Adnoc Distribution reveals 5 year growth strategy at Investor Day

The management of Adnoc Distribution revealed its new 5-year growth strategy at an Investor Day in Abu Dhabi on Monday. Speaking at the Investor Day event, Bader Saeed Al Lamki, CEO of Adnoc Distribution, said, “Adnoc Distribution’s new growth strategy is underpinned by three key drivers: domestic growth, international platforms, and future-proofing the business.

In its pursuit to become a multi-energy leader, the Company is also scaling up its portfolio of low-carbon energy solutions, including biofuels, EV and hydrogen to support the decarbonisation of the transport industry.”

Highlights from the new five-year strategy’s operational objectives for 2028 included growing the Adnoc Distribution network to 1,000 service stations, a +20 per cent increase compared to 840 stations in 2023, delivering a 50 per cent increase in the number of non-fuel transactions, and achieving a 25 per cent increase in the number of convenience stores.

The strategy also includes scaling up franchise and sub-franchise models with 50+ Company operated new franchise operations, providing a 2-3X yield versus the traditional rental model, becoming a one-stop shop for car care, tripling the number of car washes, doubling the number of automotive oil changes and expand total car service offerings.

Additionally, to launch new innovations and expand on current digital enhancements, including seamless fueling through license plate recognition, in-car ordering through the Adnoc Distribution application, and explore future subscription services for carwash and other services. Target a minimum of 500 EV fast and superfast charging points to build a national network, a 10X increase from 2023.

Adnoc Distribution also aims for up to $50 million in like-for-like Opex savings by 2028, allocating $250 to $300 million annually for Capex, with 70 per cent focused on growth. The new dividend policy proposal will provide $700 million annually or a minimum of 75 per cent of net profit, whichever is higher, offering dividend upside potential from future earnings growth. The proposal is subject to shareholder approval at the AGM in March.

Adnoc Distribution is committed to delivering Ebitda growth from 2024 to 2028 through its identified key strategic initiatives and focus areas. The Company will reallocate capital towards convenience and mobility to transform its stations into destinations of choice, continue to build on its international platforms with a focus on increased contributions, and future-proof the business by unlocking new revenue streams offered by the energy transition.

Adnoc Distribution organised an Investor Day, providing the market with an update on the Company’s achievements and strategic growth initiatives. The company, which successfully delivered on its previous commitment of reaching $1 billion in earnings before interest, tax, depreciation and amortisation (Ebitda) in 2023, will deliver further Ebitda growth in the 2024-2028 period, while it positions itself as a multi-energy, convenience and mobility leader.

Adnoc Distribution is scaling up its portfolio of low-carbon energy solutions including biofuels, EVs and hydrogen to support the decarbonisation of the transport industry and expand its non-fuel retail offerings.

Bader Saeed Al Lamki, CEO of Adnoc Distribution, said, “Adnoc Distribution has demonstrated a robust track record of value creation through its smart growth strategy, pursuing new opportunities in domestic as well as international markets.

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 per cent compared to 2018.

The company is well-positioned to take advantage of evolving energy markets and enter a new growth phase. We remain committed to a disciplined capital allocation and delivering attractive and visible shareholder returns.”

During 2023, the Company witnessed double-digit growth in total fuel volumes across the GCC markets, as well as in its non-fuel retail business, achieving a four-year-high fuel-to-convenience store conversion rate of 25 per cent.