Q2 2026 Abu Dhabi National Oil Co for Distribution PJSC Earnings Call
Speaker #1: Good day. And welcome to the ADNOC Distribution Investor Call Q2, Today's conference is being recorded. At this time, I would like to turn the conference over to Athmane Benzerroug.
Speaker #1: Please go ahead.
Speaker #2: Good afternoon, everyone. And thank you for joining us for ADNOC Distribution's second quarter and first half 2026 earnings call. I'm Athmane Benzerroug, Chief Strategy, Transformation, and
Speaker #2: Good afternoon, everyone. And thank you for joining us for ADNOC Distribution's second quarter and first half 2026 earnings call. I'm Athmane Benzerroug, Chief Strategy, Transformation, and Sustainability Officer.
Speaker #2: And it is a pleasure to have you with us today. I'm joined 2026 earnings. today by our Chief Executive Officer, Bader Lamki, and our Chief Financial Officer, Ali Siddiqi.
Speaker #2: Let me start by outlining today's agenda. Bader will open with a reflection on our strategic vision, and then share the key highlights of our record results.
Speaker #2: He will also speak about how recently announced acquisition of Shell downstream business in South Africa is reinforcing our growth strategy. I will then walk you through how we are executing our growth agenda on the ground.
Speaker #2: Ali, we close with a detailed look at our first half operating and financial performance. We'll then open the floor for your questions. Before we begin, a brief note on forward-looking statements.
Speaker #2: Today's presentation contains forward-looking statements that are subject to risks and uncertainties, and actual results may differ; please refer to the full disclaimer on this slide, which is also available on our website.
Speaker #2: With that, I will hand over to Bader to take you through strategic highlights, key achievements, and the outlook.
Speaker #3: Good afternoon, everyone. And thank you for joining us today. Before we walk you through our record H1 results, let me take a moment to reflect on the progress we have made and how we see the next phase of our journey.
Speaker #3: Over the past five years, we have built a strong foundation for growth. We have expanded our network, delivered sustained earnings growth, strengthened our customer proposition, and improved operational efficiency.
Speaker #3: These achievements reflect a clear strategy and disciplined execution. Today, we are leveraging that foundation to scale toward a leadership position in global mobility and convenience.
Speaker #3: We remain focused on strengthening the core through network expansion, future mobility solutions, and enhanced customer experience. At the same time, we're extending the core through digital innovation, strategic partnerships, and new growth platforms that deepen customer engagement and create additional value.
Speaker #3: The next chapter of our journey is about taking what we have built and scaling it further through new markets, new customers, and engines of growth, creating larger, more diversified, and faster-growing businesses to deliver additional value for shareholders.
Speaker #3: H1 2026 was a major milestone for ADNOC Distribution. We delivered record net profit of $568 million, up 59%, and EBITDA of $786 million, up 39%.
Speaker #3: Excluding inventory effects, underlying EBITDA grew around 14%, reflecting the strength of our underlying business. Return on capital employed exceeded 40%, our highest level ever, and more than doubled the peer average.
Speaker #3: These results are not coincidental. They reflect the strength of a business model that we have deliberately built over the years. Around 60% of our cash flows come from the regulated and protected UAE fuel retail business, supported by a long-term supply agreement with ADNOC.
Speaker #3: We have complemented this resilient foundation with four growth engines: fuel retail, non-fuel retail, commercial, and EV charging across the UAE, Saudi Arabia, and Egypt.
Speaker #3: That diversification is precisely why we could absorb the first half of the year, marked by disruptions, without missing a beat on safety, supply, or service.
Speaker #3: We operated 24/7 with zero injuries and zero fatalities. The strength of this model supports our ability to deliver attractive and predictable shareholder returns. Our dividend framework offers shareholders visibility and upside for future earnings growth.
Speaker #3: It remains in place through 2030. We continue to deliver strong shareholder returns through our quarterly dividend framework, with 5.14 fils per share paid for Q1 and 35.14 fils per share declared for the second quarter of this year.
Speaker #3: And we are not standing still. While delivering strong returns today, we are also investing to create the next phase of growth. Our 2026 expansion plan remains on track, with 60 to 70 new stations, 50 to 60 new charging points, and CAPEX of $250 million to $300 million committed.
