Adnoc Distribution to spend billions on M&A deals

• $2bn to spend
• Interview with strategy officer
• Listed in 2017

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, is looking to deploy $2 billion in potential mergers and acquisitions in the Middle East and beyond, a senior executive has told AGBI.

Athmane Benzerroug, Adnoc Distribution’s chief strategy, transformation & sustainability officer, said on Tuesday that with a free cash flow of more than $700 million and a net debt to EBITDA ratio of 0.6, the “company has a firepower of $2 billion, so it is looking for creative M&A opportunities”.

Benzerroug did not give any specific locations or timelines but said any deal would “be opportunistic” and the company must be able to offer “additional value, like what we have done since the IPO”.

Adnoc Distribution, the fuel distribution unit of Abu Dhabi National Oil Company listed on the Abu Dhabi Securities Exchange in 2017.

Since then, it has acquired 25 stations in Saudi Arabia and has taken a 50 percent stake in TotalEnergies Marketing Egypt.

While Saudi Arabia “is a massive market” with 10,000 stations overall, Egypt was a source of double-digit growth last year, especially in the aviation and lubricant business, Benzerroug said.

The company supplies two airports in Egypt: Cairo and Marsa Al Alam. 

This business is above 50 percent of EBITDA, Benzerroug said, adding: “We are looking at new airport opportunities, and these businesses are dollar-denominated, which means that there are no risks regarding patterning to the EGP devaluation or weakness.”

Adnoc Distribution is targeting 1,000 service stations and more than 500 electric vehicle charging points by 2028, focusing on fast and super-fast charging, above 150 kilowatts. 

“It’s also an opportunity because the (EV) margins are high,” said Benzerroug.

Adnoc Distribution’s stock closed at AED3.58 in early trading on the Abu Dhabi Securities Exchange on Tuesday, down nearly 1 percent since Monday but up nearly 6 percent from a low of AED3.39 on January 20.

Adnoc Distribution’s net profit fell by 7 percent to AED2.4 billion ($653 million) due to lower inventory gains, higher finance costs and corporate tax.

Revenue rose 2 percent year on year to AED35.5 billion, supported by higher fuel volumes, a growing non-fuel retail segment, and the consolidation of TotalEnergies Marketing Egypt, the company said in a statement.

Following an IPO in 2017 and redemption of exchangeable bonds last year, the free float of Adnoc Distribution is 23 percent, while national champion Abu Dhabi National Oil Company retains 77 percent of the stock.

So far this year, the shares have gained 6 percent, closing at AED3.64 on 10 February.

Fuel volumes rose 9 percent year on year to 15 billion litres, the company said, while the retail fuel network reached 896 stations from 840 stations in 2023. Non-fuel transactions grew 10 percent year-on-year, amid a growing contribution from international operations in Saudi Arabia and Egypt.  

Revenue in the fourth quarter of 2024 fell 8 percent year on year to AED9 billion, while net profit fell 14 percent year on year to AED580 million.

• Adnoc Distribution to pay $350m in interim dividend
• Adnoc Distribution profit falls 20% on lower fuel prices
• Adnoc Distribution reveals plans for Egypt and Saudi Arabia

The Adnoc subsidiary expanded its network by adding 59 stations in 2024, including 30 stations under development in Saudi Arabia.

The board has recommended a dividend of AED1.29 billion for the second half of 2024, expected to be paid in April 2025, subject to the shareholders’ approval. The first-half payout was AED 1.3 billion.

The 2024-28 dividend policy is set at AED2.57 billion (20.57 fils per share) or a minimum of 75 percent of net profit.