ADNOC Distribution is holding its first Capital Markets Day presentations since its IPO on the Abu Dhabi Securities Exchange (ADX) in December 2017. The company’s management made presentations yesterday to institutional investors and analysts in London, with a similar presentation taking place today, 8 May, in New York.
The focus of the Capital Markets Day presentations is to provide an update by the company’s senior management on ADNOC Distribution’s achievements to date, growth strategy and future vision, as well as the financial profile of the business, its progressive new dividend policy, and the company’s capacity to invest in future growth.
The event was hosted by the ADNOC Distribution leadership team, including Saeed Mubarak Al Rashdi, acting CEO, John Carey, deputy CEO, and Petri Pentti, CFO.
ADNOC Distribution successfully delivered on its IPO commitments, securing year-on-year EBITDA growth of 22%, from $621mn in 2017 to $755mn in 2018.
ADNOC Distribution’s clear and deliverable growth strategy remains on track, as it targets EBITDA in excess of $1bn by 2023. As the company outlined last week in its quarterly earnings announcement, its strong trajectory has continued in the first quarter of 2019.
ADNOC Distribution aims to boost top-line growth in both its fuel and non-fuel businesses through acceleration of its expansion in the UAE, particularly in Dubai where it targets at least 10 new stations in 2019, with a similar amount annually thereafter through to 2023.
ADNOC Distribution expects its non-fuel offering to continue to contribute to its profitability through the continued revitalisation of its convenience stores, further roll out of Géant Express convenience stores, and further roll out of its proprietary Oasis Cafe coffee and bakery offering.
ADNOC Distribution’s cost optimisation programme remains in place and is expected to contribute to higher operating margins. The company is targeting $100-150mn of additional savings through 2023 on top of the $50+mn of like-for-like cost savings already delivered in 2018.
ADNOC Distribution expects to deliver further growth by expanding its lubricants business in the UAE and internationally, as well as by expanding its fuel and non-fuel retail offering into new geographies, such as Saudi Arabia.
Strong cash flow generation and confidence in the company’s growth prospects support the company’s board of directors’ and shareholders’ recent approval of a new dividend policy under which the company intends to pay $650mn, for 2019 (+63% versus 2018), $700mn for 2020 (+75% versus 2018), and a minimum pay-out of 75% of distributable profits thereafter. This dividend policy represents a balance between a sustainable shareholder pay-out, while maintaining significant capacity to invest in future growth. The company had approximately $1.2bn of cash on its balance sheet and a ratio of net debt to EBITDA at 0.35x as of 31 March 2019, providing significant additional leverage capacity.
Al Rashdi commented: “Since our IPO, we have continued to grow our presence as the number one fuel retail brand in the UAE, and have made significant progress across all three pillars of our strategy: fuel, non-fuel and cost-efficiency.Our Capital Markets Day presentations allow us to reflect on our performance since our IPO, talk about the company’s strategy, and explain in more detail how we plan to meet our objectives as part of a carefully constructed growth plan, including our commitment to a disciplined, return-driven capital allocation strategy.”
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