Speaker #3: Most significantly, last month we agreed to acquire Shell's downstream business in South Africa, marking our largest international expansion to date. We are consistently delivering returns, and we are investing for future growth.
Speaker #3: The best example of that approach is South Africa, an important milestone in our international growth strategy. On 7 July, we signed an agreement to acquire 100% of Shell's downstream South Africa for an implied enterprise value of approximately $1 billion.
Speaker #3: Three things make this transaction attractive. First, it builds on our strength. South Africa's fuel retail market shares many similarities with the UAE. With regulated margins and long-term demand fundamentals, the transaction expands our network by around 55% to 1,600 stations and increases fuel volume by approximately 20%.
Speaker #3: Second, it creates value from day one. We expect the acquisition to be earnings cash flow accretive with the potential to generate an additional 30 to 40 million of run rate EBITDA within five years.
Speaker #3: Third, we remain disciplined. We have a strong balance sheet and remain committed to attractive shareholder returns. We expect the transaction to complete in 2027, subject to regulatory approvals.
Speaker #3: This is not a new business model for us; it is an extension of what we already do well. The message from the first half of this year is that we are delivering record results today.
Speaker #3: While expanding the platform for sustainable long-term growth, with that, let me hand over to Athmane to explain how we are executing across the broader business.
Speaker #2: Thank you, Bader. Let me turn to how we are executing on the ground. Starting with the core, our fuel platform did exactly what it is built to do.
Speaker #2: It kept growing. First half, retail fuel volumes across the UAE and Saudi Arabia increased by 1.7%. A new half-year record that was achieved against a dynamic market environment.
Speaker #2: Demand for our fuel holds through the cycle. Network expansion continues to support that growth. Over the past 12 months, the network size increased by more than 11%, reaching 1,045 stations adding two UAE sites in the first half, one in Egypt and 32 DOCO stations in Saudi Arabia.
Speaker #2: And in Saudi Arabia, the capital-light model is scaling exactly as designed. The network is up 65% to 231 sites, 70% of them DOCO.
Speaker #2: 52 are already operational, giving us clear line of sight to further volume growth in the near term. Finally, in the UAE commercial business, we stayed disciplined.
Speaker #2: Streaming lower margin corporate volumes and keeping margins in line with historical levels while leaning into aviation volumes. In conclusion, across retail, commercial, and aviation, in three geographies, the business kept growing.
Speaker #2: Electric mobility is where we future-proofed the franchise, and the first half numbers showed demand is real. First, about the demand, number of electric vehicle is increasing at that budgeted rate.
Speaker #2: To support this growth, we expanded fast and super fast charging points across the UAE by 35% year on year. Energy sold rose 2.1 times.
Speaker #2: We have deliberately clustered our EV network where journeys happen—highway corridors and dense urban hubs. Why we like this business comes down to economics and experience.
Speaker #2: On economics, charging tariffs and utility costs are transparent, giving us a clear line of sight on returns. Profitability per kilometer is higher than in fuel.
Speaker #2: And equally important, our chargers sit on assets that we own or control under long-term visas. On experience now, we are solving two things EV drivers care about most: will there be a charger available and will it be fast?
Speaker #2: More so, longer dwell time pulls this. Those customers into our stores. Food and beverage and quick service restaurants. Disciplined capital rising utilization and the leverage on ADNOC rewards loyalty program will, over time, turn charging into a genuine profit contributor.
Speaker #2: Non-fuel retail is where we differentiate. And it's again outpaced fuel. We have more than doubled non-fuel retail gross profit over the past five years.
Speaker #2: From 67 million in H1 2021 to 140 million in H1 2026. Over the period, it increased at a cargo of 16%. Which is materially above the average growth rate across the peak growth.
Speaker #2: We have consistently narrowed the gap with international peers improving the non-fuel retail contribution by around 100 basis points per annum. Following the strong double-digit growth, we see further potential and expect the non-fuel retail segment to contribute more meaningfully to our total earnings in the future.
Speaker #2: In H1 2026, non-fuel retail gross profit again increased at a double-digit rate, and on an underlying basis, kept widening its lead over fuel retail.
