ADNOC Distribution, UAE’s largest fuel retailer, revealed that it is evaluating potential opportunities in the Indian lubricant market as it is on track to expand its global footprint.
The leading fuel distributor from the Abu Dhabi National Oil Company said that it plans to expand organically in Saudi Arabia, and is in advanced talks with the partners in the kingdom, which is underdeveloped in terms of customer offerings.
Due to a decline in UAE fuel sales during the lock down, its first-half net profit slipped 22.4 percent to $247 million. Its sales dropped from $2.7 billion to $2.1 billion which is a decrease of 22.6 percent.
“We are progressing well on our international expansion strategy. We are in advanced discussions with several counter parties including landlords and retail fuel operators in Saudi Arabia to grow organically, as well as continue to explore inorganic growth opportunities,” the company disclosed in its Management Discussion and Analysis Report released during second-quarter results.
The firm intends to introduce fuel stations to capture untapped growth in Saudi Arabia.
“We are also assessing potential opportunities in the Indian lubricants market to achieve disciplined growth and operational success, while targeting the highest return on investment,” said ADNOC Distribution.
As of 30 June 2020 it operates 406 retail fuel stations, including 13 Dubai fuel stations. In the 1st half of 2020, it opened 25 new stations across the country. In the second quarter they launched 18 stations.
In the first half of 2020, ADNOC also incurred higher capital expenditure (capex) of $104 million compared to $37.5 million in the corresponding period last year.
“We expect 2020 capex to accelerate compared to 2019 as a significantly higher number of new stations are expected to be delivered this year.”
ADNOC Distribution has launched mobile fuel delivery in selected areas of Abu Dhabi to provide a convenient fueling service at no extra charge to retail customers.
“During Q2 2020, we added 10 new trucks to our My Station fleet to expand on-demand fuel delivery service. By the end of the first half of 2020, we have deployed eight fuel trailers and 32 fuel trucks to serve our commercial and retail customers,” said ADNOC.
The company’s like-for-like operating expenses also shrank by $7 million year-on-year basis in the second quarter following an increase of $4 million in the first quarter of 2020.
Overall operating expenses, however, rose in the first half due to one-off expenditures associated with higher pension payments, COVID-19-related expenditures and network expansion costs.