volumes remained stable year-on-year.
Its underlying EBITDA (EBITDA excluding inventory losses and one-offs) hit $171 million (AED 629 million), an increase of 4.7% compared to the same period last year. While revaluation of current inventory stock in the commercial business, following lower oil prices, and prudent provisioning in the current environment negatively impacted reported EBITDA and Net Profit for the first quarter by AED 73 million, most of the year on year decline comes from an unfavorable base period which benefitted from one-off reversals and recoveries of AED 132 million.
During its recent General Assembly meeting, held virtually, ADNOC Distribution announced that its 2020 dividend policy is set to continue with an increase of 7.5% to AED 2.57 billion, after a 62% increase in the 2019 dividend to AED 2.39 billion. Looking further ahead, the company’s shareholders approved amendments to the dividend policy for 2021 onwards, setting an AED 2.57 billion dividend for 2021 and a dividend equal to at least 75% of distributable profits from 2022 onwards.