Speaker #2: The engine here is twofold. Our fast growing property and franchise business. Anchored by the hub concept and continued momentum in high margin food and beverage.
Speaker #2: Coffee is a good proxy. Pub sales rose 10% year on year in the first half. Every one of these visits is a chance to deepen the relationship beyond the pump.
Speaker #2: And that is precisely the diversification we are building toward. Let me go deeper on convenience. As the second customer touchpoint after fueling and EV charging, our stores are central to the non-fuel retail strategy.
Speaker #2: And our high-margin platform and the refreshed Oasis by ADNOC brand now contribute to more than 40% of the non-fuel retail gross profit, versus 20% five years back.
Speaker #2: We are expanding our fresh foods and premium coffee offerings in two ways. First, AI-based clustering tailors assortments. Pricing and promotion by location. Demographics and shopping mission.
Speaker #2: Drawing on more than 250 million transactions. Second, targeted campaigns, such as our Healthier Living, live fresh food, and own sandwich sales. In addition, rollout of Oasis private label.
Speaker #2: Enhancing food and fast-moving consumer goods proposition. It's coming to our stores in the second half of this year. We expect momentum in convenience to keep building as this initiatives scale.
Speaker #2: Car care. Which includes car wash. Loop change and vehicle inspection is another vertical that continues to gain momentum. On the ground, we have already upgraded half of the automatic car washes and launched eight high capacity tunnels across the network.
Speaker #2: The target is more ambitious. Further enhanced our customer proposition and make our sites a one-stop care destination. In line with our strategy to transform our stations into destinations of choice.
Speaker #2: Property management is another lever to turn our stations into destinations. A journey that we started two years ago. Giving customers reasons to stop being fueled, convenience, and car care.
Speaker #2: Leading international and local quick service brands anchor our sites. Driving footfall while generating rental income and lifting fuel and convenience activity. We ended the first half with 1,181 occupied and awarded units.
Speaker #2: A 4% year on year. While the mix tackling towards higher yielding food and beverage and car performance. On the back of all of this, in the first half property management was again our fastest growing non-fuel retail vertical.
Speaker #2: And this growth will continue, supported by, first of all, the hub by ADNOC, which is the clearest expression of our focus on asset monetization.
Speaker #2: A community concept based around convenience, speed, and lifestyle. Today, we operate seven hubs and target 30 by 2030. Two, the growth will also be supported by our recently announced strategic partnership with Americana.
Speaker #2: It brings up to 200 quick service restaurants from a portfolio of 12 iconic global brands to the ADNOC Distribution network, expanding access to dining options and bringing trusted brands closer to customers as part of their everyday journey.
Speaker #2: As you know, fuel prices are regulated across the UAE. What sets us apart is the strength of our non-fuel offer and the ADNOC Rewards program.
Speaker #2: Together, the real drivers of preference, frequency, and loyalty. The program connects more than half of the UAE vehicle car park. The ADNOC Rewards program now has 2.8 million loyalty members—this number has more than doubled over the past five years.
Speaker #2: Membership grew nearly 13% year-on-year, with over 310,000 members added since this time last year. Scale, frequency, customer insights, and engagement together reinforce our competitive position and contribute to sustainable, long-term value creation.
Speaker #2: Driving all of this is AI. Now live across more than 20 use cases and increasingly a structural driver of growth, efficiency, and returns. AI-driven predictive intelligence forwards workforce, demand, and customer experience.
Speaker #2: Last week, we launched Engage by ADNOC. The UAE first full funnel retail media network operated by Mobility and Convenience Retailer. This is a tangible example of how we are using AI and data to create entirely new revenue opportunities.
Speaker #2: Every day, hundreds of thousands of customers interact with our stations stores app and loyalty program. That creates a unique opportunity for brands to connect with consumer through highly targeted and measurable campaigns.
Speaker #2: For us, this is more than a marketing platform. It is a new, scalable source of non-fuel retail earnings that leverages assets and customer relationships we already have.
Speaker #2: We will now hand over to Ali for the financial highlights.
Speaker #3: Thank you, Athmane and good afternoon, everyone. Brother and Athmane have covered the strategic progress. I will now connect that progress to the numbers. The headline is simple.
