ADNOC Distribution is holding an Investor Day on Monday, where it plans to provide details of its strategic growth initiatives for the next five years.
This includes a new dividend policy proposal that promises payback visibility and dividend upside from future earnings growth.
Recognising the company’s strong financial position ($870 million of cash on its balance sheet) and confidence in future cash flow generation, the Board has recommended a new dividend policy for 2024-28 based on paying annual dividend of $700 million, or a minimum 75 percent of net profit, whichever is higher. ADNOC Distribution’s ratio of net debt to EBITDA was at 0.62x on 31 December 2023. The new dividend policy will be presented to shareholders for approval during the upcoming General Assembly Meeting in March.
The UAE’s largest fuel and convenience retailer successfully delivered on its previous commitment of reaching $1 billion in earnings before interest, tax, depreciation and amortisation (EBITDA) in 2023. It promises to deliver further EBITDA growth in the 2024-2028 period.
Bader Saeed Al Lamki, CEO of ADNOC Distribution, said: “ADNOC Distribution has demonstrated a track record of value creation through its smart growth strategy and pursuing new opportunities.
“Since its market debut in late 2017, the company has delivered robust financial performance and doubled shareholder value. 2023 was a transformative year for ADNOC Distribution, with the company generating EBITDA of over $1 billion, an increase of 33 percent compared to 2018.
“The company is well positioned to take advantage of evolving energy markets and enter a new phase of growth. We remain committed to a disciplined capital allocation and delivering attractive and visible shareholder returns.”
ADNOC Distribution’s diverse energy evolution
ADNOC Distribution is scaling up its portfolio of low-carbon energy solutions including biofuels, EV and hydrogen to support de-carbonisation of the transport industry and expanding its non-fuel retail offerings.
ADNOC Distribution will continue to invest in the growing and highly attractive core UAE market. It aims to unlock incremental value from its existing network by growing its non-fuel retail business and optimising real estate assets.
As part of its new growth strategy, it plans to increase the contribution from international operations in Saudi Arabia and Egypt while exploring accretive inorganic opportunities.
During 2023, the company witnessed double-digit growth in total fuel volumes across the GCC markets, as well as in its nonfuel retail business, achieving a four-year-high fuel to convenience store conversion rate of 25 percent.
ADNOC Distribution also aims to improve its operational efficiency further, targeting up to $50 million of additional savings by 2028. It delivered a like-for-like cost savings of $130 million in 2019-23.
ADNOC Distribution is placing sustainability at the core of its day-to-day operations, reducing its carbon footprint while exploring emerging opportunities and enabling customers to decarbonise. It plans to build a network of 500 fast and super-fast EV charging points across the UAE by 2028.
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