Two of Adnoc’s arms — Adnoc Distribution and Adnoc Drilling — announced strong first half results on Thursday.
Adnoc Distribution reported a 15 per cent year-on-year increase to $267 million in Q2 2024 Ebitda, and a 12.9 per cent year-on-year rise in net profit to $170 million.
Excluding the impact of the UAE corporate tax, net profit would have increased by 24.5 per cent year-on-year to $187 million. Strong financial performance in Q2 2024 was driven by higher fuel volumes, increased contributions from international operations, and growth in the non-fuel retail business.
The company’s non-fuel retail gross profit increased by 13.5 per cent year-on-year in Q2 2024 to $56 million, driven by contributions from the expanding car wash business, supported by new initiatives such as tunnels and upgraded automatic car washes, as well as enhanced convenience store offerings and other car services.
Growth was further supported by higher inventory gains and significant progress in cost optimisation, with $10 million in like-for-like OPEX savings achieved in H1 2024.
Bader Saeed Al Lamki, CEO of Adnoc Distribution, said: “Adnoc Distribution continues to achieve strong financial results. The strong Q2 2024 results, marked by double-digit Ebitda and net profit growth, highlight our effective pursuit of the company’s five-year strategy, focusing on domestic growth, international platforms, future-proofing the business, and investing in convenience and mobility.”
The company generated a strong free cash flow of $330 million in Q2 2024, a 7x increase compared to Q2 2023.
In H1 2024, the company’s free cash flow stood at $488 million, representing 46.7 per cent year-on-year growth, while maintaining a robust balance sheet with a net debt-to-Ebitda ratio of 0.53x as of 30th June 2024.
The H1 2024 dividend of $350 million is expected to be distributed to shareholders in October 2024, subject to the discretion of the Board of Directors.
This is in line with the company’s approved five-year dividend policy that sets an annual dividend of $700 million (20.57 fils per share), or a minimum 75 per cent of net profit, whichever is higher.
The company added 10 new service stations in H1 2024, bringing the total to 847 across UAE, Saudi Arabia and Egypt, steadily progressing towards its target of adding 15 to 20 stations throughout 2024.
In H1 2024, the company also continued to expand its electric vehicle (EV) charging network. It made significant progress towards achieving a key operational milestone by opening a pioneering Mobility Hub in Masdar City and doubling its network of fast and super-fast charging points to more than 100 compared to the end of 2023. This is in line with its target to reach 150 to 200 by the end of the year.
Meanwhile, Adnoc Drilling achieved net profits of about $570 million during the first half of 2024.
Adnoc Drilling raised its medium-term revenue expectations to $3.85 billion for the fiscal year 2024, including $1.75 billion in onshore drilling revenues, $1.1 billion in offshore drilling revenues, $250 million in revenues from the artificial islands sector, and $800 million from the oilfield services sector.
Youssef Salem, chief financial officer of Adnoc Drilling estimated that the company’s capital expenditures for 2024 are expected to range between Dh750 million and Dh950 million, with ongoing rig acquisitions, noting that the company has accelerated its growth plans to support Adnoc in achieving its strategic goal of increasing production capacity from 4 million to 5 million barrels per day by 2027.
Adnoc Drilling expects projected the company to achieve net profits between $1.15 billion and $1.3 billion by the end of 2024, while it is expected to record around $730 million in the second half of the year. Growth is attributing to the significant expansion across all of the company’s operations and the full operational impact of the onshore and offshore rigs that were brought online during the previous period.
He stated that the company’s rig fleet expanded to 140 rigs by the end of the first half of this year, comprising 95 onshore rigs and 45 offshore rigs, up from 137 rigs at the end of the first quarter. He expects the fleet to reach 142 rigs by the end of this year and to grow further to 148 rigs by 2026, in response to increasing customer demand.
He pointed out that Adnoc Drilling completed three acquisitions in the first half of this year, totaling $550 million, while a new acquisition is expected to be made in the United States during the second half of the year, bringing the total value of the four acquisitions in 2024 to $750 million.