Speaker #3: Both of our most important earnings measures set new half-year highs. EBITDA came in at 786 million dollars. 39% higher year on year. And net profit reached 568 million dollars up by 59%.
Speaker #3: It's worth separating what is structural from what is cyclical. Underlying EBITDA, which excludes inventory movements and one-offs, rose close to 14% to $603 million.
Speaker #3: That is a clean read on the business and it tells you the core is compounding at a healthy double-digit rate. The balance of the headline growth reflects a favorable swing in inventory gains of 207 million dollars versus 40 million dollars in the same period of last year.
Speaker #3: The one number I would ask you to hold on to is our return on capital employed. 40%. Another record. And more than twice the average of our global peers.
Speaker #3: That is the clearest evidence that our capital discipline and investment screening are working. Let me move beneath the P&L to the operating drivers. Total fuel volume reached 7.7 billion liters in the first half up 1.6%.
Speaker #3: The quality is in the mix. Our core GCC retail business grew 1.7% on network expansion, higher mobility, and economic growth. In the UAE, fuel transactions rose almost 5% to over 100 million, as customer behavior shifted to reflect volatile pump prices, and non-fuel transactions were up 1.5%.
Speaker #3: In commercial, we released lower margin corporate volume down around 4% in the GCC while aviation more than offset it up close to 54% overall and more than doubled in the GCC.
Speaker #3: In other words, margin net growth, not volume at any price. Turning to gross profit by segment, which together rose 29% in the first half of 2026 to $1.16 billion.
Speaker #3: Fuels retail was up 24%, carried by volume growth and the inventory tailwind I referenced earlier. Commercial was the standout with 51% growth, reflecting disciplined corporate margin management and dynamic pricing, as well as being supported by inventory gains.
Speaker #3: Within commercial, corporate gross profit alone climbed 60% with aviation adding a further 16% on Egyptian tourism and pharma UAE demand. And non-fuel retail gross profit increased by 12% once again outpacing fuel when adjusted for inventory movements.
Speaker #3: On higher transactions, stronger margins are from a richer food and beverage mix, as well as upgraded car wash and new property initiatives. On costs, cash opex rose 4% to $348 million in the first half.
Speaker #3: That is cost that comes with growth. A direct function of a larger network and higher retail volume. With the profit attached. And life for life savings of 18 million dollars in 2024, 7 million dollars in 2025, we captured further savings of 2 million dollars in the first half.
Speaker #3: And we remain firmly on track for $50 million of cumulative life-for-life savings by 2028. Workforce optimization, smart energy, logistics routing, and centralization are the principal levers.
Speaker #3: Breaking EBITDA down by segment tells the same story of diversification. Retail, roughly two-thirds of the total, grew 36% to $529 million on volumes and a richer non-fuel mix and higher inventory gains.
Speaker #3: Commercial rose 48% to 265 million dollars with corporate EBITDA up 62% and aviation up 11%. Both reflecting our execution and margin discipline. The point I would leave you with is this.
Speaker #3: Every operating segment contributed to growth. This shows that our strategy of building multiple earnings streams is working. Finally, cash and balance sheet: the defining feature of our cash generation is its visibility.
Speaker #3: Because the bulk of it comes from regulated retail fuel economics and everyday retail activity, we can plan investments and distributions with a high degree of confidence.
Speaker #3: Capital spending, remains comfortably within our 250 to 300 million dollars for your guidance. Weighted towards growth projects in the second half. Free cash flow grew strongly tracking the rise in underlying earnings.
Speaker #3: Leverage sits broadly in line with the 0.7 times net debt to EBITDA we closed in 2025, leaving ample headroom to fund growth and the dividend at the same time.
Speaker #3: On distributions, we have full visibility for 2026. 700 million dollars or 75% of net income whichever is higher now paid quarterly. The first quarter paid in June the second to follow in September.
Speaker #3: With that, let me hand back to Bader for closing remarks.
Speaker #1: Thank you Adi. Before we open the line for questions, let me leave you with three key takeaways. First, we are delivering. First half of 2026 was our strongest half-year performance to date.
Speaker #1: With earnings returns and cash generation all reinforcing the strength of the business model. Second, we are continuing to grow across every part of the business.
