ADNOC Distribution announced robust financial results for the first quarter of 2024, with an 18 percent rise in its earnings before interest, taxes, depreciation, and amortization (EBITDA) to $248 million. The company’s performance underscores its commitment to its new five-year strategy, focusing on domestic growth, international expansion, and future-proofing operations.
ADNOC Distribution attributes the growth to growing momentum in both its fuel and non-fuel retail segments, including developments in ADNOC Distribution’s pipeline with more than 20 artificial intelligence (AI)-driven initiatives that accelerate growth and enhance operational efficiencies.
Financial performance
ADNOC Distribution net profits reached $150 million compared to $146 million in Q1 2023. Excluding the impact of the UAE’s recent corporate tax, net profit saw a robust 13 percent year-on-year increase to $165 million.
Moreover, the company’s non-fuel gross profits saw a 16 percent annual increase to $55 million. ADNOC Distribution also saw growth in its non-fuel retail business, with transactions increasing by 7 percent across the network in the UAE.
The company also maintained a strong balance sheet with a net debt-to-EBITDA ratio of 0.50x, reinforcing its strong financial position that allows it to invest in growth and deliver attractive shareholder returns.
ADNOC Distribution also saw sustainable growth in fuel volumes across its operations with volume rising 17 percent due to growth in both retail and commercial segments.
In particular, the GCC region saw a 9 percent increase due to an increase in traffic across the company’s network, ongoing network expansion, and a higher contribution from international operations in Saudi Arabia.
Expansion goals
We aim to “expand the ADNOC Distribution network to 1,000 stations, increase the number of fast and super-fast EV charging points to at least 500, grow our non-fuel transactions by 50 percent, and increase the number of convenience stores by 25 percent”, stated Bader Saeed Al Lamki, CEO of ADNOC Distribution.
Al Lamki added that AI continues to demonstrate tangible benefits across ADNOC Distribution operations. For instance, the Fuel Demand AI Mode harnesses predictive demand analytics to optimize fuel delivery across our network. Notably, ADNOC expects the model to prevent potential lost sales totaling over $27 million in five years.
In Q1 2024, ADNOC Distribution opened eight new service stations, expanding its total network to 846 stations. Therefore, the company remains on track to achieve its full-year target of adding between 15 and 20 new sites. In addition, the company expanded its non-fuel offerings by opening two new high-capacity car wash tunnels. Plans are underway to launch eight more car wash tunnels and upgrade 50 percent of automatic car washes by the end of 2024.
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AI reduces total fuel inventory runout
ADNOC Distribution’s Fuel Demand AI Model offers a fuel forecast accuracy exceeding 95 percent, which resulted in a decline in total fuel inventory runout. Additionally, the improved accuracy facilitated a 10 percent decline in total fuel truck emissions through optimized delivery timing efficiencies, in line with the company’s objective to reduce carbon emissions intensity by 25 percent by 2030.
In an effort to promote sustainability, ADNOC Distribution expanded its network of fast and super-fast electric vehicle (EV) charging points to 89 charging points, marking a 68 percent increase over Q4 2023. Therefore, the company remains on track to more than double its profitable EV charging points network to approximately 150 to 200 by the end of 2024.
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