Speaker #1: Fuel remains a resilience non-fuel return continues to gain momentum and we are evolving our playbook into new growth platforms through property, EV charging, digital initiatives and now South Africa.
Speaker #1: Third, we are doing all of this while maintaining an attractive, visible shareholder return proposition. Our dividend framework provides visibility on a $700 million annual floor through 2030, paid quarterly, with a clear upside as profits grow.
Speaker #1: One thing you should leave with today is that the investment case is not growth versus return. It is growth and returns from a platform resilient enough to deliver through any environment.
Speaker #1: That was true last year it was true again in the first half of this year and our move into South Africa reinforces our conviction that this platform can continue creating value for years to come.
Speaker #1: Thank you for your time and your continued interest in ADNOC Distribution. We would now be happy to take your questions.
Speaker #2: Thank you. And if you're dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad.
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Speaker #2: So please state your name and company before posing your question. Again, you could press star one to ask a question. Now if you are in the event via the web interface and would like to ask the question, simply type your question in the ask the question box and click send.
Speaker #2: We'll pause for just a moment to allow everyone to queue for questions. We'll now go to your first question.
Speaker #4: Good day. Thank you for taking my questions. I have three if I may. It's Anik Shmarer from UBS. So the first question is around the developments third quarter today in terms of the fuel cell sales volumes.
Speaker #4: What do you see on the market? Do you see any uptick in the year-on-year growth and is there any improvements versus the second quarter?
Speaker #4: What can you comment on the current environment? My second question will be around the realized margin in the commercial segment. It was extraordinary second quarter in terms of the refining margins and the refined product prices.
Speaker #4: What do you see in terms of the margins normalization in this segment towards the year end in third quarter? Do you expect the margins to remain elevated?
Speaker #4: How much of it is sustainable improvement because of your effort for dynamic pricing? And my final question will be around the impairments of receivables.
Speaker #4: Also on the B2B segment, we saw the two quarters of this receivables also happening this year. Is it related to the conflict? Do you expect those to keep happening in second half of the year?
Speaker #4: Thank you very much.
Speaker #1: Okay. Hi. Good afternoon, everyone. So Athmane here and I will kick off with the first question and then Ali will our CFO will answer the two other questions.
Speaker #1: So on the development of sales volumes, so what we have seen in July is low single digit growth in volumes and we are talking about UAE plus GCC.
Speaker #1: So quite encouraging trend. So far. Ali, I guess that there is one on the margin of commercial and two on the impairments.
Speaker #3: Yeah. Thank you, Athmane. So, on the commercial margin, of course, commercial business has two major components. The first one is the contractual business, and that's where the margin is pretty well known and contractually committed.
Speaker #3: So that business is pretty stable. The second component is obviously the spot business. Now spot business margin is fundamentally a function of the pricing movements, international commodity pricing movements and usually in a rising price environment that market opens up and you make good margin and in a declining we choose not to operate because that's a detrimental to the margin.
Speaker #3: So fundamentally commercial margin will be a function of how the international prices move and in within this whole volatility. So unfortunately won't be able to give you a very specific guidance but can actually at least cover the fundamentals.
Speaker #3: The third one is the payment. Yes, we continue to be very conservative actually and I'm exercising extreme conservatism on essentially assessing our estimated credit losses and stuff.
Speaker #3: A lot of them, we are not—hopefully, will not—come through, but we just took a very prudent measure given the overall situation and the volatility.
Speaker #3: It's just a way of embracing this volatility quite honestly of building of actually staying very prudent. Thank you.
Speaker #4: Thank you very much. But would you expect them to continue in second half if you make a mention? Thank you very much for your answers.
Speaker #3: No. These are if your question is impairments, no. The essentially again, I would see how the international environment is and if the international environment remains extremely volatile and if there is a room then obviously we will be voluntary to do but structurally no.
Speaker #3: Thank you.
Speaker #4: Thank you very much.
Speaker #2: We'll now go to your next question.
Speaker #1: Hi. Good afternoon, everyone. Congratulations on the excellent results. It's Scott Darling here from Cantor. I've got three questions. I mean, aviation revenues were excellent.
Speaker #1: So you talk about selling to a strategic customers. Can you sort of give us a bit more detail around that and how sustainable is it as we're in the sort of summer vacation period?
Speaker #1: That's my first question. And the second question is then on non-fuels. You've made some excellent progress in non-fuels projects. This year, I mean, it's been excellent.
Speaker #1: Plans around non-fuel projects for the rest of this year. Can you detail us with that? But my third question is, I mean, you sort of stopped talking about these EV mega hubs and you mentioned how penetration rates of EVs, etc.
Speaker #1: You're rolling out EV charge points, but what's happened to these mega hubs? At all? Thank you.
Speaker #3: So thank you for the questions. I think the three questions there strategic customer is the army and normally we don't disclose details of this.
Speaker #3: So that's that. Secondly, the outlook of the year, the projects that we have in store for the year — the guidance that we provided to the market remains intact.
Speaker #3: I think we are aiming for 40 to 60 new service stations and that will be delivered. We are on track. We have yeah, we have also the hubs program.
Speaker #3: We have five hubs that we've committed. This will be on top of six hubs that we delivered last year. So that's intact. We don't see any change in the plan.
Speaker #3: So all our operational targets we are very much confident to deliver in line with the guidance that we've provided the market in. When it comes to the mega hubs, the EV mega hubs, we've I mean, this is part of the hubs, right?
Speaker #3: So it's one of the hubs and earlier this year we've indeed inaugurated the first mega hub with EV with 60 CPs, 60 charging points.
Speaker #3: That's on the key highway of Abu Dhabi, Dubai, E11 with an ecosystem that integrates quick service restaurants, rest areas, additional restaurants, as well as a hot desk, an office for commuters also while charging they can avail the internet and do some work.
Speaker #3: We are inaugurating the second phase of it on the opposite side of the street later this year probably around October time will be another 40 CPs in one location making this is a big hub in the Middle East not Africa and Turkey.
Speaker #3: And we will definitely remain committed for this program. We see high energy so two times what we've seen in 2025. The model is well received by EV car owners and we also working with B2B EV car fleets that are also charging with us.
Speaker #3: So the regulation that is out there for fast and super fast charges is attractive for us as an investor and developer and our ability to create hubs is also working for the fleet car owners and also customers B2C.
Speaker #3: So very much excited and seeing that this hubs are well received by the customers. Thank you.
Speaker #2: We will now move to your next question.
Speaker #1: Hi everyone, good afternoon. This is Jamil Bash from Bank of America here. I have two questions, which are actually more clarifications for my understanding, please.
Speaker #1: They're both on the topic of inventory gains. So the first question and this is also following on from talking about commercial margins earlier. When you are coming up with your pricing strategy for your B2B clients, does the value of your inventory actually come into your thought process when you're looking at pricing from that one?
Speaker #1: And then secondly, on the dividends, particularly your calculation of 75% of net profits, does that include inventory gains in the measure? Thank you very much.
Speaker #3: Yeah. Thanks for the question. So on the inventory gains and commercial decision making, now that's a bespoke enterprise-wide decision making. So what we do is when considering commercial margin, which is the bespoke margin, it's inventory position, purchase trends, pricing trends, a lot gets added, a lot of items are added to that dish basically.
Speaker #3: So inventory gains and commercial margin generation are intertwined. We would not sort of do something which would impair either one of them and essentially we find a sweet spot between the two.
Speaker #3: So yeah, it's not totally independent. It's intertwined especially on the diesel related inventory gains and margins and decision making is holistic, not just only looking at inventory gains or the margin only.
Speaker #1: Regarding the question on the dividend, I will leave the floor to our CEO.
Speaker #4: Thank you for the question on this one. Rest assured our dividend policy is very transparent and clear up to 2030. Inventory gains is part of our construct, part of the agreement, supply agreement that we have with ADNOC that allows us to really extract value from this arrangement and the benefit of being part of the ADNOC group and them being an enter shareholder in ADNOC distribution.
Speaker #4: But our policy is very clear. We are committed to distribute 700 million dollars as a floor or 75% of the net income whichever net profit, whichever is higher and that extends all the way to 2030 and we are very much committed to this policy.
Speaker #1: Very clear. Thank you very much.
Speaker #2: And it appears there are no additional questions in the queue on the audio side. And again, there are no additional questions and on the audio.
Speaker #2: So I'll turn it back to you.
Speaker #5: Thank you. Who is that question from the webcast? Some of the questions have been answered already. There's a question about fuel price. Once the fuel prices is to pre-war level, do you see any negative impact on this from the top line and the remainder of the year?
Speaker #3: Okay. Thanks for the question. Ali Siddiqi, CFO here. When the prices come down, we have a protection mechanism called backstop. So when we talk top line, I think best the top line should start from gross profit, I think for our nature of the business, our margins are very well defined.
Speaker #3: And when the prices go down, the backstop mechanism, which protects us from inventory losses, will essentially kick in. This means the majority of our inventory and the majority of the business is very well protected from a drop or erosion in international prices.
Speaker #3: Thank you.
Speaker #5: All right. There's another question. What is ADNOC distribution outlook and what are you focusing on?
Speaker #3: Thank you for the questions. You are very much excited about the growth opportunities ahead of us. That will be coming from multiple sources, not just fuel business.
Speaker #3: We are very much committed and focused on going all verticals in our operating model—fuel, non-fuel, and EV, no doubt. We are expanding the network in the UAE, Saudi Arabia, and Egypt, and accelerating growth of our convenience stores. Oasis by ADNOC, after the refresh, is seeing more and more recurring transactions and recurring customers.
Speaker #3: Our property management with the joint venture with Americana is committed to deliver the 200 QSR, so boxes over the committed period. So those will gradually start to come into our network.
Speaker #3: Recently, of course, the hub has been a program that we continue to deliver. As I said, we have five hubs to deliver this year, and that will continue to be in execution more this year.
Speaker #3: And we've recently launched Engage by ADNOC. This is a retail media network initiative monetizing our data and insight for brands to advertise within our premises.
Speaker #3: And this is creating new earnings stream for us. So exciting phase ahead of us. The momentum will continue. And of course, we are also busy with the regulatory approval of the shell downstream South Africa the proposed transaction and looking forward to complete the process next year and also start to deliver the value from anticipated from it.
Speaker #3: Remember, this is EPS created from year one, 6% is what we forecast and look forward also for its contribution once we are done with the regulatory approval.
Speaker #3: So exciting outlook for us.
Speaker #5: Okay. So other three questions. Can you please comment on the performance of your business in Egypt? Was it also affected by the inventory gains?
Speaker #5: The second question, can you please explain how the backstop mechanism work in terms of cash and do you get settled on sales or does it happen later?
Speaker #5: And the last question, how protected and if the B2B segment in case of oil prices suddenly declined?
Speaker #3: Okay. Starting with Egypt, Egypt's performance has been very encouraging. It has actually achieved—actually exceeded—the investment case, so we are very pleased with that and obviously want to grow more and more.
Speaker #3: Important to note that the money makers there in terms of the businesses are the aviation and the lubricants one. They're not only profit spinners but at the same time they're dollar denominated or dollar linked.
Speaker #3: So, about 85% to 90% of the business is naturally protected against any EGP devaluation, which gives us additional strength and robustness in the business.
Speaker #3: So, very pleased with that. Coming down, the next question was about how the mechanism—the backstop mechanism—works. Spot on. It gets settled in cash, and it operates on a quarterly basis.
Speaker #3: So if the company has a quarterly loss, in a given quarter, if it has a net loss on its stocks, which are meant for retail, then fundamentally we charge our we charge at our group and then there's a cash settlement mechanism and it has happened in the past so it's a proven it's a proven mechanism and it works fairly robustly.
Speaker #3: The third question is the B2B segment. The spot side of the business, the contractual volume works very stable. That business works stable in a stable manner.
Speaker #3: The spot one is of course subject to international prices. So what happens is that we choose not to do the business when the prices are going down.
Speaker #3: So they may not be a margin upside if the pricing environment is not good but there's definitely no downside. Commercial margins are not regulated.
Speaker #3: They are bespoke and market-driven. Thank you.
Speaker #5: All right. So we have one more question. How much capex do you expect for full year 2026, 27, and forward?
Speaker #3: Yeah. So I answer this question. So the capex guidance is and remains 250 to 300 million dollars. For this year and I would say that going forward this is the level of capex that we intend to spend but always with the focus to optimize actually this envelope of capex.
Speaker #3: Okay. And this is what we are looking at for the medium term.
Speaker #5: We don't have further questions on the webcast. Are there any other questions in the audio?
Speaker #2: Yes. There are a few more questions here in the audio line. And again, if you want to ask the question, star one on your telephone keypad.
Speaker #2: We'll now go to your next question.
Speaker #1: Oh, yes. Hi. I think I was not able to ask my questions previously and I posted on the web. But maybe just this is older Kazio from HSBC.
Speaker #1: Since I have an opportunity to ask another one. Can you talk about the outlook in Saudi Arabia? Has anything changed there? I think there was a bit of a pressure on profitability previously because of diesel price hikes.
Speaker #1: This year it feels like it's performing better year on year but we have also noticed that they throughputs have increased per site this year because of the stronger focus on land logistics.
Speaker #1: Are you experiencing the same in Saudi Arabia? And actually, by the way, are you seeing something similar in the UAE as well in terms of demand for the from the land logistics companies?
Speaker #1: Thank you.
Speaker #3: I'm not sure if I've got the full answer. Sorry, the full question but generally speaking because Saudi Arabia remains a market that we are active in.
Speaker #3: We have boots on the ground. We have an aspiration to hit 300 stations by 2029. I think we are on track. In fact, slightly ahead of the plan.
Speaker #3: We are expanding in a smart way, with the capex-light approach that we've explained in previous engagements. So nothing has changed that is contrary to what we've guided the market with, and we are on track to deliver the scale that we think is appropriate for this market, as outlined earlier—300 stations by 2029.
Speaker #3: I'm not sure there was an extended question there. If you could repeat it, please. Otherwise...
Speaker #1: Yes. I was asking whether so there was a we've seen some improvement in throughputs in Saudi Arabia for the first time of the past few quarters in Turkey because of potentially stronger demands from trucking companies.
Speaker #1: Given the stronger focus on land logistics, right? So are you seeing something similar? Are you seeing stronger throughputs overall this year versus what we've seen last year?
Speaker #3: Yes. I mean, the fact is that we are operationalizing stations. What you're seeing in our numbers is a contribution from more and more station as they get optionalized.
Speaker #3: And that should continue in the coming phase. Yeah.
Speaker #1: Okay. Thank you.
Speaker #2: We'll now go to your next question.
Speaker #1: Hi. It's Ricardo Rosenda from Morgan Stanley. One question that I have on your supply contract with Adnoc. If you were to assume that you could get some of your fuel in South Africa from the Adnoc group, would the margin mechanism remain similar to what you have in the UAE?
Speaker #1: Meaning, would you have any protection on the downside for inventory losses?
Speaker #3: Hi, Ricardo. So on shared downstream South Africa, which is a proposed acquisition where we are expecting the approvals next year, the thing that we have said and we can tell you is that Adnoc distribution will look at different sources of supply of the fuel.
Speaker #3: This market is short and more than 65% of what is imported is coming from the region. And then we're going to update the market.
Speaker #3: I guess what is important is to tap for Adnoc distribution the synergies that we can build in with Adnoc group and with the trading arm.
Speaker #1: Okay. Thank you.
Speaker #2: We'll now go to your next question.
Speaker #1: Thank you. Thank you for taking my quick follow-up. It's an extra matter from UBS. I just want to have a follow-up around your capex comments.
Speaker #1: So you mentioned that in the medium term you will look to optimize this levels. Does this include the required capex for South Africa? Thank you.
Speaker #3: No. What we are saying is growth capex is our priority. Because we have demonstrated through return high return on capital employed that we are creating value.
Speaker #3: Where we are always looking is at where we do capex, which is maintenance, but also on growth capex is always looking at where we can optimize this the cost of investing in across our network.
Speaker #3: And this is something that of course with AIDT we are also evolving on that front. But the company has always is focusing on how we can optimize the capex program that we have.
Speaker #1: Thank you.
Speaker #2: And it appears there are no additional questions in the queue.
Speaker #4: Okay, thank you very much. With this, we conclude our call today. If you have any other questions, please contact the Investor Relations team. Thank you very much.
